Public-Private Partnership Center

MANILA (Xinhua) — The government of Philippine President Benigno Aquino III will fast-track, starting this month, infrastructure development throughout the country through massive release of public funds as well as through the public-private partnership (PPP) program with the participation of private investors both local and foreign.

Early this month, Philippine Budget Secretary Florencio Abad announced the release of 141.8 billion pesos (3.2 billion U.S. dollars) for infrastructure projects from the recently-enacted General Appropriations Act (GAA) of 2012.

Abad said that the infrastructure projects, which will be implemented within this month, include national roads and bridges; airports, seaports and lighthouses; classrooms and other educational facilities; potable water supply systems, irrigation and post-harvest facilities; and flood control and slope protection structures.

The sum is part of the 182.2 billion pesos (4.15 billion U.S. dollars) total outlay for government infrastructure under the 2012 national budget. It is 25.6 percent higher than the 2011 allocation and represents a higher 1.6 percent of gross domestic product (GDP) compared to the 1.4 percent in 2011.

According to Abad, the early implementation of key infrastructure programs at the start of the year “can hit the ground running” for the priority projects of the Aquino administration in 2012.

He said it would also reinforce President Aquino’s commitment to his Social Contract with the Filipino people and underscores his mission to ensure economic development and transparent government spending.

In addition to the outlay from the national budget for infrastructure projects, PPC Center Executive Director Cosette Canilao also announced the bidding for a 10.4-billion-peso (239- million-dollar) classroom contract, the first PPP project to be awarded this year after the much-delayed program was finally launched last December with the award of the Daang Hari-South Luzon Expressway project, south of Manila, to the Ayala Corp., a local conglomerate.

The latest project, to be implemented by the Department of Education, involves the construction of 9,623 classrooms for 2,300 elementary and secondary schools in Ilocos Region, Central Luzon and the growth centers in southern Luzon.

According to Canilao, the government also hopes to jump-start the bidding of the 900-million-peso (20.5-million-dollar) Vaccine Self-Sufficiency Program of the Department of Health in the first quarter, to be followed by six more projects in the second half of 2012.

The Philippine government intends to implement at least eight of 16 PPP projects this year in its bid to recover ground lost due to delays in its centerpiece infrastructure scheme.

These include the 5-billion-peso (113-million-dollar) modernization of the Philippine Orthopedic Center and four projects under the Department of Transportation that include the improvement of major airports in the provinces.

Other PPP projects targeted for rollout this year include the 4. 2-billion-peso (95.7-million-dollar) Puerto Princesa Airport Development Project; 20.28-billion-peso (462-million-dollar) North Luzon Expressway and South Luzon Expressway Connector project; Cavite-Laguna Expressway; LRT-2 East Extension/Operation and Maintenance contract; Corn Bulk Handling and Transshipment System project; and the Balara Water Hub in Quezon City.

The Philippine government has invited foreign groups to invest in the PPP projects in the country.

Early last year, a high-level economic mission led by Finance Secretary Cesar Purisima visited China to encourage state-owned Chinese firms to participate in the bidding of PPP projects.

But sources said that most Chinese officials are still awaiting the outcome of the scheduled renegotiation of the NorthRail project, which was approved during the administration of former President Gloria Macapagal-Arroyo. The project is being funded by a concessional loan from the Chinese Export-Import Credit Agency.

The project, which would connect Metro Manila to the Diosdado Macapagal International Airport at the Clark Special Economic Zone, a former U.S. military facility some 80 kilometers north of Manila, has been delayed due to problems on right of way and the relocation of squatter colonies along the proposed railway tracks.

Completion of the first phase was moved from 2007 to 2013 while the total cost had ballooned from 1.2 billion to 1.8 billion U.S. dollars.

During Aquino’s state visit to China in September last year, Aquino and President Hu Jintao have agreed to have the NorthRail contract renegotiated.

Despite the delay in the NorthRail project, Canilao said the government was confident that more PPP projects would take off this year, in contrast to last year’s slower-than-expected rollout.

But University of the Philippines Economic Professor Benjamin E. Diokno was quoted by reports as saying that the PPP roll-out “will not make a big contribution to growth this year” unless the projects actually take off and people and resources are mobilized.

Diokno said an invitation to bid is at the very early stage of the bidding process. “The process goes through invitation, submission, opening of bids, award, notice to proceed and mobilization… [but] at least it’s moving, though rather slowly,” Diokno, a former budget secretary, said.

Canilao has admitted that actual construction of a PPP project could start six to eight months after it is awarded to the winning bidder. In the case of the school-building program — even with a January rollout — construction will most likely take place in late December or early January 2013, she said.