Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
TA 7796-PHI
October 2013
Market Sounding: The Bulacan Bulk Water Supply
Project (BBWSP)
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 1-0 IMC 5672-004
1 Introduction ................................................................................................................... 1-2
2 Project Background ....................................................................................................... 2-0
3 Project Description and Scope ..................................................................................... 3-1
4 Market Sounding ........................................................................................................... 4-0
5 Questions ........................................................................................................................ 5-0
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 1-1 IMC 5672-004
Disclaimer
This document forms the basis for the discussion with parties who are participating in this market sounding. The Metropolitan Waterworks and Sewerage System (MWSS) of the Philippines:
Does not make any representation that it will proceed to procure the Project described in this document;
Reserves the right to alter the processes envisaged in the document; and
Reserves the right to decline to discuss further the participation of the private sector stakeholders in the Project described in this document.
Any party retaining this document or attending a meeting to discuss it by doing so acknowledges that:
Any discussion of or response to the document does not create an agreement with MWSS;
MWSS will not be under any obligation to act in any particular manner or refrain from acting in any particular manner;
The information provided in the document is preliminary, not exhaustive, and is subject to change; and
It will not rely, now or subsequently, on the information provided, for which no liability or responsibility is accepted by MWSS or any other department of the Government of Philippines, any of its authorities or agencies or any of their respective officers, employees, agents and advisers.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 1-2 IMC 5672-004
1 INTRODUCTION
The Public Private Partnership Center of the Philippines (PPP Center) is the nodal agency of the
Government of Philippines which was set up through an executive order in September 2010 to
facilitate the development of Public Private Partnership (PPP) projects in the country, provide PPP
advisory services and monitor the implementation of projects procured as PPPs in the Philippines.
The Asian Development Bank (ADB) is providing Technical Assistance (TA) to the Government of
the Philippines for the Strengthening of Public-Private Partnerships. The Public-Private
Partnership Center (PPP Center) is the implementing agency for the Project Development and
Monitoring Facility (PDMF) component of the TA and has been delegated the authority to recruit
and supervise consultants under the TA. The PPP Center appointed IMC Worldwide to Transaction
Advisory Services for the Bulacan Bulk Water Supply Project (BBWSP).
The Metropolitan Waterworks and Sewerage System (MWSS) submitted an application seeking
PDMF funding for the engagement of the transaction advisor for the pre-investment studies and
PPP structuring of the BBWSP.
A key objective of the PPP Center is to facilitate an increase in the level of private sector
participation in infrastructure development and service delivery which has the potential to:
increase private sector competition that drives innovation in infrastructure delivery and services while driving down the whole-of-life costs;
access private sector capital in a manner that facilitates cost efficient risk transfer away from the Government of Philippines; and
access the best of private and public sector know-how across all project elements to increase the quality of infrastructure stock across existing and new infrastructure in the Philippines.
The PPP Center is committed to identifying opportunities from the project pipeline that will
benefit from private sector involvement. The BBWSP has been identified as one such potential
opportunity.
With IMC’s assistance, MWSS has undertaken a feasibility assessment of the Project, including
private sector participation options to determine its viability and mode of delivery. As an integral
part of the Project assessment process and prior to any tendering process that may be
contemplated for the Project for private sector participation, MWSS has invited identified private
sector parties (project sponsors / investors, debt financiers, contractors / operators) to participate
in a market sounding process.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 2-0 IMC 5672-004
2 PROJECT BACKGROUND
Since the 1920s, after the establishment of Angat Water Supply System, Bulacan has been the
backbone of Metro Manila’s water supply. Bulacan, however, has not benefited from the Angat
water system and continues to abstract water from depleting aquifers to the detriment of the
environment. A long term, sustainable alternative for water supply does not currently exist in the
province.
