Posts Tagged ‘PPP’

PH to host ASEAN Public-Private Partnership Networking Forum in December

InterAksyon, 16 November 2014
By Philippine News Agency
 
MANILA – The Philippines will host the ASEAN Public-Private Partnership (PPP) Networking Forum in Manila in December 2014.

President Benigno Aquino III made the announcement to fellow ASEAN leaders and top business officials during the ASEAN Business Advisory Council (ABAC) dialogue, which was part of the recently-concluded 25th ASEAN Summit in Nay Pyi Taw, Myanmar.

“The forum will take stock of the outcomes of recent PPP initiatives in ASEAN and will serve as an avenue for exploring the future direction of PPP efforts in the ASEAN region,” President Aquino said during his intervention at the ABAC dialogue.

“In this way, with both the public and private sectors working together, we will sooner realize our vision of an inclusive, interconnected, and progressive region, one that serves as a wellspring of opportunity for all our peoples,” he added.

He said he believes that PPPs are key to operationalizing the Master Plan on ASEAN Connectivity, which aims to address impediments to the free movement of goods and services from small and medium enterprises (SMEs), and from all other businesses and industries.

In his intervention, the Chief Executive also underscored the need to support measures to mainstream SMEs in the regional trade integration.

He cited a report from the Asian Development Bank that 96 percent of all businesses in the region are from SMEs, and that “these contribute up to 53 percent of the region’s gross domestic product (GDP)”.

In the Philippines alone, he said, SMEs make up 99.6% of the country’s commercial enterprise.

“These figures illuminate a clear path towards our goals. Indeed, the key to the success of our economic integration is a vibrant and competitive SME sector that is able to make the most of regional integration,” he said.

He shared that the Philippines has continued to support measures to mainstream SMEs in regional trade integration through more responsive trade facilitation programs.

He said supporting SMEs complement the government’s existing initiatives to make it easier to do business in the Philippines.

Among the measures being taken by the government include establishing hubs that will facilitate SMEs’ access to services, and putting up the SME Roving Academy, a learning program that helps SMEs become more competitive in domestic and international markets.

“Through these measures, many of our countrymen are empowered to live dignified and productive lives,” he said.
 

9 firms vie for LRT2 O&M

Malaya Business Insight, 12 November 2014

 

At least nine firms have expressed interest   for the P1.33 billion Light Rail Transit (LRT) line 2 operation and maintenance project, the Public-Private Partnership Center said.
Ayala-Pangilinan led Light Rail Manila Consortium, San Miguel Corp., GT Capital Holdings Inc., Marubeni Corp., D.M. Consuji Inc. and RATP Development were the first six companies that bought pre-qualification documents.
The three-year operation and maintenance contract   also attracted APT Global Inc., Global Avia and Aboitiz Equity Ventures.
The project involves the operation and maintenance of the existing 11-station line, the 4.14 kilometer extension to Masinag, Antipolo and other future expansions the government may undertake.
No bids were presented during the October submission, prompting the Department of Transportation and Communications (DOTC) to declare a failed bidding.
The pre-qualification deadline for the new bidding, originally set for November 20, was moved by the DOTC to December 15 to give interested bidders ample time to prepare the needed documents.
The LRT-2 project is set to be awarded June of next year to the firm with the lowest operation and maintenance fee. The government will still hold ownership of the transit and the fare box as the winning firm will not undertake capital spending.
Daily average passenger traffic was at 215,117 persons for the first half of the year and brought in P549 million in gross revenue collection.

 

Bidders for LRT 2 O&M contract given more time

Manila Bulletin, 12 November 2014

by Kris Bayos

 

The government has given interested bidders one more month to qualify for the bidding of the operation and maintenance contract for the Light Rail Transit (LRT) 2.

The Department of Transportation and Communications (DoTC) has deferred the bidders’ submission of qualification documents for the LRT 2 operation and maintenance project to December 15 instead of the original schedule on November 7.

