Source: Philippine Star
MANILA, Philippines – The Department of Transportation and Communications (DOTC) is tapping official development assistance (ODA) to finance the infrastructure development aspect of projects to be undertaken under the government’s Public-Private Partnership (PPP) program.
The implementation of the PPP, the banner program of the Aquino administration and which was supposed to begin with the privatization of the operation and maintenance (O&M) of MRT 3 and LRT 1, has been delayed due to ongoing reviews by each government agency-proponent.
DOTC Secretary Mar Roxas said the reviews are proceeding with regularity. “The one key difference is that we are reconfiguring the financing of many projects so that we can avail of the long-term, low-interest capital that is available to the government,” he said.
The Metro Pacific group, led by Manuel V. Pangilinan, has expressed interest in undertaking the O&M of MRT 3 and LRT 1 as well as bidding for the privatization of the NAIA terminals.
Meanwhile, San Miguel Corp. (SMC) president Ramon Ang said his group will also participate in the bidding for all PPP projects.
Roxas explained that as originally conceived, several of these projects could have been concession agreeements with the private sector. “We have reconfigured the projects so that the large basic hard infrastructure will be undertaken by the government availing of low interest, 30-year money that is in ODA. And we will then subsequently privatize the operation and maintenance aspect,” he said.
“In short, the area where the private sector is good which is in operations, maintenance, disciplines, timetables and so forth, we will avail of that by having them operate it through the concessionn agreements. But the hard infrastructure, the building of the railway line for example, will be done by the government through bidding it to the private sector but the government will avail of, for example, one percent, 30-year money that is available to it,” he added.
But the projects have remained constant, Roxas said. These include the LRT 1 extension to Bacoor, Cavite, the LRT 2 extension to Masinag in Antipolo, the airport in Puerto Princesa and Laguindingan, the additional low-cost terminal in Cebu.
“All of these projects are the same, we studied and reconfigured the financing element and the sequencing element so that in fact we can have this at the lowest possible cost to the public. There will still be user fees but at least these user fees hopefully will not include recoupment of the capex, because the capex would be financed through outright ODA, governmental loans. In that way, expect that it will be more reasonable user fees,” the DOTC chief said.
Roxas added that they expect not to be able to have to guarantee as previous governments did in MRT. “They had to guarantee ridership and returns regardless of what would actually happen. So in this way, the government knows exactly what it will pay and what it is going to get for the resource and the private sector then bears the market risks for undertaking the O&M,” he said.
He also revealed that the projects will have to go through detailed engineering and financial closure and that always takes time. “I would say that substantially there has not been any slippage. I have reconfigured the financial structure so that the feasibility study relative to financial structure is more coherent. The biddings for the detailed engineering may happen earlier.
What we are trying to do in reconfiguring is to put the market risks to the private sector. The execution risks, meaning the building of the infrastructure with the low-cost money, will be on the low-cost side,” he noted.
