THE IMPORTANT ROLE OF RISK MITIGANTS
The construction of both airports and ports is capital intensive in nature, and successful roll-outs require adequate risk transfers to respective project owners and backers - including construction risks, traffic risks, revenue, operator performance risks.
In order to mitigate or transfer these risks to encourage investment in more projects, governments have developed various deal structures and concessions to improve project feasibility and attractiveness to investors. The financial close of the 25-year concession Mactan Cebu Airport project has boosted confidence in the market for future PPPs. ADB's provision of $75 million demonstrates its commitment, along with the Philippines government, in developing critical infrastructure for the country.46
Next door, Vietnam is also keen to address its port infrastructure deficit as it becomes increasingly important on the global stage, with more shipping companies choosing Vietnam as their port of call. It is estimated that about 820-1,080 million tonnes of cargo will transit through Vietnam's seaports until 2020.47 The government of Ca Mau Province said that the local government would continue creating a transparent and favorable business investment environment for domestic and international investors doing business. As of December 2016, a major project awaiting investors is the $2.5 billion Hon Khoai seaport project, which has been approved in principle by the government in 2015.48
EXHIBIT 19: EXAMPLES OF LOGISTICS HUBS PROJECTS
PELINDO II -TANJUNG PRIOK PORT EXPANSION (INDONESIA)
PROJECT DETAILS: Project involves the expansion of Tanjung Priok Port by construction of new terminals, and increasing port capacity from 5 million twenty-foot equivalent units (TEUs) to 18 million TEU. Project has been planned to be constructed in multiple phases with construction works beginning in 2013 and expected to be completed by 2023 |
| PROJECT STAGE: Execution PROJECT VALUE: $4.67 billion PROJECT OWNER: PT Pelabuhan Indonesia II (Pelindo II) PLANNING AUTHORITY: Tanjung Priok Port Authority |
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LACH HUYEN PORT DEVELOPMENT - HAI DUONG PROVINCE (VIETNAM)
PROJECT DETAILS: Project involves the construction of an international port capable of handling container ships of up to 8,000 TEUs. Constructed in two parts, construction works commenced in 2013 and are expected to complete by 2018 |
| PROJECT STAGE: Execution PROJECT VALUE: $1.23 billion PROJECT OWNER: Ministry of Transport, Vietnam (MoT) PLANNING AUTHORITY: Ministry of Transport, Vietnam (MoT) EPC CONTRACTOR: Penta-Ocean Construction Co Ltd and TOA Corporation |
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KERTAJATI INTERNATIONAL AIRPORT (INDONESIA)
PROJECT DETAILS: Project involves the construction of an international airport with a handling capacity of 70 million passengers per annum. Planned to be implemented in three phases, the project will include the construction of four runways, two terminals, a taxiway, and other facilities |
| PROJECT STAGE: Execution PROJECT VALUE: $1.12 billion PROJECT OWNER: Ministry of Transportation, Indonesia PLANNING AUTHORITY: Ministry of Transportation, Indonesia; Provincial Government of West Java EPC CONTRACTOR: PT Waskita Karya |
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Source: APRC analysis of data from Construction Intelligence Center