Gov’t warned against veering away from PPP track

A top Ayala Corp. official has cautioned against the government’s direction to do away with private sector-led projects in bringing forth its ambitious infrastructure development program, worried that “what we had been concerned about is actually happening.”

In a press conference yesterday for the launch of the Oxford Business Group’s annual report on Philippine development, AC Energy Holdings president and CEO John Eric Francia voiced out a frank warning against the government’s move away from public-private partnership (PPP) projects.

With high hopes for the PPP initiative that had a slow start under the Aquino administration, Francia said that the Duterte leadership should have just picked up from where its predecessor left.

But instead of a sense of continuity, the private sector was surprised to find the government taking a different route.

“Our hope was that this momentum would continue and [the present administration] would reap the benefits that were sowed in the last administration. Lo and behold, what we had been concerned about is actually happening. A lot of these PPP projects are being shoved aside. We haven’t seen a single PPP project bid out or carried out,” he said.

The current initiative of the administration focuses more on the government leading the execution of the projects with a preference for overseas development assistance (ODA) funds while leaving the operation and management of the finished infrastructure to the private sector.

Francia, who leads the Ayala group’s business arm in the energy sector, said the government might not be the best stakeholder to lead the infrastructure development.

Moreover, he said that there were members of the private sector, including the Ayala group, willing to take the risk of investing in these important projects.

Economic managers have pegged at P8.4 trillion the estimated budget to be spent for the government’s “build, build, build” initiative, increasing the share of infrastructure spending in the gross domestic product (GDP) from 5.4 percent this year to 7.4 percent in 2022.

Although Francia did not have reservations on the ODA funding since there was still “room in our balance sheet” given a manageable debt-to-GDP ratio, he expressed a lack of confidence in the way the government would execute these projects.

“The major issue is more of human resource capacity and capability. Historically, I hate to generalize, but here I make one: The government is not the best and not in the best position to execute these complex infrastructure projects,” he said.

He cited the delayed completion of certain projects like the Subic–Clark–Tarlac Expressway (SCTEx) and the bidding of light railway trains as examples.