Gov’t plan may see the light of day

By: Ronnel W. Domingo, July 22nd, 2013 08:40 AM

The government’s long-delayed plan to put up cold chain facilities for perishable goods across the country may finally see the light of day, with the help of the private sector.

Economic Planning Secretary Arsenio M. Balisacan told Inquirer editors and reporters that such a project would require incentives, like the so-called “take-or-pay” provision, to attract private enterprises.

This contractual provision will make sure that a private entity profits from any transaction by committing one party to either take delivery of goods or services, or pay a certain amount.

But the take-or-pay provision has left a bad taste in the mouth of consumers who believe it to be the reason why electricity prices in the country are so high.

“Take-or-pay may be needed in certain locations—not all—of a nationwide cold chain project,” Balisacan said. “This may be necessary, for example, in Benguet.”

The Department of Agriculture has lined up three major public-private partnership (PPP) projects, including a multipurpose irrigation project, as well as a network of postharvest facilities for corn and a string of refrigeration facilities for perishable products.

The Philippine Center for Postharvest Development and Mechanization, or PhilMech, has drawn up a proposal for a P683-million cold chain system, which will be considered a greenfield undertaking.

Five routes have been identified for the proposed cold chain system, with Benguet-Manila as the pilot link. The others are Cagayan-Manila, Manila-Cebu, Cebu-Manila and Visayas interisland connections.

Also, potential sites are still being considered for a fruits and vegetable facility in La Trinidad, Benguet, and for an abattoir project in Guiguinto, Bulacan.

Balisacan said the PPP approach as applied in agricultural projects needs something extra, compared to PPP projects in urban centers, like tollways.

“There are peculiarities in the agriculture sector, such as the seasonality of production and the impact of natural forces,” the government’s chief economist said.

Agricultural projects need government subsidies, incentives, or other means of assured funding or return on investment to be attractive to private-sector partners, he explained.

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