Source: Business World, 07 December 2011
INVESTORS are still keen to participate in the country’s public-private partnership (PPP) program despite delays in the implementation of projects.
“There is a finite amount of capital and many countries in the region pushing for their infrastructure projects. But, the Philippines is ahead of many countries,” Mark Rathbone of PricewaterhouseCoopers (PwC) said in a press conference yesterday.
PwC is the consultant for two PPP projects, the Puerto Princesa and Bohol airport development, due for rollout in 2012. Company officials met with representatives of the Finance, Transportation, Health and Socioeconomic Planning departments yesterday to share the international best practices.
The country, said Mr. Rathbone, boasts of a robust pipeline of PPP deals that cut across various sectors. The government is pursuing 15 big-ticket deals next year, covering transportation, power, agriculture and health.
He also hailed the government’s efforts to update the 20-year-old Build-Operate-Transfer law to accommodate the PPP program. Financial markets are likewise very supportive of infrastructure financing, he claimed.
“Banks, infrastructure funds and constructors see the Philippines as a market to invest in,” Mr. Rathbone said.
Officials of the financial advisory giant brushed aside criticism that the Aquino administration’s centerpiece economic program was taking too long, as the 10 priority projects slated for this year failed to get off the ground due to protracted reviews.
“The worst mistake you can make is to throw an unprepared, unfinished project out in the market. It will simply not take off or it will take very long to finish,” PwC partner Richard Abadie said.
The preparation of PPP deals is a long, painstaking process, he explained. It requires rigid risk allocation, strict procurement guidelines, comprehensive performance parameters and a clear legal framework.
“When you try to source money from the private sector, they will be very critical. These are good reasons to wait,” Mr. Abadie said.
“It is crystal clear to me that the government understands the challenges in PPP and they understand the issues they have to address,” he added.
He claimed the roadblocks encountered by the Philippines were just the same as those experienced by other countries.
Finance Undersecretary John Phillip P. Sevilla, for his part, did not shy away from the issue of PPP delays.
“Have there been delays? Yes. Are we happy about it? No. But we are working very hard to learn our lessons, and we will pursue the PPP program even more aggressively in 2012,” Mr. Sevilla said during the press conference.
Two projects could still be implemented this year, Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. claimed at the sidelines of yesterday’s media briefing.
The P1.956-billion Daang Hari-South Luzon Expressway link is scheduled to be bid out on Dec. 28. The National Economic and Development Authority is also processing the final documents for the auction of the Department of Education’s construction of 10,000 classrooms in regions I, III and IV-A, he said.
PwC officials, meanwhile, also weighed in on the government’s plans to remove several projects from the PPP program and to finance these through development loans instead.
“There is not enough ODA (official development assistance) capital to fund PPP projects. You would also have to look at multilateral, bilateral and commercial financing then, such as equities and securities,” Mr. Rathbone said.
ODA is a valid option, he said, but the government must also know when to use the PPP mode, such as when it wants to keep key risks away from taxpayers.
“Moreover, ODA only supplies you with money. But is a good way of looking after an asset in its complete life cycle since it involves not just construction but also operation and maintenance,” Mr. Rathbone said. — Diane Claire J. Jiao