A CASE STUY ON THE OPERATION AND MAINTENANCE OF NAIA EXPRESSWAY

TOWARDS ITS COST AND BENEFIT FOR THE PRIVATE-PUBLIC PARTNERSHIP

ABSTRACT

A Case Study on the Operation and Maintenance of the NAIA Expressway Towards Its

Cost and Benefit for the Private-Public Partnership aims to project an analysis on the elevation of

the expressway with regards to the benefits it brings to the country and its countrymen. Its aim is

to provide a solution to reduce the traffic congestion within the vicinity of the terminals of NAIA.

The case study will provide further information about the following: 1) Project Description,

2) Project Cost, 3) Project Objectives, 4) Project Status, 5) Project Involved Bidders 6) Project

Alignment, and 7) Project Timeline, 8) Project Structure, in terms of the project's benefits to the

Private-Public Partnership to provide better access to Ninoy Aquino International Airport (NAIA)

Terminals 1, 2, and 3, as well as connect the NCR Skyway network to provide better access to

the City of Entertainment.

This case study can be used by students conducting research as a reference material on

the cost and benefits of the private-public partnership and the reduction of traffic congestion in the

Philippines.

INTRODUCTION

According to research, a public-private partnership (PPP) is a contractual arrangement between

the government and a private corporation to finance, construct, execute, and operate
infrastructure facilities and services that were previously supplied by the government. It contains

efficient risk distribution among the participants, lowering costs while achieving project

development goals. As a result, the project must be designed in such a way that the private sector

receives a decent rate of return on its investment.

PPP provides both monetary and non-monetary benefits to the public sector. It solves the

public sector's limited financial resources for local infrastructure or development projects, allowing

public monies to be allocated to other local priorities. It is a framework for allocating project risks

between the public and private sectors. PPP is designed to benefit both sectors by improving

efficiency and project execution procedures in the delivery of public services. Most significantly,

PPP stresses Value for Money (VfM), concentrating on lower costs, better risk distribution, faster

implementation, enhanced services, and potential income generating. (What Is PPP? | PPP

Center, n.d.)

Heavy traffic has been an issue since then in the Philippines and the government is

currently still looking for possible ways in order to reduce the traffic congestions in some areas

specially within those busy areas in the countries in order to provide better experience for the

people in the country. Which in fact, according to a study based from Amsterdam-based TomTom

International B.V. Metro Manila saw 53 percent congestion last year, compared to 71 percent

congestion in 2019. This indicates that a 30-minute trip would take 53% longer than it would during

baseline uncongested conditions. Furthermore, in research from Balinbin (2021) from March 15

to May 31, when stringent lockdowns were in effect, Metro Manila had sustained low traffic levels

— or 50% less crowded than the same days in 2019.

The congested roads of Metro Manila specifically the roads within the vicinity of Terminals

1, 2, and 3 of NAIA needs a solution that will make the experience of the locals and the tourists
as well to be better. Former President Benigno Aquino III approved the phase 2 of the NAIA

Expressway project on May 30, 2012, with the help of the San Miguel Corp. in order for it to be

possible.

PROJECT DESCRIPTION

According to the data, NAIA Expressway Phase II Project is a public-private partnership that

would build a 4-lane elevated expressway from Villamor Airbase to PAGCOR Entertainment City

in Paraaque City. It will give access to NAIA Terminals 1, 2, and 3, as well as an interconnection

with the Skyway and Cavitex. Aside from the Main Viaduct, there are 13 entry and exit ramps, as

well as 3 connecting ramps. The NAIA Expressway alignment follows the current route along

Sales Avenue, Andrews Avenue, Electrical Road, over the Paranaque River, and NAIA Road. The

Department of Public Works and Highways (DPWH) constructed the NAIA

Expressway phase two through a public-private collaboration. (Department of Public Works and

Highways, n.d.)
 NAIA Expressway has two phases, and its first phase has been developed and started in

the year 2003 and it was completed in the year 2010. Entry and exit ramps beside the Resorts

World Complex are included in here also. The fully elevate expressway is 0.6 kilometers long,

starting from the Metro Manila and ends in Sales Road which is near at the NAIA Terminal 3.

