Payment Mechanisms

There are no investment fees payable to the Procuring Authority during the operations phase of the toll road and no minimum traffic demand guarantee was given by the Procuring Authority. The agreement allows the Project Company to use the toll revenue collected as the primary source of income to recover the cost of its investment. Poor performance leads to fines levied on the Project Company. The fines are issued based on the monthly performance reports submitted by the Project Company.

The toll rates are assessed in each direction at the toll barrier, based on the class of vehicle. In accordance with the law, all toll rates include a 12% Value-Added Tax. The toll rate is reviewed periodically every two years and is adjusted to reflect current economic conditions. The adjustment is made based on a specified formula and is tied to the Consumer Price Index in the Philippines. Since the Project Company has taken construction and demand risk, it is not allowed to implement a toll adjustment on its own to cover construction cost overrun or lower than forecast traffic volume. Approval for the toll adjustment must be granted by the Toll Regulatory Board, a government regulatory body on toll expressways.

It is worth noting that any wrongful disallowance in toll rate adjustments may result in remedies, such as compensation from the Procuring Authority of revenue foregone by the Project Company as a result of disallowance. The reason for this is that decisions made by the regulatory authority are influenced by multiple factors, including political and economic factors. Thus, the Procuring Authority guarantees to provide a remedy for foregone revenue if toll rate adjustments were disallowed when the Project Company had a valid reason to request the adjustment. The remedies can be in the form of direct payments or an extension of the operations period.

In addition to the toll revenue, the Project Company is allowed to develop areas in the land available within the corridor to provide commercial services for the users of the toll road. The Procuring Authority is entitled to receive 5% of the revenue generated from commercial services and activities by the Project Company.