Undersecretary for Legal Affairs and Chairman of the DoTC Bids and Awards Committee Atty. Jose Perpetuo Lotilla said the postponement was meant to “give prospective bidders ample time to prepare their qualification documents.”

The DoTC identified six bidders that have bought pre-qualification documents to join the auction: LRT 1 winning concessionaire Light Rail Manila Consortium, San Miguel Corp., Marubeni Corp., GT Capital Holdings Inc., D.M. Consunji Inc., and RATP Development.

The winning concessionaire will operate and maintain the existing LRT 2 line for a period of 10 to 15 years and integrate the system after the construction of the 4-kilometer LRT 2 extension to Masinag in Antipolo.

The winning concessionaire will collect the LRT 2 fare box revenue and remit it to government; maintain and procure all necessary capital spares; reinstate four heavily cannibalized trains; maintain and update the asset register of the LRT 2 system; and perform the additional services such as project management for renewals and stimulus contracts.

Under the original timetable, the DoTC said it targets to announce the qualified bidders by December 20. Submission of bids is set between May and June 2015 while the issuance of the notice of award is scheduled between June and July. The government hopes to sign the concession agreement with the winning contractor between August and September.

Aside from the operation and maintenance of LRT 2, the DoTC is also bidding out the construction contract for the four-kilometer extension of the LRT 2 from Santolan in Pasig City to Masinag in Antipolo City.

At least  P2.396 billion was allotted for the construction of 3.934 kilometers of elevated guideway or viaduct that will extend the LRT 2 eastward from Santolan Station along Marcos Highway in Pasig City up to the intersection of Marcos and Sumulong Highway.

The LRT 2 connects Recto Avenue in Manila to Santolan in Pasig City. The “newest” of the three elevated rail lines in Metro Manila, the LRT 2 is designed to carry 470,000 passengers daily but only ferries an average of 200,000 since it started commercial operation in 2003. (Kris Bayos)

Meanwhile, The existing maintenance service provider of the Metro Rail Transit (MRT) 3 system is eyeing to operate and maintain the Light Rail Transit (LRT) 2 line next.

APT Global Inc. is among the nine companies that bought prequalification documents for the LRT 2 operation and maintenance contract, according to the Public-Private Partnership (PPP) Center.

APT Global Inc., in joint venture with Global Epcom, is the existing maintenance provider of the MRT 3. The maintenance contractor came under fire after the MRT 3’s worst accident that happened last August 13 when a de-energized train overshot the tracks at Taft Avenue in Pasay and hurt passengers on board.

Apart from APT Global, Inc., firms that bought prequalification documents include Globalvia, and Aboitiz Equity Ventures, Inc.

Earlier, six entities have secured the prequalification documents. Interested bidders include Light Rail Manila Consortium of Ayala Corp. and Metro Pacific Investment Corp., San Miguel Corp., GT Capital Holdings, Inc., Marubeni Corp., D.M. Consunji, Inc., and RATP Developpment SA.

Nine groups express interest to bid for LRT 2’s O&M contract

Business Mirror, 12 November 2014

by Lorenz Marasigan

 

Public-Private Partnership (PPP) Center confirmed on late Tuesday that only nine groups secured prequalification documents for the contract to operate and maintain the Light Rail Transit (LRT) Line 2.

In a statement, the government agency named the prospective investors as the Light Rail Manila Consortium of Metro Pacific Investments Corp. and Ayala Corp., San Miguel Corp., GT Capital Holdings Inc., Marubeni Corp., D.M. Consunji Inc., RATP Development SA. APT Global Inc., Spanish firm Globalvia Inversiones S.A.U. and Aboitiz Equity Ventures Inc.

Earlier the PPP Center said 12 companies are interested in the deal, but it was not clear if all of them bought prequalification documents.

The deadline for submission of prequalification documents for the project is set on December 15. It was rescheduled from November 20 to give prospective bidders ample time to prepare their qualification documents.

The key infrastructure project aims to infuse private-sector efficiencies into the operations of the LRT 2 to provide better service levels to the riding public.

An indicative timeline showed that the bid submission date for the deal is set in May or June 2015.

