Going the hybrid PPP route | Inquirer Business

Going the hybrid PPP route

/ 05:02 AM July 21, 2017

Solar-Belle Sangley project

In President Duterte’s “change” administration, the private sector continues to seek its place, given the overhaul on how big-ticket infrastructure projects will be financed.

Over its first year, the administration has shifted the funding structure of nearly all public private partnership projects due for bidding into either an overseas development assistance scheme or state financing.


The private sector, at the government’s discretion, would be invited to bid for the operations and maintenance component. Thus, the hybrid PPP initiative was born.

This administration said this was the faster and cheaper route, although critics have produced plenty of data showing otherwise.


The private sector’s aversion to uncertainty, however, has pushed it toward another opening that Mr. Duterte had allowed—unsolicited projects.

This has encouraged an unprecedented level of cooperation among big business groups, who see better infrastructure as a way to ensure not only their own growth but that of the Philippines.

Take, for instance, the ambitious partnership between the Solar Group and Henry Sy’s Belle Corp. to build an airport, seaport and industrial complex over reclaimed waters to replace Manila’s congested Ninoy Aquino International Airport.

Ayala Corp. and SM Investments Corp., rivals in banking and property development, have teamed up to propose a tollroad that would link two of their flagship real estate properties while providing a traffic solution.

Not stopping there, big conglomerates are also partnering with state agencies to pursue massive infrastructure deals.

Examples are the P554-billion Metro Manila Skyway and South Luzon Expressway expansion projects that San Miguel Corp. had proposed with state-run Philippine National Construction Corp. Separately, Metro Pacific Investments Corp. offered to venture with the Bases Conversion and Development Authority to develop Clark International Airport for P337 billion.

All told, over P3 trillion worth of unsolicited and private sector-initiated joint ventures have been put forward during Mr. Duterte’s first year.


These are all still facing an uncertain future given that the administration has yet to approve any new project.

This was despite their compliance with Mr. Duterte’s specific requirements that unsolicited projects receive no state guarantees or subsidies.

The decision to allow unsolicited projects has been off to a rocky start.

Take the example of competing offers between the consortium of Megawide Construction Corp. and India’s GMR Infrastructure versus that of JG Summit Holdings and Filinvest Development for Clark International Airport. Both offered to transform Clark into in a world-class (mixed use enclave) over a 50-year concession.

Not wanting to choose a side, the DOTr and BCDA decided to go the hybrid route.

As for that aforementioned tollroad proposed by Ayala-SM, early concerns have been raised by San Miguel Corp., which was worried the new project would cannibalize the Naia Expressway—a PPP project it paid a dear price to win.

The Department of Public Works and Highway said it wanted a closer look at the alignment of the Ayala-SM tollroad, known as the C3 Elevated Expressway.

Inquirer Business has collated some of the projects the private sector wants to pursue.

C3 Elevated Expressway Project (DPWH)

Ayala Corp. and SM Investments Corp. proposed to build an 8.6-km expressway that will link Sta. Mesa, Manila, San Juan, Makati City and Pasay City.

Budget: P25 billion

Implementation period: 3 years

Tanauan Tagaytay Expressway (DOTr)

San Miguel Corp. will extend South Luzon Expressway via a 29-km tollroad that will run through Tanauan in Batangas, Silang, Amadeo and Indang in Cavite to Tagaytay City through the Tagaytay-Nasugbu Highway.

Budget: P27 billion

Implementation period: 2-3 years
Cavite Tagaytay Batangas Expressway

Metro Pacific Investments Corp. will build and operate the 46-km tollroad that will extend its Cavite Laguna Expressway project in Silang through Tagaytay City and Nasugbu, Batangas.

Budget: P25 billion

Implementation period: 3 years

Manila Taguig Expressway

Concessionaires CLGP Philippine Holdings and P.T. Citra Persada Infrastruktur will build and operate the 17.7-km tollroad mainly along the Pasig River. The road will link Skyway Stage 3 and the Metro Manila Expressway (C-6) project.

Budget: P41 billion.

San Miguel Corp. New International Airport (Manila)

SMC proposed to build a new “aerotropolis” in a 2,500-hectare property in Bulakan, Bulacan to eventually replace Manila’s Naia. Target is to have multiple runways serving 50 to 100 million passengers yearly.

Budget: P700 billion

Implementation period: 6 years (first phase)
Belle Corp.-Solar Group New International Airport (Manila)

The Belle-Solar consortium plans to reclaim 2,500 hectares of land in offshore Sangley Point, Cavite, to be converted into a new international airport, seaport and industrial estate. The airport component will have multiple runways that can serve up to 100 million passengers yearly.

Budget: P1.3 trillion (development cost)

Implementation period: four to five years (first phase)

Megawide Construction-GMR Infrastructure —Clark Int’l Airport

The consortium offered to assume operations and develop Clark Airport. Plan is to modernize the facility, build new terminals and have three parallel runaways over a 50-year concession period. Target capacity is 50-100 million passengers yearly.

Budget: P250 billion

Implementation period: 3 years (first phase)

JG Summit Holdings- Filinvest Development Corp. —Clark Int’l Airport

The consortium offered to assume operations and develop Clark, also with plans to modernize the gateway and increase capacity to 36 million passengers under a 50-year concession period.

Budget: P187 billion

Implementation period: 3 years ( first phase)
Metro Pacific Investments Corp. —Clark International Airport

The group offered to partner with the Bases Conversion and Development Authority to develop Clark Airport. Plan is also to modernize facility, increase capacity and build an express train service to Manila. Target capacity is 115 million passengers yearly, over several phases.

Budget: P337 billion
Megawide Construction-GMR Infrastructure- Mactan Cebu International Airport

The consortium is seeking to extend its 25-year Cebu Airport concession (ending 2039) by another 25 years given plans to rehabilitate/assume airside operations, build a new runway, increase capacity further, and turn Cebu into a global hub.

Target is to increase 2018 capacity of 12.5 million passengers to 50 million a year.

Budget: P208 billion

Implementation period: To be done in phases, with the runway rehab as the first phase for completion in 2021.

As noted, none of these projects have been approved. In fact, some have been informally rejected.

This hardly matters. As one large investor likes to tell us: “the government can always change its mind.”

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