June 19,2011, BusinessWorld
CANBERRA — Australia has more than doubled funding to help the Philippines start private-public sector partnership (PPP) projects, announcing up to $9 million in additional co-financing arrangements with multilateral agencies.
The Australian Agency for International Development (AusAID) will tie up with the World Bank and its private sector financing arm, the International Finance Corp. (IFC), to put more PPP projects in the pipeline, an AusAID fact sheet released after the Philippines-Australia Ministerial Meeting last week said.
Co-financing with the IFC and World Bank will involve grant funding of $4.5 million each over a three-year period to 2013. This is on top of an $8.5-million co-financing deal with the Asian Development Bank (ADB) announced in April, in which AusAID will provide $7 million. AusAID put total grants for the three programs at approximately $15 million.
Funding will “help carry out successful PPP projects and improve the government’s capacity to develop, package, competitively tender and implement PPP projects. It will also seek to facilitate a more enabling policy, legal, regulatory, and institutional framework for PPP,” AusAID said.
The AusAID-IFC funding will focus on “quick wins” and fast-track high-priority PPP projects up to the awarding of contracts. Consultants will help analyze legal and regulatory risks, assess financial, social and environmental concerns, and draw up agreements.
“Australia’s support is contingent on the IFC securing a mandate for specific PPP projects and matching Philippines Government contributions, together with ‘success fees’ from winning bidders,” AusAID said.
The separate program with the World Bank is aimed at sustaining the PPP pipeline “after some ‘quick wins’ and to develop and test PPP models in sectors with limited experience with standard PPP transactions.” Australia will fund, through the World Bank, “technical advice” to the Public Works, Transportation, Energy, Agriculture, Heath, and Education departments as well as local governments.
The earlier announced AusAID-ADB grant will be for a technical assistance project to help the Philippine government “develop a stronger policy, legal, institutional and regulatory environment for PPPs,” as well as improve the capacity of the PPP Center under the National Economic and Development Authority to implement projects.
“It will also provide financial support to the [Philippine] government’s Project Development and Monitoring Facility (PDMF) to fund transaction advisory support for the preparation of bankable PPP projects,” AusAID said.
AusAID will contribute $6 million to the PDMF — a revolving fund to help government agencies carry out project development and present well-structured projects to investors and lenders — which will be matched by an initial $7.8 million from the Philippines.
A joint statement released at the conclusion of the Philippines-Australia Ministerial Meeting last Thursday in Canberra said both sides recognized the “potential of PPPs for further deepening commercial linkages between the two countries, given the strengths of Australian infrastructure-related companies.”
Australia took note of the Aquino administration’s “reform agenda,” which the statement said “promises to improve the business environment while driving economic growth and poverty alleviation.”
“Australian Ministers announced new initiatives on Public-Private Partnerships to boost private sector investment in critical infrastructure; to progress important public financial management reforms; and to use state-of-the-art technology to map natural disaster and climate change risks across densely populated Metro Manila,” the statement said.
Craig Emerson, the Australian Trade minister, said in a joint press conference with Philippine officials last Thursday that Australia would share its expertise on PPPs, which he described as “an exciting new chapter” in the Philippines’ economic history.
The Australian government said total development assistance to the Philippines had been increased slightly to A$123 million for 2011-2012 from A$118.1 million in 2010-2011.