The phase two of the NAIA Expressway starts where the end of phase one is and ends at

PAGCOR Entertainment City which is located in Pasay City. It includes two sub-phases which is

named as Phase II-A and Phase II-B. Macapagal Boulevard and NAIA Terminals 1 and 2 are

connected by the Phase II-A while on the other hand, the Domestic Airport Road and Andrews

Avenue and Sales Road are linked on the Phase II-B. The second phase of the Ninoy Aquino

International Airport (NAIA) highway, which runs through Pasay and Paraaque in Metro Manila,

Philippines, opened in June 2017.

a. Main Viaduct: It is the four-lane elevated expressway from Sales Road near the NAIA

Terminal 3 and runs through Roxas Boulevard and Diosdado Macapagal Boulevard

which is 4.70 kilometers long. The viaduct is built over NAIA Road, Sales Road,

Domestic Airport Road, and Andrews Avenue.

b. Ramps: It has 16 entry and exit ramps which includes the connecting ramps to NAIA

Terminals 1, 2, 3 which is 7. 95 kilometers long. NAIA Terminal 3, Cavitex, Villamor

Airbase, NAIA Road, Seaside Drive, Imelda Avenue, Resorts World, and Diosdado

Macapagal Boulevard are among the various places where these exit ramps and the

three connecting ramps are built.

c. At-grade feeder road: It is the road which provides access to and from the PAGCOR

Entertainment City which is 2.20 kilometers long. Andrews Avenue, Parañaque River,
 Diosdado Macapagal Boulevard, Sales Avenue, and NAIA Road are included in the

location across where the at-grade feeder road is built.

PROJECT CONTRACTORS

San Miguel Corp (SMC) obtained a 30-year contract from DPWH in July 2013, with a concession

offer of PHP11 billion ($250 million) to design, build, finance, operate, and maintain the NAIA

expressway through its subsidiary Vertex Tollways Development. The deal also grants SMC the

right to collect tolls for the next 30 years.

PROJECT COST

Activities Amount (Billion)

Civil Works P 10.977

Government Support P 7.093

Transaction Advisory Services P 0.014

Right-of-Way Acquisition P 3.977

Meralco P 0.200

Independent Consultant P 0.802

Variation Order P 2.100

Total P 18.070
The total project cost of the NAIA Expressway is P18.070B. Its original project cost that was

approved by the NEDA Board was P15.86B on May 30, 2012. Due to the Variation Order

amounting to P2.07B, the cost increased to P17.93B. Below is the liquidation of the budget that

has been used for the NAIA expressway project:

PROJECT OBJECTIVES

a. The project aims to provide better access to Ninoy Aquino International Airport (NAIA)

Terminals 1, 2, and 3, thus connect to the Skyway network of NCR as an addition with

regards to providing better access to the City of Entertainment.

b. One of its objectives also includes the reduction of the traffic congestion within the

vicinity of the NAIA Terminals.

c. To improve the international and domestic investment environment with better

infrastructure are also included in the project objectives of NAIA Expressway.

PROJECT STATUS

• The status of the NAIA Expressway project is under operation and maintenance.

The Phase II-A and the Phase II-B of the project operation commenced on the 22nd

day of September and the 20th day of December on the year 2016.

• Monthly routine inspection is conducted under the O&M Division wherein a

contractual connection is formed between the public and private sectors. During
 the agreed-upon time, the private sector is in charge of the project's operation and

maintenance. The contract does not mean that the private sector owns the project

and can do anything they want with it. The government still owns the project, and

the public sector continues to intervene with its regulatory and legal structure

(UNECE, 2008). of the PPP Service for the benefit of the operation and

maintenance of the expressway as per categorized on the Section 15 of the MPSS

and the Section 12.4 of the Concession Agreement.

• The Variation No. 1 which is known as the Transfer of Alignment from Domestic

Road to Parañaque River is already approved by NEDA.

