ASIAN DEVELOPMENT BANK

Transcription

1 TAR:PHI ASIAN DEVELOPMENT BANK Li TECHNICAL ASSISTANCE TO THE REPUBLIC OF ThE PHILIPPINES FOR PREPARATION OF A NATIONAL TRANSPORT STRATEGY November 1995

2 CURRENCY EQUIVALENTS (as of 15 October 1995) Currency Unit Peso (P) $1.00 P25.94 P1.00 $ The foreign exchange rate of the Peso is determined on the basis of a floating rate system related to the daily foreign currency transactions of the banking sector. In this Report, a rate of $1.00 = P25.50 has been used. ABBREVIATIONS DOTC DPWH IATCTP MARINA NEDA PPA TA - Department of Transportation and Communications - Department of Public Works and Highways - Inter-Agency Technical Committee for Transport Planning - Mantime Industry Authority - National Economic and Development Authority - Philippine Ports Authority - Technical Assistance NOTES (i) (ii) The fiscal year (F?) of the Government ends on 31 December. In this Report, N$1 refers to US dollars.

3 . -I I. INTRODUCTION 1. During the Country Programming Mission in 1994 the Government of the Republic of the Philippines (the Government) requested advisory technical assistance (TA) to prepare a transport master plan for the island of Mindanao. Subsequent discussions between the Government and the Bank indicated that transport projects are prioritized based on an outdated strategic analysis undertaken at the national level and completed in The economic growth in recent years has led to large increases in the demand for transport and has created the need to ensure that existing strategy addresses the future requirements for transport infrastructure to facilitate economic growth and social development over the longterm. In July 1995, during a Fact-Finding Mission it was agreed that the preparation of a national transport strategy to guide development of the transport sector over the longterm was high priority. Following discussions between the Bank and the Government, an understanding was reached on the objectives, scope, and cost of the TA.1 II. BACKGROUND AND RATIONALE 2. While almost 13 percent of the Philippine population reside in Metropolitan Manila, the majority are dispersed among the major island groups of Luzon, Visayas, and Mindanao. Growth in gross domestic product in the decade prior to 1990 was erratic, averaging only 1.6 percent per annum. The bulk of the economic activity centered upon the national capital region, which accounted for about 31 percent of gross domestic product in Since 1990 economic growth has accelerated and has attained an average of about 5 percent per annum over the past two years. 3. The National Transport Planning Project estimated that 53 percent of ton kilometers of freight transport in the Philippines in 1987 was carried by road transport, 47 percent by water transport, and negligible shares by rail and air transport. In the case of passenger transport, an even higher 89 percent of passenger-kilometers of travel was made by road, 9 percent by water transport, 2 percent by air, and a negligible proportion by rail. As travel is a derived demand, the revival of economic growth in the Philippines has resulted in rapid growth in travel demand. The increased demand coupled with the relative poor quality of the network facilities is placing considerable constraints upon transport infrastructure and services. The low level of service provided by existing facilities inhibits economic and social activity, particularly in the less developed rural areas. 4. The length of the road network in the Philippines has remained relatively unchanged during the past 15 years, and there is a comprehensive system of ports and airports. The rail line in southern Luzon is being rehabilitated. Hence, the backbone of the transport network in the country is largely in place and is generally able to accommodate current demand. The clear exception is in some urban areas, Metro Manila in particular. Other general exceptions include a need for additional roads to improve accessibility to isolated areas on the eastern coast of Luzon, additional cross-island roads to improve connections between major towns and The TA was first listed in the ADB Business Opportunities in July 1995.

