PSE eyes role in raising PPP funds

THE PHILIPPINE Stock Exchange (PSE) has teamed up with the government’s Public-Private Partnership Center (PPP Center) to explore the issuance of PPP securities in the local stock market to raise much-needed infrastructure financing.

“We believe the stock market can play an important role for PPP companies to raise capital similar to the experiences in other markets. We are working closely with our regulator, the PPP Center and other stakeholders to explore opening up the equities market for this purpose,” PSE president and chief executive Hans Sicat said in a statement.

With support from multilateral lender Asian Development Bank, the PSE and the PPP Center recently held a forum to discuss how PPP proponents could access the capital markets. The participants discussed opportunities in the issuance of PPP securities and assessed the viability of PPP participants tapping the capital markets for financing, the PSE reported.

The panelists, representing the Securities and Exchange Commission (SEC), listed firms, international and local legal counsels and investment advisers talked about the requisites for successful PPP securities issuance, regulatory requirements and challenges, and the potential framework and mechanism to create a suitable environment for PPP investors.

A report late last year from Moody’s Investors Service said emerging regulatory frameworks and a need for consistent risk allocation between governments and the private sector were constraining the market for PPPs in Asia Pacific. With the exception of Australia and India, PPPs have been slow to develop in the Asia-Pacific region, the credit watchdog said, noting that emerging regulatory frameworks might be subject to an elevated risk of political interference and strong legislative frameworks to enforce PPP contracts were still developing in some countries.

Despite these constraints, the Moody’s report said that PPP markets in the Philippines and China were expanding, with deal flow accelerating in the Philippines under the Aquino administration and its PPP Center.

In the United States, Moody’s said the PPP market was expanding, aided by supportive legislation and public-policy initiatives. Moody’s noted that the US had the potential to become the biggest PPP market in the world, given the sheer size of its infrastructure.

In the Philippines, three PPP projects worth P188.8 billion were scheduled for President Aquino’s approval last week, along with proposed tweaks in the terms of two previously approved PPPs and other infrastructure projects that would benefit areas outside Metro Manila.

The additional PPP projects were the P74.6-billion Ninoy Aquino International Airport (Naia) development, the P64-billion Light Rail Transit (LRT) Line 6 and the P50.2-billion LRT Line 4.

The Naia project, which will be jointly implemented by the Department of Transportation and Communications (DOTC) and the Manila International Airport Authority, “will improve, upgrade and enhance the operational efficiencies of all existing terminals of the Naia covering both landside and airside (except air traffic services), to meet the International Civil Aviation Organization standards and develop the main gateway airport of the Philippines,” according to the PPP Center website.

The Ortigas-Taytay LRT Line 4 project to be implemented by the DOTC would run from the intersection of Ortigas Avenue and Edsa to Taytay, Rizal. The 11-kilometer rail project would have six stations passing through Ortigas Avenue and Taytay Diversion Road.

The DOTC-led, 19-km LRT Line 6, meanwhile, would run from Bacoor to Dasmariñas City in Cavite. It would have seven stations to be built along Aguinaldo Highway.

The Cabinet-level, interagency Neda Board chaired by the President also discussed possible changes to two previously approved PPP projects—the P122.8-billion Laguna lakeshore expressway-dike venture and the P50.2-billion regional prison facilities through PPP.

The 47-km Laguna lakeshore project will run from Taguig City to the Los Baños-Bay boundary in Laguna. The flood control dike will have a six-lane expressway toll road above it.

Under the regional prison facilities PPP project, the private partner will build and maintain a modern prison facility in Fort Magsaysay, Nueva Ecija, that will accommodate 26,880 inmates.

Besides these PPP projects, the Neda Board was also scheduled to tackle other infrastructure projects such as the Naga Airport, the Clark International Airport Terminal Project, the Metro Manila Bus Rapid Transit (BRT) System, irrigation projects, as well as the Department of Agrarian Reform’s Inclusive Partnerships for Agricultural Competitiveness Project.