• Proposed Variation No. 2 which is known as the Tramo On Ramp Provision o The

PPP Service is preparing the following documents for the approval of the

Concessionaire’s Initiated Proposal on Executive Summary for Secretary and

Approval Letter for SMHC, based on the review of the submitted documents.

o The updated proposal based on the comments of the PPP Service, the

SMHC submitted on the 25th day of April on the year 2022.

o In accordance with the executed Concession Agreement last 21st day of

March on the year 2022, the PPP Service requested SMHC for the

additional details and information of the proposal.

o On 7th day of February on the year 2022, the SMHC submitted a

Concessionaire’s Initial Proposal which is subject for PPP Service’s

evaluation.
PROJECT INVOLVED BIDDERS

Prospective Bidders

• ACI Consortium (Ayala)

• Manila North Tollways Corp.

• IL & FS Transportation Network

• Optimal Infrastructure Development Corporation (SMC)

Prequalified Bidders

• ACI Consortium (Ayala)

• Manila North Tollways Corp.

• IL & FS Transportation Network

• Optimal Infrastructure Development Corporation (SMC)

Bidders

• Manila North Tollways Corp.

• Optimal Infrastructure Development Corporation (SMC)

Winning Bidder

• Optimal Infrastructure Development Corporation (SMC)

PROJECT ALIGNMENT

PROJECT TIMELINE

Sections Opening Date

Start of Construction January 2014

Phase II-A except CAVITEX area September 22, 2016

Phase II-B except Villamor Air Base Section December 21, 2016

Cavitex Section (Ramps 11 and 12) December 27, 2016

Circulo del Mundo Bypass Road December 30, 2016

Connectivity of NAIA 1 to NAIAx 2 April 2017

(Villamor Air Base)

Ramps going to/from Skyway June 01, 2017

(Ramps 1 and 17)

The NAIA Expressway phase two project was approved by the independent economic

development of the Philippines and the planning agency of the National Economic and

Development Authority (NEDA) in May 2012. Year 2013 on the month of April, the bid submission

was held.

In July 2013, San Miguel Corp (SMC) secured a 30-year contract from DPWH with a concession

offer of PHP11 billion ($250 million) to design, build, finance, manage, and maintain the NAIA

expressway through its subsidiary Vertex Tollways Development. The agreement also authorizes

SMC to collect tolls for 30 years.

D.M. Consunji was chosen to handle the civil works for the NAIA airport toll road in

conjunction with Design Science and Pertconsult International.

The project's comprehensive engineering design phase was completed between August

2013 and April 2014, and construction began in 2015.

In September 2016, the elevated roadway connecting Macapagal Boulevard to NAIA

Terminals 1 and 2 opened. The project's first access ramp, connecting Terminal 3 at Andrews

Avenue and Skyway, opened in November 2016.

In December 2016, a road connection linking Pagcor Entertainment City, NAIA Road,

SLEX, and Skyway was opened. In the same month, access ramps 11 and 12 in the Cavitex

region were also opened.

PROJECT STRUCTURE

The NAIA Expressway is having a Build-Transfer-and-Operate (BTO) type of PPP

structure. According to the research, A build-operate-transfer (BOT) contract is one in which a

public organization (typically the government) offers a concession to a private corporation to fund,

build, and run a project. The corporation operates the project for a length of time (possibly 20 or

30 years) in order to return its investment before handing over management to the government.

BOT projects are often large-scale, greenfield infrastructure projects that would otherwise be fully

funded, developed, and operated by the government. A motorway in Pakistan, a wastewater

treatment facility in China, and a power plant in the Philippines are a few examples. (How Build-

Operate-Transfer Contracts Work, 2020).

COST-BENEFIT ANALYSIS

The project consists of a 4-lane, 7.75-kilometer elevated highway and a 2.22-kilometer atgrade

feeder road that would connect the Skyway and the Manila-Cavite Toll Expressway and offer

access to NAIA Terminals I, II, and III. The project is helpful since the NAIA Expressway phase

two caters to an expected total of 80,000 travelers per day, which has also helped to the decrease

of traffic congestion surrounding the roadways of NAIA Terminals. It shortened travel time from

the Entertainment City to Terminals 1 and 2 in Phase II-A, resulting in improved access to the City

of Entertainment. The journey time is expected to be between 25 and 8 minutes. The completion

of Phase II-B of the NAIA Expressway reduced travel time from the South Luzon Expressway