Efforts were made to solve Bulacan’s water deficit following the Privatization of MWSS in 1997,
through a scheme that aimed to supply Bulacan with bulk water through a Common Purpose
Facility and later under the completion of the Umiray Angat Transbasin (UATP) project in
2001.Since the implementation of UATP there have been several initiatives to develop Bulacan’s raw
water allocation from the Angat Dam as unsolicited proposals via Build-Operate-Transfer (BOT)
schemes. They have been unsuccessful due to the size of investment, complexity of technical
requirements and limitations of the implementation framework. The complexity of the project has
posed a challenge to identifying the optimal efficiency and technical soundness that is financially
viable in terms of an acceptable tariff to the proponent, Water Districts (WDs) and end users.
In addition, the WDs in the province face a number of obstacles that impinge on their ability to
fully serve the service area. The following are the major deficiencies of many of the WDs in
Bulacan:
1. Inadequate supply
2. Low water pressure due to the undersized distribution system and inadequate supply.
3. Saline water intrusion
4. Aging distribution pipelines
5. Inadequate storage volume.
6. High Non-Revenue Water. The average NRW in the area is 30%
A reliable supply of treated bulk water is urgently needed by most of these Water Districts in the
short term and by all of them in the medium to long term. The bulk water must be supplied in a
manner that will reduce regional reliance on unsustainable sources such as saline-intruded ground
water, illegal abstraction and time consuming journeys to fetch water in far off locations. Neither
MWSS nor any of the WDs has the financial capacity to fund the construction and operation of the
infrastructure and equipment necessary to provide the quantities of bulk water that these Water
Districts need individually and collectively. Therefore, private sector capital investment will be
required to meet the demand.
The proposed project aims to address the need for bulk water supply through the construction of
infrastructure and utilities for the abstraction, treatment and conveyance of the treated water
supply to the intended connectors of the Water Districts. The sequence of implementation of the
proposed project will be by Water Districts that have been divided into two geographical areas,
grouped into three phases of development. The grouping of Water Districts for implementation has
been prioritised by need first and then geographic location. The project will cover 24 Water
Districts in total, spanning the whole area of the Bulacan Province.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 3-1 IMC 5672-004
3 PROJECT DESCRIPTION AND SCOPE
The BBWSP will provide treated bulk water to the province of Bulacan under an appropriate PPP
scheme. The Project will be implemented in three phases that, when completed, will supply treated
water to 24 municipalities of Bulacan. Phase 1 will provide bulk water supply services to six of these
municipalities within 18 months of the start of construction.
Figure 1: Project Area
Overall, the intervention will require, among others, the following components:
Construction of interconnection structures; Development of new water source/s including raw water conveyance systems; Construction of water treatment plant/s (WTPs) and ancillary facilities; Construction of treated water reservoirs; Construction of pumping stations; Construction of treated water transmission mains, including line appurtenances; Installation of flow metering devices; and Installation of appropriate measurement and monitoring stations.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 3-2 IMC 5672-004
All client WSPs will have at least one interconnection point to the main conveyance facility passing
through their service area. Multiple interconnections will be permitted, provided that the cost of
additional interconnections will be shouldered by the Water Service Provider (WSP). In Phase 2
areas, wells drilled and equipped with necessary pumps and pump stations may be directly
connected to the WD main distribution lines or to the designated reservoir.