The issuance of the notice of award will be a month after, hence, the signing of the concession agreement between the government and the winning concessionaire will be scheduled by August or September next year.

The private sector may start operating the railway line east of Metro Manila by second half of 2016, the document showed.

The winning bidder will take over the operations and maintenance of all 11 stations of the existing line, as well as the 4.19-kilometer LRT 2 Masinag Extension, for about 10 to 15 years.

Construction of the P9.7-billion Masinag Extension will start by January next year.

It will take the government about a year and a half to fully complete the construction of the railway extension. It will be fully operational by that same time frame.

When constructed, the new facility will add 4.14 km to the existing line.

Two additional stations will be built—the Emerald Station in front of Robinsons Place Metro East in Cainta Rizal; and the Masinag Station at the Masinag Junction in Antipolo City. It will serve an additional 130,000 train commuters from the current number of 240,000. The 13.8-km-long LRT 2 traverses the cities of Manila, San Juan, Quezon, Marikina and Pasig.

The operations and maintenance contract of the train system is one of the six key infrastructure contracts currently under procurement. Other projects are the P6.5-billion Integrated Transport System-South and Southwest Terminal Projects; the P24.4-billion Bulacan Bulk Water Supply Project; the P122.8-billion Laguna Lakeshore Expressway Dike Project; and the P19-billion New Centennial Water Source-Kaliwa Dam Project.

Since the infrastructure program’s inception in 2010, the government has awarded eight contracts so far.

Gov’t hopes to draw more water PPP bids

Business World, 12 November 2014
by Claire-Ann M. C. Feliciano

Prospective bidders have been given more time to seek prequalification for the P18.72-billion New Centennial Water Source-Kaliwa Dam Project (NCWS-KDP), an official said on Tuesday.
The Metropolitan Waterworks and Sewerage System (MWSS), the agency-in-charge for the public-private partnership (PPP) project, has moved the deadline to submit prequalification documents to early next year.
“From the original deadline on Nov. 17, the submission date of prequalification documents will be extended to Jan. 15,” Nathaniel C. Santos, chairman of MWSS’ prequalification, bids and awards committee (PBAC), said via text.
The official explained that, during the conference held on Nov. 3, interested parties asked for an extension to prepare their documents.
Mr. Santos added that MWSS has “set Dec. 22 as the last day to entertain queries and the PBAC responses to the queries will be released by Jan. 8.”
MWSS earlier this month identified eight companies that bought prequalification documents and attended the conference for the NCWS-KDP. These were: San Miguel Holdings Corp.; Filinvest Development Corp.; DM Consunji, Inc.; Megawide Construction Corp.; Prime Metroline Holdings Inc.; San Lorenzo Ruiz Builders & Developers Group, Inc.; Abengoa Abeinsa Business Development; and Obrascon Huarte Lain S.A.
Bidding date for the project has yet to be announced.
The NCWS-KDP is part of efforts of the government to provide another water supply source for Metro Manila. “The objective of the project is to ensure water security, increase Metro Manila’s raw water supply to meet future potable water demand, and as a redundant water source, thereby reducing total dependency on the Angat Dam reservoir,” read the invitation to prequalify published last month.
Located in Norzagaray, Bulacan, Angat Dam currently provides more than 90% of Metro Manila’s potable water supply.

