15 February 2013, Business World Online

by Emilia Narni J. David

 

Japanese investors are interested in the public-private partnership (PPP) projects of the Philippines but noted the program still needs fine tuning to attract more investors and enhance competition, speakers at the Philippine Infrastructure Development Seminar said.

The seminar was sponsored by the Japan External Trade Organization (JETRO) and the National Economic and Development Authority (NEDA).

“There is a need to generate more projects and investor interest. Therefore the case for PPP is project development, closing viability gaps and extending guarantees,” said Megumi Muto, deputy director-general for Southeast Asia and Pacific of the Japan International Cooperation Agency (JICA).

She added there is also “a need for more competitors as it impacts the cost to the government and quality of execution.”

The guarantee, or contingent liability, is a financial guarantee given by the government as a risk reduction measure to ensure the project contract beyond the current administration.

“Contingent liability is the largest driver in building investor confidence and determining cost to government,” said Ms. Muto.

JICA is working with the Philippine government and with the PPP Center to enhance the sustainability of the country’s PPP program.

“We are already in talks about contingent liability and that is being handled by the Finance department. We understand, of course, that investors are conservative and want to reduce risk so that is why we are working on that,” said PPP Center Executive Director Cosette V. Canilao.

She added that foreign investors are interested in participating in many of the PPP projects, particularly the hard infrastructure programs, but need to take note of the foreign equity restrictions of the country.

Japanese firms presented technologies and methods that can be used in the various PPP projects that they are interested in, including the Batangas-Manila natural gas pipeline, monorail projects and sewerage.

So far, two PPP projects have been awarded since the government unveiled its flagship infrastructure program in 2010. These are the P1.96-billion Daang Hari-Southern Luzon Expressway link which was awarded to Ayala Corp. last December. The second is the P16.42-billion School Infrastructure Project Phase I, which was won in September by the BF Corp.-Riverbanks Development Corp. and Citicore Investments Holdings, Inc.-Megawide Construction Corp. consortiums.

Including the first phase of the school infrastructure project, the government rolled out seven PPP projects last year, namely: the P15.86-billion Ninoy Aquino International Airport Expressway 2; the P60-billion Light Rail Transit-1 Cavite extension; the P5.6-billion Orthopedic Center rehabilitation; the P1.16-billion rehabilitation of Angat power plant’s two turbines; the P13.14-billion second phase of the School Infrastructure project; the P1.72-billion automated fare collection system; and, the P17.5-billion expansion of the Mactan-Cebu International Airport.

The projects, that have yet to be awarded, are still in the pre-bidding stages.

Projects to be rolled-out this year are the North Luzon Expressway-South Luzon Expressway Connector Road, the Cavite-Laguna Expressway, Phase II of the Civil Registration System — Information Technology Project, Phase II of the Vaccine Self-Sufficiency Project, the Talisay City Plaza Complex Heritage Restoration and Redevelopment Project, the Enhanced operation and management (O&M) of the Panglao Airport, the O&M of Laguindingan Airport, the Establishment of Cold Chain Systems, the Grains Central Project, the O&M of light rail transit (LRT) line 2, the O&M of the Puerto Princesa Airport, the New Centennial Water Supply project, the Rehabilitation of Quirino Highway, the Integrated Transport System Project, the Bulacan Bulk Water Supply Project, the El Nido Water Supply and Sanitation System Project, and the Regional Prison Facilities project.

Metropolitan Waterworks and Sewerage System Chairman Ramon B. Alikpala said the New Centennial Water Source Project is expected to be bid out by July this year, with the 550 million liters per day Kaliwa Dam as the first project. Feasibility studies will be finished by April. — Emilia Narni J. David