The BBWSP will be implemented in three Phases, namely Phase 1, Phase 2, and Phase 3. The
following table lists the components and areas to be served in every stage of implementation.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 3-3 IMC 5672-004
IMPLEMENTATION STAGES
Stage 1 Stage 2 Stage 3 a Stage 3 b Stage 3 c
SERVICE AREA Balagtas,
Bocaue,
Marilao,
Meycauayan,
Obando, San
Jose Del Monte
City
Bulakan, Calumpit,
Guiguinto, Hagonoy,
Sta. Maria, Malolos
City, Paombong,
Plaridel, Pulilan
Angat, Baliwag,
Bustos, Pandi,
Norzagaray, San
Miguel, Dona
Remedios
Trinidad, San
Ildefonso, San
Rafael,
All 14
towns
and cities
in Phase 1
and 2
area
All 10 towns
in Phase 2
area
INDICATIVE
PROJECT
COMPONENTS
Interconnection
of 6 WD’s
Interconnection of 8
WD’s
Interconnection
of 10 WD’s
- -
TARGET
IMPLEMENTATION/
COMPLETION
Y2014-Y2015 Y2015-Y2016 Y2018-Y2020 Mid of
Y2023-
Y2025
Mid of Y2028-
Y2030
TARGET
OPERATION
Q1-Y2016
Q1-Y2017 Q1-Y2021 Y2026 Y2031
The project is underpinned by a legal framework that has validated the project’s legal viability with
MWSS as the key regulator. The recommended legal option for the tended is that the project will
be tendered in its entirety as a Built-Operate-Transfer (BOT) agreement. The project will be
underpinned by contractual agreement through the concession/ BOT agreement between MWSS
and the Proponent; multiple Water Purchase Agreements (WPAs) between the Proponent and the
Water Districts; and a guarantee mechanism potentially between LGUGC and the Water Districts
in need of credit enhancement. The bid parameter for the tender will be the lowest bulk water
charge that can meet the output specifications.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 4-0 IMC 5672-004
4 MARKET SOUNDING
The Objective
The objectives of the market sounding are as follows:
Gauge the interest of the private sector to partner with MWSS for undertaking the BBWSP as
a PPP;
Determine market appetite and preferences for specific private sector participation models
for the BBWSP; and
Understand key considerations of the private sector regarding their potential involvement
with the Government of Philippines in the BBWSP.
The purpose of this market sounding exercise is to inform MWSS about possible impacts on the BBWSP Project from potential participants’ appetite, concerns, preferences and timing. Where relevant, these will be considered by MWSS during the assessment of the BBWSP and prior to bidding the Project for private sector participation. The outcomes of the market sounding process may also aid in evaluating the delivery options of similar projects and their procurement in future.
It should be noted that this market sounding exercise does not form part of the procurement process for the BBWSP Project or for the procurement of any other project being contemplated by MWSS.
The Process
MWSS, with support from its transaction advisors, will hold discussions with the private sector participants from 24October to 15 November 2013. This document has been prepared for distribution to the participants prior to discussions that will take place over an online platform. The discussions will include representatives of MWSS and PPP Center.
The discussions will focus on the market sounding questions in section 5 of this document. Written responses may be submitted. All questions shall be entertained during the time allocated for each participant. No subsequent queries through letters, e-mails, phone call shall be entertained.
Market sounding will take place from Monday, 24 October 2013 to Friday, 1st November 2013, and will be conducted virtually using an online platform.
All queries regarding the market sounding meeting prior to its conduct should be directed by mail or email to:
Engr. Ramon Fabul, BBWSP Project Manager MWSS,4th Floor, Administration Building, MWSS Complex, 489 Katipunan Water Supply, Balara, Quezon City (+632) 922-2969 / (+632) 920-5521 local 103 [email protected] or [email protected] Mark Nimeno Project Manager Public Private Partnership Center NEDA sa QC, EDSA Diliman, Quezon City [email protected]
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 4-1 IMC 5672-004
Conditions of Participation
By accepting an invitation to participate in the market sounding process being undertaken by MWSS, participants note and agree to the following conditions:
The market sounding meeting is being undertaken on a ‘no commitment’ basis and does not
form part of the formal procurement process for engaging private sector implementation
assistance. Participation in the market sounding process does not act to pre-qualify
participants for any future tender process.
Participation is voluntary and MWSS will not be responsible for any costs incurred by
organisations associated with either preparation or participation in the market sounding
process.
Only employees of invited private sector organisations will be able to attend the market
sounding meeting. Representatives of potential consortium member organisations or
potential sub-contractors are not eligible to attend.
MWSS will keep a record of the discussions at the market sounding meeting. However, these
records will be of a generic nature and will not identify any individual participant or
contributor.