4 2 agricultural production areas in Mindanao, and, in some locations, additional penetration roads to areas with agricultural potential. 5. While the extent of fixed transport infrastructure is largely in place, it is commonly in poor condition. The capacity of some infrastructure facilities needs to be expanded to accommodate future growth in transport demand and technological developments. The integrated planning and coordination of these improvements must be facilitated to ensure that their capacity is suitable and timing appropriate. The organization of Government responsibilities in the transport sector is generally well-developed. The Department of Public Works and Highways (DPWH) is responsible for the national road system. The Toll Regulatory Board is attached to the DPWH. The Department of Transportation and Communications (DOTC) is responsible for transport planning and policy in general, for administration and regulation of the sector, and for the development and operation of the national system of fixed air and maritime infrastructure. Many of DOTC's activities are undertaken by agencies that are directly or ultimately responsible to it, including the Air Transportation Office, Civil Aeronautics Board, airport authorities for the Manila and Cebu airports, Maritime Industry Authority (MARINA), Philippine Ports Authority, Philippine National Railways, Land Transportation Office, and Land Transportation Franchising and Regulatory Board. 6. With the exception of some regulatory powers in the PPA, most regulatory and operational responsibilities are now located in separate agencies. Liberalization of entry to the transport industry and deregulation of tariffs has commenced, in particular in the shipping and aviation industry, with the objective of improving efficiency, promoting industry development, and providing new and improved services. There remain opportunities to extend and enhance this process. The Government also envisages a substantial role for private sector funding of fixed transport infrastructure. 7. In practice, planning of transport infrastructure development occurs on a sectoral basis. Medium-and long-term plans are largely based on occasional landmark studies. Policy, strategy, and institutional issues are addressed to varying degrees in the course of these and other studies. Examples of some recent studies include: (i) Civil Aviation Master Plan (1992); (ii) Roll-on Roll-off Transport System Development Study (1992); (iii) Master Plan Study on Luzon Island Strategic Road Network Development Project (1993); (iv) Philippine National Railways Privatization Study (1993); (v) Greater Capital Region Integrated Port Development Study (1994); (vi) Philippine Road Classification Study (1994); (vii) Study on Commercialization Options for the Philippine Port Sector (1995); and (viii) Philippine Ports Authority 25-Year Development Plan (1995). 8. The sectoral and occasional nature of these studies results in a tendency for the following: (I) lntersectoral linkages have not been fully taken into account. For example, planning of ports and port access roads may not be integrated. Similarly, alternative strategies such as upgrading several neighboring ports or, say, only one port and improving road linkages between the ports are commonly not undertaken.

5 I.,.. -, (ii) (iii) Plans may be prepared on different bases. For example, different forecasts of transport demand and different planning horizons may be used by different agencies. However, increasing use is being made of the Government's mediumterm development plan, which is limited to the period. Plans commonly do not take into account financing constraints and opportunities in the transport sector as a whole and possible resource availability from private and nontraditional sources is not addressed systematically and in an integrated manner. The studies do, however, provide important repositories of information and analysis that serve an ongoing role in supporting policy formulation and change by the Government as well as infrastructure planning. 9. Relatively little attention has been given in recent years to strategic transport planning in the Philippines. However, a current activity for long-term planning for the transport sector will involve senior Government and non-government people in the formulation and development of a vision and guiding principles for the future development and management of transport in the country. This activity will not be based upon rigorous analytical study but will depend upon existing sources of information and desk studies. 10. Other studies that are currently planned include (i) a road network study for the Visayas and Mindanao (expected to commence in early 1996 with JICA assistance); (b) Cost-Recovery of Infrastructure Facilities and Services of PAGASA and MARINA (to be undertaken by consultants to the National Economic Development authority (NEDA) in 1995); and (c) Identification and Privatization of Basic Transport Infrastructure and Services (by NEDA). 11. The presence of a number of recent sectoral studies, together with the need to commence planning for the next medium-term development plan period ( ), provides an appropriate occasion to draw together and develop this previous work into an integrated, prioritized program of investment in the transport infrastructure network. The focus of the TA will be on the transport network for which the Government is directly responsible. Other than the review of linkages to ports, airports, railway terminals, and intercity highways, urban transport requirements will be addressed because of their special needs and complexity. Project will be prioritized based on their social and environmental features, economic and technical factors, and consideration of alternative strategies for development of the transport network. There is a more general need to review alternative transport policies and strategies to provide a clear indication of options available to the Government and the implications of continuing the current policies or adopting alternative approaches. The study will also consider possible future sources of funding. It will identify the potential role for private financing of transport infrastructure and alternative strategies to seek and secure this funding. Finally, the study will contribute to the development of intersectoral agency cooperation and transport planning, and will examine the need for further institutional reform. 12. The TA will promote the Bank's strategy of facilitating institutional development and training by involving private and public sector personnel in the development and application of methodological and analytical techniques for integrated transport planning and policy analysis. The TA will also promote the Government's strategy of enhancing the effectiveness of infrastructure planning and improving the efficiency of the transport sector over the longterm.

