Source: Business World, 24 November 2011


THE GOVERNMENT’S delayed public-private partnership (PPP) initiative could finally take off next year with 15 projects having been tentatively scheduled for rollout.

“We are looking at bidding out 15 projects next year; at least seven [projects] in the first half and eight in the second half,” said Cosette V. Canilao, executive director of the state-run PPP Center, during a Financial Executives Institute of the Philippines forum yesterday.

She stressed, however, that the list was “indicative” and would be reviewed “periodically.”

“This is just an indicative project rollout schedule, which is still dependent on the feasibility studies and approval from the [National Economic and Development Authority] Board and the Investment Coordination Committee,” Ms. Canilao said.

The first semester schedule comprises:

• the Puerto Princesa Airport Development Project;

• North Luzon Expressway-South Luzon Expressway Connector Project;

• Vaccine Self-sufficiency Project;

• operations and management of the Laguindingan Airport;

• common automatic fare collection system for Metro Manila’s light railways;

• Mactan Cebu International Airport New Passenger Terminal Building Project; and

• the operation and maintenance (O&M) of hydropower plants (Agus hydroelectric power plants turbines 4 and 5, and Macau Multi-hydro Power Plant)

The latter half of 2012, meanwhile, could see the following rolled out:

• Philippine Orthopedic Center Modernization Project;

• Cavite-Laguna (CALA) Expressway;

• New Bohol Airport Development Project;

• a new water supply project involving a dam and water treatment plant for Metro Manila;

• establishment of cold chain systems;

• operation and maintenance of the Light Rail Transit-2 (LRT-2) East Extension;

• Corn Bulk Handling and Trans-shipment System Project; and

• the Balara Water Hub.

Rollout, Ms. Canilao clarified, means publishing invitations to bid. The actual project auction and awarding schedules still have to be determined by the government.

“Depending on the feasibility studies, some projects might go back to the pipeline and some that are in the pipeline might be included in the initial list,” Ms. Canilao said.

Her presentation stated that 43 projects were currently “in the pipeline,” including 13 under the Transportation department, nine under the Public Works department, two under the Metropolitan Waterworks and Sewerage System, and two more under the Agriculture department.

Ms. Canilao’s list represents an overhaul of the goverment’s initial 2011 PPP schedule, which involved 10 priority projects. Seven remain on the 2012 list but two — the Clark Airport Project and LRT-1 Interim Operations and Management Project — were relegated to being “in the pipeline” and another — the Legaspi Airport Project — was dropped.

“The Legaspi Airport project was reviewed by the Transportation department, [which determined] that rather than a PPP scheme, the government will instead undertake it through direct implementation,” Ms. Canilao explained.

Another project, the P15-billion O&M contract for the Metro Rail Transit-3 that was lumped with the LRT-1 project in the 2011 schedule, is also off the list. The Transportation department has decided to split the deal into two anew and Ms. Canilao said a review is still ongoing.

Commenting on the announcement, International Finance Corp. resident representative Jesse O. Ang said the primary issue in the rollout of PPP projects was the challenge of creating a “robust” pipeline.

“The reality is PPP programs will take time … but the issue should be structuring the projects, preparing them, and how the risk will be shared between the private and public parties,” Mr. Ang said at the forum.

Neeraj Jain, Asian Development Bank country director, said it would be better for the government to take its time reviewing projects.

“This is a period very well spent in laying foundations for programs rather than rushing the projects … It’s better to have well-prepared projects,” Mr. Jain said.

Benjamin Philip G. Romualdez, vice-president of the Philippine Chamber of Commerce and Industry, said the government should consider hurdles such as constitutional limits on foreign ownership.

“There are legal obstacles, for example, the 40% limitation on foreign ownership … because the PPP program was meant to attract a lot of foreign investors for infrastructure projects,” he said.

Eduardo V. Francisco, president of BDO Capital and Investment Corp., for his part said he disagreed with the government’s plan to have some projects funded through official development assistance (ODA).

“The ODA [funding scheme] may result in a non-optimum deisgn and the firms will be stuck in a contract that is so expensive,” Mr. Francisco said. “All the projects should be kept open to non-ODA schemes.”

Jaime Faustino, co-chairman of the American Chamber of Commerce of the Philippines, Inc.’s infrastructure and transportation committee, said the PPP scheme could find success if “there is focus on a few projects such as the LRT-1 South Extension project, Line 2 East Extension, CALA Expressway, DepEd’s (Department of Education) 10,000-classrooms project, bridges and the Clark Budget Terminal project.”

Ms. Canilao said the government was looking into publishing an invitation to bid for the School Infrastructure Project before year-end.

The government, after launching the PPP initiative with fanfare late in 2010 and declaring that it would bolster 2011 economic growth, has yet to bid out a single project.

The MRT-3/LRT-3 deal was the first to be offered in the first half and many investors quickly expressed interest. A change in leadership the Transportation department, however, led to the project’s shelving.

Another deal, the P1.95-billion Daang Hari-South Luzon Expressway Link road, is scheduled for bidding next month. — Kathleen A. Martin