MWSS reserves the right to use information gained from the meeting on a non-attributable
basis during the assessment of the BBWSP, including evaluation of the private sector
participation options and subsequent procurement of the Project.
Generic information generated as a result of the market sounding meeting may be used by MWSS to assist with the assessment and in evaluation of private sector participation options of the BBWSP which may be used in related documentation that may be released to third parties. A participant that attends a market sounding meeting does so, on the basis that he / she agrees that MWSS may include information or aspects of information provided by that participant in documentation.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-0 IMC 5672-004
5 QUESTIONS
In responding to the below questions, please take into consideration existing and proposed future growth of the Bulacan province, the water supply and sanitation sector in the region, the specific characteristics of the BBWSP and your company’s objectives.
The questions have been structured and arranged into sections based on the specific role a private sector participant may play in the BBWSP; namely, project sponsors, contractors/operators and financiers. If multiple roles are contemplated by a respondent, multiple sections may be applicable.
Project Sponsor The questions given below need to be answered by
participants who propose to play the role of project
sponsors and equity investors who will be taking
substantial equity risks on the BBWSP.
1. Do you own concessions for developing water supply infrastructure assets in the Philippines / other parts of the South East Asian Region / World? What is the primary role you have played in the development of the water supply infrastructure assets you own?
2. What is your company’s perspective with regard to developing water supply infrastructure assets in the Philippines, i.e., what are the key factors that need consideration by the government for the selection of the optimal procurement mechanism? What specific aspects would you focus on?
3. What is your company’s general interest / appetite for entering into concession contracts in the Philippines for the development of water supply infrastructure in the country? Why does your company believe that the Bulacan province offers a good opportunity for the development of the BBWSP?
4. If you own other water supply infrastructure concessions in the Philippines / elsewhere, what are the challenges you are facing with regard to their implementation /operation which you may want to consider in the context of the BBWSP? How does your company propose to overcome these for the BBWSP?
5. What are the financial criteria / threshold investment requirements that your company has for equity investment into water supply infrastructure projects?
6. To what extent is your company willing to consider involvement in the BBWSP? Is your company interested in investing into the concession and is it likely to take a lead equity role if the Project were to be bid out for private sector participation? What would be the financial structure that would make your level of participation feasible?
7. What do you consider to be the most suitable private sector participation option for the BBWSP and why?
8. What is your initial corporate position with regards to the development of the BBWSP as a PPP Project under
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-1 IMC 5672-004
the BOT model? What does your company foresee as the appropriate PPP solution for the Project and why?
9. What would be the type of government support /concessions necessary from your company’s perspective to make the Project attractive for the private sector?
10. The government will make available the feasibility study undertaken on the Project and demand projections. Is there any other key information that would be required by your company as an equity investor to consider the opportunity from an investment perspective? Please specify.
11. What concerns as an equity investor would you have from a perspective of sharing risks with the government, i.e., what risks would you be open to taking, not taking and sharing on the Project.
12. Are there any concerns you have with regard to sourcing of debt funds on the Project including the cost of raising the debt which may impact the Project’s delivery /cost adversely?
13. Are there any contractual issues that would need to be addressed by the government at the bid document stage to enable timely financial closure? Please specify.
14. What initiatives do you propose to undertake that can maximise value for money outcomes for the government from a whole-of-life cost perspective? Please specify.
15. Do you perceive any constraints / limitations for private sector participation in the BBWSP? Please specify.
16. Are there any specific condition precedents that will need to be fulfilled by MWSS prior to the project being tendered out?
17. Do you have any other comments or remarks which you feel may be of use to MWSS in this process?
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-2 IMC 5672-004
Contractor / Operator The questions given below need to be answered by participants who propose to play the role of a contractor / operator involved during the construction / operation stage of the BBWSP.
1. What is your company’s experience with regard to constructing / operating water supply infrastructure assets in the Philippines / SEA region / world?