6 4 III. THE PROPOSED TECHNICAL ASSISTANCE A. Objective 13. The TA will help the Government prepare a comprehensive, integrated plan for the development of an efficient and effective intercity transport system to support the national economic growth and social development objectives of the Government. The TA will build on and integrate the results and work of past and other ongoing studies of the transport sector in the Philippines. B. Scope 14. The TA will review existing sources of data and proposals to prepare a comprehensive transport strategy for the Philippines. The TA will cover all modes of transport and will focus on nonurban travel needs and facilities. It will review linkages in urban areas to ports, airports, railway terminals, and intercity highways. 15. The TA will determine a consistent basis for estimating future transport demand on which the scope and priority of projects can be assessed. It will review current transport sector project and program proposals, review other needs, and prepare an integrated, comprehensive infrastructure investment program for the period to 2010, with particular focus on the period to 2004 corresponding to the next medium-term planning period. Linkages between projects and the sensitivity of the scope and priority of projects to alternative scenarios will be identified. Project will be prioritized based on economic, financial, technical, environmental, and social criteria. The TA will identify the potential for private sector funding of projects and other means for improving the mobilization of financial resources to fund infrastructure maintenance and development. 16. The TA will incorporate a review of sectoral policies to ensure that they promote efficiency and enhance services over the long term, address social issues, support poverty alleviation, and minimize adverse environmental impacts. The TA will also review current institutional arrangements to ascertain their appropriateness over the longterm. The conduct of the TA should promote intersectoral coordination and institutional development. The terms of reference for the services are presented in Appendix 1. C. Cost Estimates and Financing Plan 17. The total cost of the TA is estimated at $1 090,000 equivalent, consisting of $ equivalent in foreign exchange and $289,000 equivalent in local currency costs. The Government of France has agreed to provide $1,000,000 to meet the entire foreign exchange and $199,000 of equivalent local costs on a grant basis. The remainder of the local currency costs of $90,000 will be met by the Government of the Philippines. The cost estimates for the TA and the proposed financing arrangements are shown in Appendix 2. D. Implementation Arrangements 18. A team of internationally-recruited experts in association with domestic consultants will be engaged to undertake the TA. This will ensure that the various tasks under the TA are accomplished satisfactorily and in a timely and cost-effective manner, and that skills development

