Workshop on Design Issues in PPP

Workshop on Design Issues in Public-Private Partnerships
Keynote Speech
of Executive Director Cosette Canilao
Lee Kuan Yew School of Public Policy, Singapore
April 10, 2015

A pleasant morning to all of you present here today!

It is truly an honor to be speaking before an esteemed audience and share the Philippine’s experience in building and implementing a sound and practical PPP program. It is my hope to be able to provide an insightful and inspiring story on what we have done, the challenges we have encountered thus far and what our plans are to continue to strengthen and ensure sustainability of our PPP Program.

As you may be aware, the Philippines has come a long way since the PPP Program was launched in 2010. Five years hence, we are proud to say that we now have a Program with a sound policy framework, established and clear institutional roles, a robust pipeline of PPP projects, and well-capacitated implementing agencies.

The government has made significant strides to address regulatory and policy constraints to ensure that PPP project preparation is seamless and projects are successfully tendered. It was not an easy feat. One might say it was a bumpy and slow start, but through the support of no less than the President himself, we have been able to accomplish more than what we expected.

PPPs are complex. It requires the strong support of the leaders and movers in the government, especially the buy in of both the oversight and implementing agencies.

Thus, when the Program was jump started in 2010, the government immediately endeavored to capacitate both oversight and line agencies and other government bodies involved in delivering PPPs. An extensive capacity building program for national agencies and local government units was put in place and executed, along with the issuance of the PPP Manuals for both national agencies and local governments as well as implementing guidelines to oversight agencies.

It is also imperative to have a strong PPP unit that will facilitate, monitor, and act as catalyst to fast-track the implementation of PPP Projects. This is the role of the PPP Center.

Cognizant of the importance of maintaining the private sector’s keen interest and support to the program, the Center worked on formulating and adopting key policies that addressed the weaknesses under the current legal framework.

These are the policy circulars on Pipeline Development, Viability Gap Funding, PPP Best Practices, Termination Payments, and Material Adverse Government Action. We have established the inclusion of the Contingent Liability Fund in our annual General Appropriations Act. Most importantly, we are pushing for the enactment of the PPP Act (amendments to the BOT Law) which will institutionalize the reforms we have put in place and further strengthen the legal framework of our proven and tested processes.

2014 was a year that showcased the strides and milestones that come with the successful implementation of the PPP program as a cornerstone of the country’s infrastructure agenda. One concrete and undeniable proof of the thriving Program is The robust pipeline of projects that we have developed and maintained in close coordination with the various implementing agencies. Through the government’s collective efforts, we were able to develop a pipeline of over 50 projects with an estimated cost of USD 26 billion.

In terms of securing the necessary government oversight approval, the PPP Center has successfully performed its facilitative role in shepherding key infrastructure projects in the Investment and Coordination Committee (ICC) and the NEDA Board. The role of the PPP Center as secretariat to the ICC for PPPs, as well the creation of a focused technical working group that evaluates PPP projects, further streamlined the evaluation and approval of PPP projects. Through the effective collaboration of the PPP Center and partner agencies, we have successfully tendered and awarded nine (9) projects totaling to around USD 2.9 billion. This is more than the six (6) solicited PPP projects awarded in the past three (3) administrations. These numbers represent not only the value of implementing PPP projects for the benefit of the people but is also an indication of increasing investors’ confidence in the transparent process and the level playing field.

The turn-out of investors participating in the bidding of projects, both local and foreign, have expanded throughout the years. We recognize the importance of having transparent and well-documented transactions. Hence, we are developing a PPP Knowledge Management Portal which includes a Virtual Data Room (VDR) system – a highly secure online facility for storing, accessing, and distributing relevant tender documents. We aim to institutionalize the use of the VDR for future PPP projects as it will further improve our processes and ensure transparency in our bidding procedures.

Several milestones can be attributed in great part to the Project Development and Monitoring Facility (PDMF) which is a revolving fund available for use by the implementing agencies to engage competent consultants in project preparation and transaction advisory services. As of date, 40 projects benefited from this facility, which includes five (5) of the awarded projects in the pipeline. Currently, the PDMF panel consists 22 consulting firms from Australia, Canada, France, Germany, UK, and USA, among others. This facility will be further expanded to hire independent consultants to assist the government during contract implementation and probity advisors to boost the confidence of the local and international business community
on the Program’s credibility.

Further assistance to implementing agencies and other stakeholders and partners in PPP implementation were done through a reinvigorated and focused capacity building program. In 2014, more than 90 local government units, 63 Government Owned and Controlled Corporations, 81 National Government Agencies, and 8 Academic Institutions were capacitated by the Center to ensure that the necessary skills and knowledge are passed on to enable these partners to develop well-structured and bankable PPP projects. We have likewise partnered with international institutions to further improve the capacity of the Center and the IAs and LGUs. We have signed a Twinning Agreement with Infrastructure New South Wales last year, which aims to enhance the Center’s competencies in the areas of contract management, knowledge management, public communications, and probity advisory.

These developments contribute firmly to the success of the Program today which has been reaffirmed by international award-giving bodies. Last year, the Partnerships UK awarded PPP Center as the Best Central/Regional Government PPP Promoter during the Partnerships Awards 2014. Recently, the program received another recognition by Infrastructure Journal. In addition, and perhaps arguably a better gauge that the Philippines is on the right track, is the numerous requests for knowledge sharing and the successful. In fact, the countries of Indonesia, Nigeria, Bhutan, Guam, and Tonga have sought guidance and assistance in developing their own PPP Programs.

Needless to say, while launching a PPP program is a complex process by itself, it can be done. All of these achievements are a testament to the lessons, efforts, and reforms that the Philippines government has learned and executed in the past years that ensured the effective and successful implementation of PPPs in the country.

We have come to realise that PPPs are highly dynamic and is always evolving. By continuously building up our pipeline and tendering projects, we get to learn from our mistakes and come up with innovative solutions to address challenges.

Looking back, the Philippines has truly come a long way since the PPP Program was launched. We owe this to the government’s firm commitment to deliver public services that will benefit the people. Much like here in Singapore, through the leadership of the late Prime Minister Lee, the support of the Philippine government was led by no less than the President Aquino. Such political will from the highest government office provided the needed leadership, strong commitment, and synergistic partnerships of all in the bureaucracy towards achieving the Program we have today.

Despite these major achievements, the Philippine government remains committed in establishing a strong PPP Program that will continue to sustain the gains it has made and improve on those that still need work. The Aquino administration would like to leave a legacy of a PPP Program that has a solid legal and policy framework; transparent, predictable, and tested procedures; and contract agreements that uphold fair risk allocation.

We hope that you are able to gain useful insights from our country’s experience in doing PPPs. I also hope that the Philippines’ experience will serve as a base case study on what a sustainable Program entails as well as serve as a good example of harmonization of theories and practical application.

As I am happy to share these milestones and challenges, I also hope to gain more knowledge on managing PPPs from our experts present here today. Again, I would like to express my sincere gratitude for this opportunity. I look forward to an engaging and productive session ahead!