Empowering LGUs for PPP Agreements
When the Duterte Administration took over in mid-2016, it is clear that one of the government’s priorities is rapid build-up of infrastructure that will serve the people. The President is a strong advocate of regional development, championing more equitable growth towards the countryside. Public-Private Partnerships (PPPs) at the local government unit (LGU) level will spur growth to the countryside and ensure that benefits will redound to our people.
Acknowledging the important role of LGU PPPs in regional development, the PPP Center has relaunched its strategic direction by strengthening the support it provides to LGUs in the development and implementation of PPP projects.
Enhanced Capacity Building Initiatives
In recognition of the potential of LGUs to utilize PPPs to improve the delivery of services in their localities, the PPP Center’s Capacity Building and Knowledge Management Service (CBKMS) team has been at the forefront of training and other capacity building activities of LGUs since 2011. In support of the intensified focus on LGUs, our CBKMS team develops modules that will offer a more customized intervention which will be applicable at the project preparation stages such as prioritizing projects for PPP implementation, reviewing and developing feasibility studies, and financial analysis and financial modelling.
Beyond the Traditional Build-Operate-Transfer Framework
In line with the current Administration’s thrust to explore all avenues for LGUs to participate in PPPs, the PPP Center recognizes that there are other legal framework and modes that can be used to implement PPPs. For instance, through the local autonomy granted by the Local Government Code of 1991, LGUs are given the authority to pursue Joint Venture Arrangements (JVA), subject to rules that they will enact in their own local Joint Venture / PPP Ordinance. The Center will continue to strengthen its capacity building and project development initiatives in support of JVAs. Continuous support shall likewise be extended for evaluation of unsolicited proposals submitted at the local level.
Replicating successful LGU projects
Based on our on-the-ground experience in interacting with LGUs, we realize that LGUs have similar infrastructure needs. LGUs are looking for successful PPP implemented programs at the local level which can serve as their model projects. In addressing this, the PPP Center is pursuing efforts to successfully develop, approve and bid out LGU PPPs in the sectors of water supply and distribution, septage and sanitation facilities, solid waste management facilities, and vertical infrastructures/property development.
These sectors are recommended based on the typical needs of LGUs and their commercial attractiveness. Once we have fully developed a project, we hope that these pilot projects can eventually be replicated by other LGUs as a successful PPP project.
Linking LGUs to Project Preparation Funding and Support
Most good ideas for PPP projects at the local level do not prosper simply because LGUs find it difficult to spend for properly made and high quality pre-investment studies. The PPP Center recognizes that a well-developed project will require resources – even at the very early, project development phase. Thus, part of the LGU Strategy is to actively link PPP projects with potential for success to various funding sources so that their good ideas can be developed through a robust feasibility study (FS). The PPP Center is collaborating with our Development Partners like Asian Development Bank (ADB), Cities Development Initiative for Asia (CDIA), and local sources of funding like the Department of Finance’s Municipal Development Fund Office (MDFO) so we can link good projects to FS funding sources. LGUs can likewise tap the Project Development and Monitoring Facility (PDMF) administered by the PPP Center. Hopefully, this initiative will enable LGUs to bring their vision to reality through the help of our partners in development.
In conclusion, the PPP Center’s LGU strategy is anchored on these bedrock plans to address the pain and needs of LGUs in pursuing PPP projects. With its intensified support to LGUs, the PPP Center hopes to create a local PPP project pipeline composed of well-structured and viable LGU PPP projects that would truly improve lives and benefit our people.
Lawrence G. Velasco
Director III, Project Development Service