7 5 and transfer occur. The TA will require about 64 person-months of consulting services, comprising about 29 person-months of international consulting services and about 35 person-months of domestic consulting services. The international consulting services required will be in the fields of transport planning, transport economics, transport policy analysis, and environmental planning, and will contain specific expertise in the road, aviation, maritime, and rail subsectors as well as financial evaluation and financing of transport infrastructure. The expertise required from local consultants will include transport planning, transport economics, transport policy analysis, highway engineering, and environmental planning. To provide the services for the TA, an international firm of consultants in association with local consultants will be selected and engaged in accordance with the Bank's Guidelines on the Use of Consultants. 19. The major portion of the work will be undertaken over an 11-month period concluding with the submission of a draft final report to the Government and Bank. The reports will describe the work undertaken, including a transport investment strategy and proposals for policy and institutional development. Seven other technical reports will be prepared during the course of the TA (see Appendix 1) to provide the opportunity for review of its progress and performance. 20. NEDA will be the Executing Agency for the TA. The Inter-Agency Technical Commiftee for Transport Planning (IATCTP), which is chaired by NEDA and cochaired by DOTC and comprises representatives of DPWH, the Philippine National Railway, MARINA, and PPA, will coordinate and oversee implementation. The IATCTP will meet on at least four occasions to discuss reports and progress of the TA. NEDA will appoint a full-time Project Director, who will be responsible for guiding the technical work of the TA, supervising Government staff, and facilitating implementation of the TA. The responsible transport agencies will nominate a minimum of six full-time counterpart staff to the TA team comprising the following technical expertise: national transport and development planning, transport economics, highway planning, port planning and operations, civil aviation, and transport policy formulation. Other expertise, such as railway planning and operations, environmental and social impact assessment, economic development and financial specialists, will be made available for short-term inputs as needed. The Government will also provide suitable office accommodation and secretaries, draftsmen, and office support staff. IV. THE PRESIDENT'S RECOMMENDATION 21. It is considered that the proposed technical assistance to the Government of the Republic of the Philippines in an amount not exceeding the equivalent of $1,000,000 is necessary for the purpose of preparing a Philippine Transport Strategy. This technical assistance will be financed by the Government of France on a grant basis, and is to be administered by the Bank under the existing cooperation arrangement between the Government of France and the Bank. The proposal for the Bank to administer the assistance is considered appropriate. 22. The President recommends that the Board approve the Bank acting as administrator of the proposed technical assistance to be financed by the Government of France. LI I IJJI L 1 ILWU1K TOl WFCfl tnernrneht is directly responsible. Other t

8 6 Appendixl,page6 OUTLINE TERMS OF REFERENCE A. Objectives 1. The objective of the Transport Strategy Study is to prepare a comprehensive, integrated plan for the development of an efficient and effective multimodal transport system to support the national economic growth and social development objectives of the Government of the Philippines. The study is to build on the results and activities of past and other ongoing studies of the transport sector and is to focus on nonurban travel needs and facilities. Specific objectives include (i) (ii) (iii) (iv) identifying and assessing alternative transport strategies and policies for transport infrastructure development and transport operations and indicating the preferred strategy and policy options; using appropriate criteria and network classification, preparing an integrated, prioritized strategic program of investment in nationallyimportant infrastructure catering for intercity and international travel by all modes of transport for the period to 2010, with particular focus on the period to 2004, and commenting on subsequent needs for the period to 2025; identifying projects suitable for implementation by the private sector and opportunities to mobilize financial resources to support infrastructure development; and Reviewing existing institutional arrangements for the provision of transport facilities in the public and private sectors and ascertaining their appropriateness over the longer term. B. Scope of Work 2. The broad scope of services to be undertaken in the study are, as follows: (i) Determine the development context and forecast transport demand by the following activities: (a) (b) (c) (d) Compare the existing transport situation with that in other countries in the region and assess the relative strengths and weaknesses in the sector. Describe current national and regional development strategies in the public and private sectors and policies that have a bearing on the transport sector. Describe other underlying trends that may affect the future supply of and demand for transport facilities in the Philippines. Review forecasts of transport demand prepared by recent transport studies.

