DOF: Private sector won’t have the upper hand in deals with gov’t

While the Duterte government is open to fresh public-private partnership (PPP) proposals to build more infrastructure, it will avoid “detrimental” provisions in contracts that previous administrations had entered into.

In a statement, Finance Undersecretary Karen Singson said the Duterte administration would shun “unwarranted obligations imposed under PPP contracts,” such as automatic rate increases, commitments of noninterference and noncompete clauses.

“In our review of PPP concession agreements executed in the past, the government had agreed to [those] provisions, which we view as detrimental to regulators, the government and more importantly, a disservice to the Filipino people,” Singson said.

“These types of provisions restrict the power of the government to perform its functions and address the needs of the Filipino people quickly and efficiently, leaving public infrastructure to the unregulated control of companies fueled primarily by profit motive. The government simply will not subsidize private sector interest to the detriment of serving the public,” Singson added.

Before the Duterte administration would enter into PPP deals, Singson said “private proponents must display willingness to accept terms imposed by the government to lessen the overall timeframe for the evaluation and implementation of PPP projects, especially since the financial interests of the concessionaires are addressed by providing the private sector reasonable returns.”

“In a survey of Philippine PPPs, actual returns have significantly surpassed projected returns. On top of this, the private sector is allowed to engage in commercial activities surrounding the infrastructure project. We can no longer accept advice that the government must continue to provide guarantees for a significant portion of project risk, when the private sector makes more than adequate returns for taking on limited share of the risk,” according to Singson.

On Tuesday, Finance Secretary Carlos Dominguez III said the administration wanted to finish as many big-ticket infrastructure as possible before President Duterte stepped down in 2022 and as such reviewing the projects that could be implemented by the private sector.

It earlier shunned the PPP mode, saying the process from project approval to rollout had been slow during the Benigno Aquino III administration, which implemented only 10 projects during its six years in office. It had pledged to implement 10 per year.

The Duterte team’s “Build, Build, Build” program—currently composed of 75 “flagship” projects—includes only nine with private sector participation.