MWSS last June said NCWS-KDP will involve a 25-year contract for a dam with 600 million liters per day (MLD) capacity, a 2,400 MLD water conveyance tunnel and access roads, as well as bridges and a drainage system in General Nakar, Quezon.
Another water source development project for Metro Manila involving construction of Laiban Dam in Tanay, Rizal will also be auctioned off by the MWSS. “This is a very big project, so it will be done in phases. We’re not sure yet of the timeline for the Laiban Dam but we want to effectively implement the Kaliwa Dam first,” PPP Executive Director Cosette V. Canilao had said last June.
Besides the NWCS-KDP, MWSS has already started the bidding process for the P24.4-billion Bulacan Bulk Water Supply Project (BBWSP).
On Oct. 20, five groups submitted prequalification documents for the project — the first water PPP rolled out by the government. These were: the consortium of First Philippine Holdings Corp. and Spain’s Abeima; Filinvest Agua Consortium (composed of Filinvest Development Corp., Tecnicas de Salinizacion de Agua, SA; and Black & Veatch Pte Ltd.); a consortium of San Miguel Corp. and Korea Water Resources Corp.; Team Polaris-Manila Water Consortium (Manila Water Company, Inc., M.E. Sicat Construction, Inc., and JH Patawaran Construction, Inc.); and Prime-Alloy Water Consortium (Prime Water Infrastructure Corp., Malaysia’s MTD Capital BHD and United Kingdom’s Biwater International Ltd.).
The BBWSP involves the design, financing, construction, development, as well as operation and maintenance of facilities that will supply treated water to 22 Bulacan water districts. The project — to be conducted in three phases — will be executed under a 32-year build-operate-transfer contract.

The government has so far awarded eight PPP projects since the flagship infrastructure thrust was launched in late 2010, namely: P1.72-billion Automatic Fare Collection System; P2.01-billion Daang Hari-South Luzon Expressway Link Road; P5.69-billion modernization of the Philippine Orthopedic Center; P15.52-billion Ninoy Aquino International Airport Expressway; P16.42-billion first phase of the PPP for School Infrastructure Project (PSIP); PSIP’s P3.86-billion second phase; P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building; and P64.9-billion Light Rail Transit Line 1 Cavite Extension.

 

The Role of PPP in DRR and in Building Sustainable and Resilient Communities: Lessons Learned and Way Forward

Senate of the Philippines
Press Release

 

SENATOR LOREN LEGARDA
The Role of PPP in DRR and in Building Sustainable and Resilient Communities: Lessons Learned and Way Forward
Top Leaders Forum 2014
10 November 2014 – SMX Convention Center

There is a long history of cooperation and selflessness in the face of crisis and disasters. Haiyan, Ketsana, Parma, just to name a few, brought massive destruction and death, and yet, it is during these times of crisis that we see people establishing deep social connections to alleviate the plight of victims.
Why, we should ask, do such moments of selflessness become massively evident only in times of disasters?

Author Rebecca Solnit of the book A Paradise Built in Hell succinctly captured this observation by highlighting the remarks of an interviewee who said, “The great majority of people are calm, resourceful, altruistic or even beyond altruistic, as they risk themselves for others. We improvise the conditions of survival beautifully.”

We need to examine ourselves if, indeed, the best way to bring out the best in ourselves is by trying to help others survive after each disaster; or would it not be more practical and reasonable to approach today’s risks with concrete measures that diminish our vulnerabilities?

The Asian Development Bank reports that half of the world’s megacities with populations of over 10 million are in Asia. ADB further reports that, “while their economic growth has lifted millions out of poverty, these cities are still home to more than two-thirds of the world’s poor, many living in grim city slums and most vulnerable to the impacts of climate change and the onset of increasingly severe natural disasters.”

Global disaster statistics for 2013[1] show that 330 disasters triggered by natural hazards occurred in the year. These disasters killed 21,610 people, affected 96.5 million people, and caused US$ 118.6 billion worth of economic damages. Considering the global scenario, these figures are significantly lower than the annual average statistics from 2003-2012. But when we look at regional and country experiences, the story becomes remarkably different.

China, the United States, Indonesia, the Philippines and India are the top 5 countries most frequently hit by natural hazards. In 2013, two disasters killed more than 1,000 people–typhoon Haiyan or Yolanda in the Philippines killed 7,354 people and the monsoonal floods in June in India caused 6,054 deaths.

Haiyan affected 16.1 million people in the Philippines, while typhoon Phailin had 13.2 million victims in India, and typhoon Utor affected 8 million people in China.

Haiyan, which resulted to US$ 10 billion in damages, was also one of the top two most damaging disasters in 2013, along with the flood in East and South Germany that caused US$ 12.9 billion worth of economic damages.

