Uncertain fate of PPP projects

AFTER five years, the first public-private partnership (PPP) project awarded under the Aquino administration—a four-kilometer toll road linking Muntinlupa City to Cavite—was completed on July 24.

The Muntinlupa-Cavite Expressway project cost its developer, Ayala Corp., P2.2 billion, which includes the P902 million upfront cash payment it gave to the government.

Ayala will operate and maintain the tollway for 30 years in partnership with a toll concession operator from France.

Had the project not been snagged by commercial issues with the real estate company that owns the land through which part of the tollway passes, it would have been completed much earlier.

Better late than never, as the saying goes.

At least, President Aquino has the consolation that a project conceived under the program he announced at the beginning of his term as one of the cornerstones of his administration was inaugurated while he’s still in office.

With less than a year to go before he leaves Malacañang, it is doubtful if any more PPP projects earlier awarded will be completed before his term ends.

Whoever will be elected president in 2016 will ribbon-cut these projects and those scheduled for public bidding this year.

Infrastructure

The website of the Public Private Partnership Center, the government office tasked with supervising the evaluation and bidding of PPP projects, shows that 10 projects worth P189.02 billion have been awarded as of July 2015.

These projects include the Cavite-Laguna Expressway (P35.42 billion), Mactan-Cebu International Airport Terminal Building (P14.4 billion) and LRT Line 1 Cavite Extension (P64 billion).

Thirteen other projects worth P517.98 billion are ready for public bidding. In the list are, among others, the New Bohol (Panglao) Airport (P2.34 billion), Davao Sasa Port Modernization (P18.99 billion) and Regional Prison Facilities (P50.18 billion).

Forty-one other PPP projects are either awaiting approval by the relevant government agencies, undergoing evaluation studies, or in the process of engaging the services of consultants who will conduct pre-investment analysis.

The aggregate value of the projects on the drawing board is a whopping P831 billion.

If completed, these projects will substantially improve the country’s infrastructure network which is considered, in terms of quality and maintenance, as one of the poorest in this part of the world.

Continuity

The question in the mind of many, in particular, business people, about these projects, is: What will happen to them after President Aquino signs off as the country’s chief executive?

For projects that have been awarded and work is already in progress, it is reasonable to expect the incoming administration to honor the terms and conditions of their contracts.

Since these projects were awarded pursuant to existing laws and entered into by the proper government offices after the appropriate regulatory approvals had been secured, they are valid and binding obligations of the government, regardless of who gets to sit in Malacañang.

Commercial agreements between government offices and private entities are inviolable unless it can be shown in the proper forum that any party violated their terms and conditions, or the parties voluntarily agree to abrogate them.

That’s the way things are (and should be) conducted in a civilized society or in a country that sincerely abides with the “rule of law” in a democratic setting.

It’s the same premise that foreign investors and financial institutions rely on and look to when they enter into joint ventures with local companies or extend credit facilities to big ticket projects.

Governments or administrations may come and go, but agreements freely and legally entered into by them with third parties remain in force.

Apprehensions

Unfortunately, if we go by the history of past administrations, the government’s record in honoring high value contracts with private parties is quite spotty, especially if their revenue flows are lucrative and consistent or the counterparty is identified with a political figure or organization.

There had been several occasions before when project contracts that have been signed and partially performed were ordered re-negotiated for some perceived defect or infirmity.

It is easy for a lawmaker (acting on behalf of an anonymous businessman) or a local government official who thinks he is entitled to personally benefit from a project within his political territory to raise all kinds of issues on an already awarded PPP contract and demand its re-review.

If aired in Congress, an investigation “in aid of legislation” will follow as a matter of course; if raised at the local government level, the issue can be forced by refusing to issue the required permits or revoking those earlier issued.

Of course, the problem can be made to go away if the affected businessmen submit the right amount of counter-arguments or give the complaining officials or their dummies a piece of the action.

The usual justification for capitulation is “you cannot fight City Hall,” unless the businessman concerned is prepared to go to court to assert his rights and, in the process, suffer various forms of inconveniences and harassment, not to mention incur huge litigation expenses.

It will be tragic if awarded and partly performed PPP projects, and those already covered by contracts but work has yet to commence, to be treated as spoils of war by the next administration.

If that happens, the country’s reputation in the international community will irreparably suffer.

The PPP projects still on the drawing board will probably suffice to satisfy the greed if that sin cannot be avoided.

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