9 I UlIL.LIy responsiole. utnet man the 7 Appendixl,page7 (e) (f) (g) Develop an appropriate transport demand forecasting methodology that can provide data for the identification and evaluation of future transport infrastructure development needs. The methodology should be able to forecast growth in passenger and freight demand on the strategic transport network, i.e., to and from ports and airports, on National road links and on rail links. Existing demand forecasts may be used where they are judged to be sound. The methodology should provide, in conjunction with demand forecasts prepared by other transport studies, a consistent basis for identifying and prioritizing project proposals in the current study. Prepare aggregate forecasts of future transport demand in the Philippines. Undertake sensitivity tests to indicate the possible effect of alternative economic growth scenarios and different development strategies and policies as may be appropriate. Describe other socioeconomic and environmental features of localities that will be pertinent to the prioritization of project proposals. (ii) Identify and prioritize infrastructure development proposals, as follows: (a) (b) (c) Assemble information on current transport sector project and program proposals. Identify and monitor other ongoing studies that address transport sector investment needs (e.g., proposed studies of road investment needs in the Visayas and Mindanao). Determine a classification of ports and airports that identifies a national system of infrastructure and provides a basis for planning and prioritizing project proposals. Subject to the concurrence of the Government, the recently prepared classification of national roads may be used for the road sector. These classifications should be used as the basis for determining an integrated network of nationally important transport infrastructure by geographic locality (i.e., island or region, as is appropriate). Identify a comprehensive program of infrastructure investment needs for the period to 2010 based on the previously-described activities and taking into account forecast transport demand, development of underdeveloped regions, intermodal linkages, and the effect of alternative development, policy, and strategy scenarios considered in other tasks in the study. This activity should draw on projects proposed by other recently completed and ongoing transport studies. Major projects that may become necessary after 2010 but have long lead times, for example the possible need to develop a new international airport for Manila, should be identified. Key features of transport development likely to be required in the subsequent period to 2025 to meet the long term vision for transport being developed by the Government should also be identified.

10 8 Appendix 1, page 8 (d) (e) Prioritize the identified program of infrastructure investment proposals for the period to 2010 on the basis of appropriate economic, financial, technical, social (including poverty alleviation), and environmental criteria; and determine the robustness of the proposals to alternative development, policy, and strategy scenarios. Projects should be prioritized, taking into account budget/funding constraints (see below), as being required either before or after the most important projects in each of these periods should be identified for financing either in the public or private sectors. Present an integrated, corn prehensive infrastructure investment program, indicating priorities, linkages between projects, and the sensitivity of the scope and priority of projects to alternative development, policy, and strategy scenarios. Indicate projects that which would be suited to private sector funding and development. Characteristics of each project proposal should be documented. (iii) Review program funding through the following: (a) (b) (c) (d) (e) Assemble data on past expenditure on investment and maintenance in transport infrastructure, and the sources of funds whether public and/or private, foreign and/or domestic. Forecast future public funding for transport infrastructure investment and maintenance on the basis of a continuation of current and anticipated policies. Estimate future maintenance and investment expenditure needs for transport infrastructure required to accommodate forecast interregional travel demand. Identify the role and scope for private funding of transport infrastructure. Determine other opportunities to enhance resource mobilization to finance development and maintenance of transport infrastructure. (iv) Identify and assess policy and strategy scenarios (a) Delineate policy and strategy options for the future development and operation of transport in the Philippines. Issues to be considered should include, but not necessarily be limited to (i) the criteria for private provision and operation of transport infrastructure; (ii) alternative mixes of port/airport and road infrastructure; (iii) alternative scenarios for developing the Philippine National Railway system; (iv) assessment for possible railway development in Mindanao; (v) barriers to technological innovation, for example introduction of new truck types and roll-on, roll-off and fast ferries; (vi) further liberalization, deregulation, and pricing developments to enhance efficiency and resource

