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Pernia: ‘Pure’ PPPs must be welcomed, not shunned, in new ‘Build, Build, Build’ list

By: - Reporter / @bendeveraINQ
/ 05:44 AM October 26, 2019

The country’s chief economist on Friday said that as the Duterte administration widens its ambitious infrastructure pipeline to cover up to 100 projects, the government must be more welcoming toward private sector-led projects.

“There was hesitance to PPP (public-private partnership) projects before, but over time, minds tend to adjust to reality and I think this is what’s happening … We should look at the bigger picture. Let’s not be too obsessed about little gains to be made by the private sector proponent or a little loss on the part of the government,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a press conference on the sidelines of the National Economic and Development Authority (Neda)-led AmBisyon Natin 2040 symposium and expo.

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The Inquirer earlier reported that the government was reviewing its “Build, Build, Build” pipeline to include more PPP projects that could be rolled out during President Duterte’s term.

As earlier reported, the San Miguel Corp.-led Bulacan International Airport and other big-ticket airport projects such as the rehabilitation of the Ninoy Aquino International Airport (Naia), as well as the unsolicited proposals for the new airports in Panglao, Bohol and Davao would likely land in the new “Build, Build, Build” list to be released next week, Pernia said.

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However, the economic team also acknowledged that several “Build, Build, Build” projects were non-feasible as they were “challenging and costly.” Pernia said three projects in the pipeline would be taken out from the list. These are the P57.6-billion Luzon-Samar Link Bridge, the P56.6-billion Cebu-Bohol Link Bridge and the P47.4-billion Leyte-Surigao Link Bridge.

From the previous 75 big-ticket projects, the updated list will likely have about 100 projects, to include even “smaller but game-changing” projects in the regions. These include roads, bridges and irrigation facilities.

Pernia is optimistic that half of the about 100 “Build, Build, Build” projects would be completed or at least started before Mr. Duterte steps down in 2022.

At the start of the Duterte administration, its economic team had shunned the “pure” PPP mode as they claimed the process required—from project approval to implementation—was too slow. In fact, only 10 projects were rolled out during the entire six-year term of the Aquino administration.

To invite private sector participation in infrastructure development, Duterte’s economic managers had pushed for “hybrid” PPP under which the government builds the projects, then bids out O&M to private firms.

It also encouraged pure PPP proposals to be pitched to local government units to support developments in provinces, cities, municipalities and barangays.

For Pernia, who heads the state planning agency Neda, the government in entertaining PPP projects must “look at the bigger picture—the impact of projects on the economy, in terms of employment, increase in GDP (gross domestic product) growth, their multiplier effects—direct and indirect economic activities generated.”

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“It’s not good to be too restrictive. Let’s think more of the forest than just the trees,” he said.

Also, he said the Duterte administration was “very cautious” about the cost to the government of PPP projects, unlike the previous administration which, he said, was “not so careful” about contingent liabilities, subsidies, guarantees and non-compete clauses.

The Department of Finance (DOF) had said it did not want any “unwarranted obligations” imposed on the government by PPP contracts.

Pernia said he had yet to talk to Finance Secretary Carlos G. Dominguez III about his stand on pure PPPs, but he had already made his position known in a recent meeting where the DOF was represented by Undersecretary Karen G. Singson.

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TAGS: Build Build Build, Ernesto Pernia, PPP (public-private partnership)
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