Haiyan, like other disasters in previous years including typhoons Ketsana (Ondoy), Parma (Pepeng) and Bopha (Pablo), has placed the Philippines at the top of disaster statistics.

Disasters as an enemy are becoming more enigmatic and formidable. These disasters have made the government realize that it is no longer “business as usual.” The shift from reactive to proactive stance in dealing with natural hazards is a must.

This brings me back to my earlier question. Should we not build in ways that lessen our vulnerabilities?

Pricewaterhouse Coopers reported that infrastructure deficit across Asia Pacific is substantial. It cited that between US$800 billion and US$ 1.3 trillion annually is necessary for infrastructure projects from now until 2020.

The Philippines, which is ramping up its spending on infrastructure, estimates its funding requirement at US$46.69 billion for 2013-2016.[2] For 2015 and 2016, infrastructure allocations are estimated at 4% and 5% of the country’s GDP, respectively.

These developments beg the question, “What kind of infrastructure are we building?”

Resilience is said to be one of the remarkable strengths of our citizens, but what is our understanding of “resilience?” Is it relevant only to the way we rebuild our communities after each disaster?

The task of “building better” starts not after each disaster, but long before calamities strike. Investing in and building the right infrastructure at the right place is a first step to developing safer, resilient, and sustainable communities.

The task of ensuring a safer tomorrow begins with the integration of disaster risk reduction (DRR) and climate change adaptation (CCA) in national development planning, budgeting and financial management.

The government need not be alone in building more resilient infrastructures and communities; after all, reducing risks and building up resilience entail the participation of community members and institutions alike.

Following Haiyan, the Philippine government has clearly seen the importance of embracing the concept of building back better. Building better, however, will only be meaningful if the standards we use comply with resilience benchmarks. Building better, but still below the standards, is building less. The private sector has a crucial role here.

In September of this year, Secretary Arsenio Balisacan of NEDA, announced that “increased public spending will be supplemented by private sector investments through PPP.” Php553 billion worth of infrastructure projects are expected to be rolled out in the next 12 months. The Aquino administration has awarded eight PPP infrastructure projects worth Php127.5 billion since four years ago. Such partnership, in the light of the concept of “building better” and in the face of our society’s deep need for effective disaster risk governance, is indispensable.

Though historically PPPs have been favored for basic services and infrastructure, this partnership paradigm could very well help fuel the country’s Disaster Risk Reduction thrusts.

DRR is a relatively new area for public-private partnerships, as traditionally, private sector involvement in disaster management has focused largely on response and relief. But businesses have the potential to bring in core competencies for shaping innovative and sustainable solutions and therefore play a vital role in building resilience.[3]

To build resilience means to invest in DRR and CCA. We need better investments in flood control, forest management, hazard identification, mapping and assessment, research and development, preparedness, and risk financing.

In doing so, the government would greatly need support from the business sector. Investments can come in various forms such as financial, technical assistance, research and development support.

In Vietnam, part of the government’s National Strategy for Natural Disaster Prevention, Response and Mitigation is the business community’s involvement in various activities of disaster preparedness and response. Local companies and provincial governments are working together to improve disaster information dissemination, create public awareness on disasters, and carry out training and capacity building activities.[4]

In South Korea, the Disaster Mitigation and Countermeasures Task Force was formed in 2006 and engaged the private sector in the area of disaster causes analysis and survey. Local government officials and experts from the private sector held conferences and developed recommendations to the government to improve disaster management laws and regulations.[5]

In the Philippines, we have been engaging the private sector in our DRR and CCA initiatives.

The government’s Nationwide Operational Assessment of Hazards or Project NOAH was created with the support of several private business entities, particularly information communications technology and telecommunications companies.

Project NOAH is a program that uses science and technology in building capacities for disaster risk reduction and management.

This year, the Free Mobile Disaster Alerts Act was enacted into law, through which the services of telecommunications companies may be tapped by government in sending out disaster alerts and other relevant information to mobile phone subscribers located near and within areas that would be affected by an impending natural hazard.