2. What key factors will drive your interest for constructing / operating water supply infrastructure projects in the Philippines?
3. What is your perspective on the implementation of the BBWSP during its construction / operation stage?
4. Are there any technical challenges you foresee during the construction / operations stage of the Project in the Bulacan Province? What could be the approach to overcome them?
5. What do you consider to be the most suitable private sector participation option for the BBWSP and why?
6. Are there any risks you believe will be high and will need consideration from a contractor / operator perspective that needs to be mitigated by the government prior to taking the Project into the market for private sector participation?
7. As a contractor / operator, do you perceive any major environmental/social concerns that will need mitigation and that may delay the Project?
8. What institutional mechanisms do you have that ensures innovation of project delivery during the construction / operation stage? Would you be using international know-how / resources for this purpose? Or do you have previous local experience that could be used to enhance innovative approaches to the Project?
9. The government will make available the feasibility study undertaken on the Project and demand study. Is there any other key information that would be required by your company from a contractor / operator perspective? Please specify.
10. Are there any specific risks that you will not assume? Specify why?
11. Are there any specific initiatives (ie. NRW reduction) you propose to undertake that can maximise value for money outcomes for the government from a whole-of-life cost perspective? Please specify.
12. Do you perceive any constraints / limitations for participation by contractors / operators in the BBWSP? Please specify.
13. Are there any specific condition precedents that will need to be fulfilled by MWSS prior to the project being tendered out?
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-3 IMC 5672-004
14. Do you have any other comments or remarks which you feel may be of use to MWSS in this process?
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-4 IMC 5672-004
Financier The questions given below need to be answered by participants who propose to play the role of senior lenders for the BBWSP.
1. What are the financial criteria / threshold disbursing requirements that your company has for extending senior debt assistance for water supply infrastructure projects?
2. Does your institution have any infrastructure / non- infrastructure investments in the Philippines? If so, what is your position with regards to investing into the water supply infrastructure sector in the Philippines and with regard to the Bulacan Province?
3. What key factors will drive your interest for extending funding assistance to the BBWSP?
4. Would your institution require a substantial retention of risk by the government (to overcome any inherent challenges of the Project) to consider extending funding assistance to the BBWSP?
5. From a debt financier perspective, what do you consider to be the most suitable private sector participation option for the BBWSP and why? Would your institution consider this option and the BBWSP for investment?
6. Are there any concerns from a debt financing perspective that will impact funding /funding costs during the construction / operations phase of the Project? How can they be overcome?
7. Would your institution be suggesting any innovative structuring options for the debt component that can drive down funding costs and provide a better value for money outcomes for the government from a whole-of-life costs perspective? Please specify.
8. Are there any considerations that the government needs to be aware of and that needs consideration in the bid documents (in terms of contracting issues) that may pose as a potential issue for financial close?
9. Does your institution see a need for tri-partite financial agreements (Government-Project Investor-Financier) to make the PPP structure stronger in the Philippines? Please specify.
10. The government will make available the feasibility study undertaken on the Project, demand projections, topographic and geological survey material. Is there any other key information that would be required by your institution from a financier perspective? Please specify.
11. Are there any specific risks that you will not assume as a debt financier for the PPP section of the Project? Why?
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-5 IMC 5672-004
12. Do you perceive any constraints / limitations for participation by financiers in the BBWSP? Please specify.
13. Are there any specific condition precedents that will need to be fulfilled by MWSS prior to the project being tendered out?
14. Do you have any other comments or remarks which you feel may be of use to MWSS in this process?
.
Market Sounding:
Bulacn Bulk Water Supply Project
TA 7796: PPP/ADB/IDCA12 5-0 IMC 5672-004
IMC Worldwide Ltd
64-68 London Water supply
Redhill
Surrey
RH1 1LG
United Kingdom
Tel: +44 (0)1737 231400 Fax: +44 (0)1737 771107
www.imcworldwide.com