APEC PPP Experts Advisory Council Meeting
by Executive Director Cosette Canilao
Taal Vista Hotel, Tagaytay
March 4, 2015
A pleasant morning to all of you present here today!
Together with Ambassador Neil Reeder, co-chair of the APEC PPP Experts Advisory Panel, allow me to welcome all of you to this momentous event.
We are delighted to see APEC economies come together to exchange knowledge on PPPs. I hope I will be able to share the Philippines’ experience in implementing the PPP Program and in turn, benchmark on best practices to successfully implement projects.
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 institutional reforms, 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 started, we endeavored to capacitate both oversight and line agencies, and other bodies involved in delivering PPPs. An extensive capacity building program for national agencies and local government units was executed, along with the issuance of the PPP Manual for both national 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 mandated to 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 the 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.
The proposed amendments to the BOT Law also include, among others, institutionalization of the Project Development and Monitoring Facility (PDMF), PPP Governing Board and the PPP Center, prohibition of issuance of Temporary Restraining Orders and preliminary injunction of the lower courts, and extending the challenge period for unsolicited projects.
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 maintained in close coordination with various implementing agencies. Through the government’s collective efforts, we were able to develop a pipeline of 61 projects with an estimated project 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 as 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– the Daang-Hari-SLEX Link Road, the Phase 1 and 2 of the PPP for School Infrastructure Project, NAIA Expressway Phase 2 project, Modernization of the Philippine Orthopedic Center, Automatic Fare Collection System, Mactan Cebu International Airport Passenger Terminal Building, the LRT Line 1 Cavite Extension O&M, and the Integrated Transport System-Southwest Terminal Project. 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 public 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) – a revolving fund available for use by the IAs 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 consists of 22 international and national panel of consulting firms from Australia, Canada, France, Germany, UK, and USA, among others. This facility will further be expanded to hire independent consultants during contract implementation and probity advisors during the bid process to further boost the confidence of the local and international business community on the Program’s credibility.
Further assistance to IAs 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. The Japan International Cooperation Agency has also partnered with us to capacitate select IAs in developing more PPP projects.
These developments contribute firmly to the success of the Program today which has been reaffirmed by international award-giving bodies. The Partnerships UK awarded PPP Center as the Best Central/Regional Government PPP Promoter during the 2014 Partnerships Awards. In addition, and perhaps arguably a better gauge that the Philippines is on the right track, are the numerous requests for knowledge sharing and the successful hosting of country visits to share the Philippines’ experience in PPP Program implementation. In fact, the countries of Indonesia, Nigeria, Bhutan, Guam, and Tonga have sought guidance and assistance from us 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 government has learned and executed in the past years that ensured the effective and successful delivery of PPPs in the country.
Despite these major achievements, the PPP Center remains committed in establishing a stronger 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 standard contract agreements that would uphold reasonable returns and fair risk allocation.
We hope that you will be able to gain useful insights from the Philippines’ experience in implementing PPPs. We are likewise eager to learn from your experiences and hope for a stronger collaboration on PPPs within APEC economies.
Again welcome to the APEC PPP Experts Advisory Panel Meeting and I look forward to a productive session.