The private sector is a key partner in DRR. They supply the wherewithal, including the technical expertise, to ensure that development is pursued strategically at the outset.

It is vital, however, that predictability is made a key feature of our business environment lest the partnerships to promote DRR also turn into disaster itself.

It is also vital that the private sector should put disaster resilience at the core of their business strategies. The heightened engagement of the business sector in DRR is crucial in preventing substantial business losses and economic development setbacks resulting from disasters of unprecedented scale.

The business sector is a vital partner of the government in ensuring effective disaster risk governance. No community can exist on a sustainable basis by the sheer efforts of government alone.

The 2015 UNISDR Global Assessment Report on DRR is coming out in March, and it will likely indicate that development is becoming more and more elusive with the severity of the risk dilemma. Recent reports of the Intergovernmental Panel on Climate Change expound on the grim scenario for the future. Humanity may very well be heading straight towards the brink.

I therefore call for a ‘cultural revolution’, for humanity to adapt to a fast changing environment and to adopt a risk-informed lifestyle. We must now live life on the planet mindful of the need to reducing risk to life, livelihood and property. This should apply in all aspects of our daily life — in designing a product, in engineering a structure, and in planning development programs or projects.

This cultural transformation for a safer world entails a new way of thinking and doing our everyday business that prevents socio-economic losses and ensures genuine human development.

Thank you and good morning.

______________________

 

[1] Annual Disaster Statistical Review 2013: The numbers and trends. Centre for Research on the Epidemiology of Disasters (CRED), 2014. 
[2] http://www.interaksyon.com/business/97183/analysis–philippines-revives-infra-push-to-sustain-economic-gains 
[3] The Development of a Public Partnership Framework and Action Plan for Disaster Risk Reduction in Asia. UNISDR, 2009. 
[4] Private Sector Engagement in Disaster Risk Reduction. Asian Disaster Preparedness Center, Bangkok. 
[5] The Development of a Public Partnership Framework and Action Plan for Disaster Risk Reduction in Asia. UNISDR, 2009.

Transparent PPP gets investors

Manila Standard Today, 02 November 2014

By Jennifer Ambanta

 

The Foundation for Economic Freedom said Sunday transparency and good governance in public-private partnership projects started to attract the attention of investors.

FEF said the government made a good decision in funding the transparency and monitoring of the projects in the PPP pipeline. “Funds allocated for monitoring and supporting the financial and technical capacity of agencies for project development activities are administered efficiently, with 93 percent of such funds allocated to support the project pipeline,” it said.

Data showed that since 2010, the government had a robust pipeline of 57 PPP projects, eight of which were awarded.

FEF said the improvement in PPP might be attributed to three specific actions undertaken by the government. “First is the institutional strengthening and leadership,” it said.

Think tank urges reforms based on PPP experience

The Philippine Star / ABS-CBN News, 01 November 2014
By Ted P. Torres
 
MANILA, Philippines – A high profile think tank has urged government to institutionalize reforms based on the four-year performance of the Public-Private Partnership (PPP) program.

In a statement, the Foundation for Economic Freedom (FEF) also recommended that government allow equal opportunities to unsolicited proposals and Swiss Challenges.

The FEF is a non-government organization (NGO) chaired by former Finance Secretary Roberto de Ocampo. Its other prominent members include Romeo Bernardo, Calixto Chikiamco and Ernest Leung.

The group noted there have been gains in developing the country’s infrastructure with the joint participation of the government and private sector bu still challenges abound.

“The challenge lies in sustaining the momentum,” it said.

The first requires legalizing the successful mechanisms put in place, which includes the institutional reforms under Executive Order (EO) 8 and 136, such as the inter-relationship between the National Economic and Development Authority (NEDA), the PPP Center, the PPP Governing Board, and the Project Development Monitoring Facility (PDMF) Committee, as well as the administration of agency-level support received through the PDMF.