11 nn rrr,i rrrrrd k,,-fhr rr.rl+it, r.-,mrl+,'i,..,-1 9 Appendix 1, page 9 mobilization in the transport sector; (vii) examination of the current policy for cross-subsidization in the ports and airports subsectors to determine whether policy changes will lead to improved efficiency and effectiveness; and (viii) corporatization/privatization of transport agencies and organizations. (b) Assess the policy and strategy options to indicate their costs and benefits compared with a continuation of current policies. Identify actions required to implement the options and remedial actions that could be taken to ameliorate distributional effects that may result from their implementation. (c) Describe the preferred transport strategy, policy options, and directives indicating any legislative requirements that are needed to adjust existing policies. (v) Examine institutional arrangements as follows: (a) (b) Describe the current institutional arrangements for policy, regulatory, and operational responsibilities in the transport sector. Examine the possible implications of proposals addressed in the current study for these institutional arrangements including any strengthening, restructuring, or formation of new institutions. C. Required Expertise (C) On the basis of experience in the study, assess the opportunities for improved collection and management of data required for transport planning and the requirements to institutionalize a national transport data base for this purpose. (d) Maximize the contribution to institutional development and coordination through the conduct of the study by conducting technical seminars/presentations at regular monthly intervals. 3. The consultants will have extensive experience in all elements of the transport sector; sound quantitative skills; and an ability to clearly articulate and present options and proposals for projects, policies, and strategies. The consultants will need to have expertise in transport planning; identification and appraisal of road, aviation, maritime, and rail projects; transport economics; and transport policy analysis. About 29 person-months of international consultant expertise and 35 person-months of domestic consultant expertise will be required for the study. D. Reporting Requirements 4. The nature and timing of various documents that will be submitted to the Government and the Bank will be as follows:

12 10 Appendixl,pagelo (a) (b) (c) (d) (e) (f) (g) (h) (i) Inception Report. A brief report will be submitted within two months of commencement of the consulting services. The report will highlight progress made, initial findings, and any recommendations and proposed changes to the work program for the study. Development Context Working Paper. Within about three months of Project commencement, a working paper will be submitted describing factors that will influence transport in the Philippines in the future and initial economic and demographic forecasts by province or locality. Demand Forecasting Working Paper. Within about four months of Project commencement, a working paper will be submitted describing that describes the methodology to be used to forecast transport demand in the current study, initial estimates of future aggregate demand for interregional travel in the Philippines by mode and comment on the demand forecasts used in recent transport studies. Transport Network Classification Working Paper. Within about five months of Project commencement, a working paper will be prepared that describes the proposed classification of the road, port, and airport network. Policy and Strategy Scenario Working Paper. Within about seven months of project commencement, a working paper will be submitted that presents the assessment of alternative policies and strategies for development and operation of interregional transport in the Philippines. Project/Program Progress Report. Within about eight months of Project commencement, a brief report will be submitted that describes progress with the identification and evaluation of a program of transport infrastructure development. Draft Final Report. Within about 11 months of Project commencement, a draft will be submitted report that describes the methodology and results of the work undertaken in the study. Working papers described above, together with other necessary material, will be included as appendixes to this report. Final Report. The final report will include due consideration of comments on the draft final report made by the Bank and Government. The final report is to be presented within two months of receipt of comments on the draft final report. Progress Reports. At the end of each month, a brief progress report will be provided to the Bank indicating the administrative and technical accomplishments achieved during the month. 5 Twenty copies of each document described in items (a) - (i) will be submitted (5 copies for the Bank and 15 copies for the Government). Fifty copies of the final report will be submitted (10 copies for the Bank and 40 copies for the Government).

13 11 Appendix 2 COST ESTIMATES ($) Foreign Exchanci Local Currency Total A. Government of France Financing 1. Consultants a. International Consultants b. Domestic Consultants 2. Equipment and Reports 3. Field Visits and Local Travel 4. Contingency Subtotal (A) 673,800 41, , ,000 54, , , ,000 41,100 54,000 1,000,000 B. Government Financing 1. Furnished Office Accommodation 2. Local Staff (Office staff, engineers and planners) 3. Field Travel 4. Telecommunications 5. Contingency Subtotal (B) I 35,000 28,000 18,000 1,000 90,000 35,000 28,000 18,000 1, ,000 Total (A + B ,000 1,090,000 Source: Staff estimates. ii 10.1 Ic1yerIIIlL ui uilt reci u irea or