(SLEX) to the NAIA Airport from one hour to twenty minutes. This clearly states why this project

is not just beneficial for the Filipino citizens but as well as with the tourists who visits the

Philippines. This could promote the countries infrastructures and attract more foreign investors to

invest in more PPP projects that the country might have in the future.
 NAIA Expressway Matrix

VEHICLE CLASSIFICATION VAT Inclusive Toll Fee VAT Inclusive Toll

(Short Segment) Fee (Full Route)

Class 1: Cars, Jeepneys, Pick-ups, Vans 35 Php 45 Php

Class 2: Light Trunks, Tourist/School and 69 Php 90 Php

PUB, Class 1- above 7 feet in height except
class 1 exceeding 7 feet due to top load of
recreational equipment such as bikes,
surfboards, and the like, securely attached
and not intended for commercial use.

Class 3: Heavy and Multi-Axled Trucks, 104 Php 134 Php

Trailers.

Through its subsidiary Vertex Tollways Development, San Miguel Corp (SMC) received a

30-year contract from DPWH with a concession offer of PHP11 billion ($250 million) to design,

develop, finance, operate, and maintain the NAIA expressway. The arrangement also allows SMC

to collect tolls for the next 30 years. With the span of these years, the estimated average total of

travelers might increase with the help of further innovations with regards to the NAIA Expressway

project. This project could pave a way for more opportunities that the country could benefit from.

RATIONALE

As a developing country, it is important to provide a great quality of service to the

countrymen and the tourists as well that could possibly bring economic growth to the country.
NAIA Expressway opened lots of opportunities for the country and might bring undeniable benefits

that the country could attain with the help of the public-private partnership. NAIAX provided with

an opportunity to investigate and construct an innovative funding solution.

The project is beneficial since an estimated total of 80,000 travelers a day are catered in

the NAIA Expressway phase two which also contributed to the reduction of the traffic congestion

around the roads of NAIA Terminals. It reduced the travel time from the Entertainment City to

Terminals 1 and 2 which is in the Phase II-A that resulted to provide a better access to the City of

Entertainment. The travel time is within the estimated span of 25 minutes to 8 minutes. Through

the help of opening the Phase II-B of the NAIA Expressway, it helped to reduce the travel time

from South Luzon Expressway (SLEX) to NAIA Airport from 1 hour to 20 minutes. The project

connects the two existing expressways which are the Skyway 1 and the CAVITEX Expressway.

Its benefits also include the P11 Billion concession fee that the private concessionaire paid to the

government. The 7.7-kilometer project, one of the successful public-private partnership contracts

awarded during the Aquino administration, was won by SMC's Vertex Tollways Development, Inc.

in 2013 (Camus, 2017). Furthermore, it is expected that the airport toll road will bring economic

benefits to the province of Cavite.

CONCLUSION and RECOMMENDATIONS

The problem of every Filipino with regards to congested and heavy traffic is still undeniable and

clear up to this day. Regarding to this matter, the opportunity for a public-private partnership has

been opened. The NAIA Expressway Project under the administration of the late President

Benigno Aquino is one of the priority projects under the public-private partnership (PPP). While in

a PPP, the government collaborates with the private sector over time to provide services to the

public. Throughout the term of this arrangement, the government will manage the project, while
the private sector will be in control of the funding, design, building, operation, and maintenance.

Change is the only constant, especially in projects, and it may have a significant impact on the

project's pace and finance. Change can be associated with risk; project control may alter the

timeline; and formal change management must be created and executed (Stare, 2010)

Addressing the solution without properly addressing the root cause of the problem might hinder

the people to comprehend the efficiency of the project thus, making the policies related with this

matter is recommended. The project could be more efficient for an instance that the people

understand the problem comprehensively. The government also has to strengthen the

implementation of regulatory framework which supports the NAIA Expressway project.

REFERENCES

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despitelockdown/

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https://ppp.gov.ph/pppprogram/what-

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Camus, M. R. (2017, June 3). NAIA Expressway now fully operational. INQUIRER.Net.

https://business.inquirer.net/230636/naia-expressway-now-fully-operational