“Second, we must build on these mechanisms and improve the implementation of Public-Private Partnerships by among others developing the competitive selection process by allowing unsolicited proposals to be subjected to public bidding and lengthening the period for the Swiss Challenge,” the FEF said.

The group likewise recommended that the joint venture arrangement, or any other future PPP arrangements, be subject to the uniform application of the law, as well as standardizing basic PPP terms and conditions.

The FEF also said that not only the interests of government and the private investors be balanced, but also take into consideration the interest of the consuming public.

“By giving the private sector a stake in nation building, we believe the country can move that much closer to meeting its infrastructure needs,” it said.

Since 2010, the government has a robust pipeline of 57 PPP projects, eight of which have been awarded and were solicited projects originating from the government’s national or local priority list.

Funds allocated for monitoring and supporting the financial and technical capacity of agencies for project development activities are administered efficiently, with 93 percent of such funds allocated to support the project pipeline.
 

The PPP promise, a work in progress

Business World, 02 November 2014
By Romeo L. Bernardo
 
AFTER A FALSE START back in 2010, the Aquino administration’s flagship public-private partnership (PPP) program finally roared to life. Several large projects have been auctioned off under seemingly competitive conditions that, contrary to model forecasts, yielded substantial revenues for the government. Moreover, the government, with the help of a donor-sponsored project development fund, has built up a pipeline of about 50 projects for PPP that it has taken on international road shows to attract more foreign investors.
 
However, as the government exhausts the first batch of projects — which featured revenue streams that appealed to private investors — and moves to more complicated greenfield projects, there is a high risk of another stall. Having observed closely the problems the government encountered in the newly awarded projects, we’ve identified some policy, institutional and political issues that, left uncorrected, will make it hard to sustain the winning streak.

After a false start and a few years limping along, the Aquino government’s flagship PPP program finally roared to life. In relatively quick succession, the government bid out or awarded four projects worth P125 billion and rolled out six more costing about P170 billion. What was particularly surprising was that the auctions yielded substantial concession fee payments to the government, as against pre-bid financial model results showing that the government would have to provide subsidies to enhance project cash flows.

Encouraged by the successes, the government through the PPP Center has lined up another seven projects worth about P180 billion for approval by the National Economic and Development Authority (NEDA) board, and is preparing feasibility studies for 10 other projects. In all, there are about 50 projects in the PPP Center’s pipeline which the government is also actively marketing to foreign investors through a series of international road shows.

The mood has not always been this upbeat due largely to unmet expectations following the government’s high publicity launch of the program back in 2010. Then, the much-hyped “PPP is the solution to the infrastructure shortage in the country” failed to consider that in the wake of controversies surrounding failed PPPs in the past, both sides of the partnerships had their guard up and were distrustful of each other. In particular in the aftermath of the Asian crisis, the public sector had to grapple with and absorb some of the liabilities in PPP contracts, and for years leading up to 2010 preferred to manage the risks from contingent liabilities by avoiding them altogether. In turn, the private sector was particularly leery of government contract promises that the latter had time and again failed to keep, notably delays in tariff adjustments in most sectors — power, water, rail, toll roads — particularly during politically sensitive periods.

Moreover, there were very few market-ready projects in the pipeline at the time and fast-tracking last-mile adjustments to ready projects was constrained by technical limitations in implementing agencies. It was thus a slow process of learning by doing on a per-project basis, tentatively delineating risks among the parties involved, with the government deftly testing what risks the market could bear through actual biddings of smaller projects.

These included (a) a small 4-kilometer (km) toll road in December 2011 that very soon became stuck in right-of-way (ROW) disputes, and (b) a project to build classrooms, awarded in September 2012, that was the first of its kind in that it relied solely on government payments for its cash flows and thus was not able to attract more bidders willing to assume congressional appropriations risk. Critics also pointed out that this project and its second phase the following year lacked features of true PPPs in that the private sector merely handled construction of the schools and were not exposed to market and operating risks.

The first major win for the Aquino government was the P15.5-billion, 7.75-km, four-lane elevated NAIA Expressway project that had been in the drawing board for decades and was finally brought to market with donor technical assistance. Albeit it attracted only two bidders, the auction, won by a consortium led by one of the large domestic conglomerates (SMC) in May 2013, yielded P11 billion in concession fees to the government and by early 2014 had already broken ground. Another win six months later was a five-way bid in November to install a P1.7-billion single-ticketing system for Metro Manila’s rail system, where the winning bid was a P1.1-billion payment to the government.

But it has not become easier. The latest auctions, involving three multibillion-peso transport projects, have been uphill struggles for both the government and the private sector. The challenges that have emerged during the bid stage are reminders of the inherent difficulty and associated time lag of doing PPPs, especially in a developing country like the Philippines where institutions remain weak and bidders take for granted that calling on the courts, Congress or the President to intervene on their behalf is part of the rules of the game. Such politicization of the formal PPP processes tarnishes the program’s image and dulls investors’ appetites. Here are a few of the project holdups:

LRT LINE 1 EXTENSION
The biggest and the most complicated one to date, it has been subjected to repeated feasibility studies. The first bidding in August 2013 failed due to misallocation of risk (shifting to the private sector the uncertainty of real property taxes) and the insufficiency of allowed subsidy. It was rebid in May this year with the lone bidder (out of seven prequalified) winning. The award was delayed to September by a still ongoing legal tussle involving the location of a “common station” shared with another rail line.

MACTAN-CEBU AIRPORT TERMINAL
Seven bidders showed up in November 2013, with the consortium of Megawide Construction Group, which partnered with India’s GMR Infrastructure, winning the bid. Citing conflict of interest, the losing bidder challenged the qualifications of the winning group, which was then subjected to a Senate inquiry. Even with a legal challenge filed before the Supreme Court, the project was awarded in April, delayed by a few months.

CAVITE-LAGUNA EXPRESSWAY
Four groups vied in the June bidding, with the SMC consortium disqualified based on a noncompliant bid bond. Of the three remaining, the Ayala-Aboitiz consortium offered the highest premium, amounting to P11.66 billion. The SMC group claimed that it would have won with a P20 billion had it not been disqualified on a “technicality.” It appealed to the President to overturn its disqualification and the Palace issued an order in late June suspending the awarding of the project. The issue has yet to be resolved.

(Next week: Moving forward)

This piece is based on a GlobalSource report by Christine Tang and Romeo Bernardo

Romeo Bernardo was finance undersecretary during the Cory Aquino and Ramos administrations, and board director of Institute of Development and Econometric Analysis Inc.

Bhutan looks at Phl PPP School Infra Project

The Philippine Star, 30 October 2014
 
MANILA, Philippines – Officials of the government of Bhutan recently paid a visit to one of Megawide Construction Corp.’s infrastructure projects as part of their three-day itinerary to learn more about the public-private partnership (PPP) model and the details of specific construction projects under the scheme.

Megawide, together with faculty and students of the Cabilang Baybay Elementary School in Carmona, Cavite, welcomed the nine-member delegation, with representatives from the PPP Center and the Department of Education (DepEd) taking part in the presentation of the PPP school infrastructure project to the Bhutan officials composed of department secretaries and senior planning officers from various government agencies.

“The purpose of our visit is to hear and learn from the experience of the Philippines with regard to undertaking infrastructure projects under the public-private partners model. For most of us, we are hearing about PPP schools for the first time,” said Bhutan Economic Affairs Secretary Sonam Tshering, who headed the delegation.

“We know that PPP projects involve roads and other such structures. So we’d be glad to hear about how Megawide and the Department of Education entered into this partnership [using a] successful model,” Tshering added.

After DepEd’s representative – engineer Annabelle Pangan, officer-in- charge of the Physical Facilities and Schools Engineering Division – gave an extensive presentation of the agency’s role in the PSIP team-up including facts and figures on the different phases of the venture, Megawide’s marketing manager Genna Mijares and regional director for Region 4-A John Harold Manuel provided the delegates a closer look at the project, which involves the construction of nearly 10,000 classrooms at 2,800 job sites.