Virus surge to delay infra projects

The recent surge in COVID-19 cases may again delay the implementation of big-ticket infrastructure projects, but the country’s chief economist said protocols must ensure that the virus does not spread among construction workers.

“There is a higher risk now given the spike, so it will affect various activities, including infrastructure. But once the risk is managed, we expect it to return to a more regular level,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua told the Inquirer on Friday.

To prevent COVID-19’s further spread while building more infrastructure, existing protocols need to be enforced fully, said Chua, who heads the state planning agency National Economic and Development Authority (Neda).

Despite the prolonged pandemic, presidential adviser on flagship programs and projects Secretary Vivencio Dizon told the Inquirer that the infrastructure projects under the ambitious “Build, Build, Build” program were still ongoing implementation. The economic team had been bullish that the jobs and economic activities resulting from “Build, Build, Build” would lift the economy from its pandemic-induced recession.

Contract changes

By the end of March, the Neda Board-led committee on infrastructure (InfraCom) will revisit the progress of big-ticket projects, Dizon said. The current “Build, Build, Build” pipeline included 104 projects worth a total of P4.13 trillion.

Dizon earlier told the Inquirer that the government would renegotiate the terms of public-private partnership (PPP) projects and possibly give them longer contracts to allow the private firms to recover their investments in consideration of the economic “new normal” wrought by COVID-19. Thirty PPP projects, including 18 unsolicited proposals, are part of “Build, Build, Build.”

Lengthening PPP projects’ terms will facilitate investment recovery as “it will probably take a couple of years for demand to normalize” post-pandemic, Dizon explained.

Spending budget

Another possible relief for private proponents would be for the government to defer its share of revenues until these projects’ operations normalize, Dizon added.

The government has set aside P1.17 trillion, equivalent to 5.9 percent of gross domestic product (GDP), for infrastructure spending this year.

Last year, total national government-funded infrastructure spending amounted to P869.5 billion, exceeding the P785.5-billion program but below the P1.05 trillion in 2019.

Public infrastructure spending took a backseat to COVID-19 response in 2020, with the budget cuts inflicted on the departments of Public Works and Highways (DPWH) and of Transportation (DOTr) realigned into the war chest to fight the health and socioeconomic crises inflicted by the pandemic.

In a report last week, the Beijing-based multilateral lender Asian Infrastructure Investment Bank (AIIB) noted the sluggish implementation of as well as loan disbursement for the massive flood control project it was cofinancing in Metro Manila due to the prolonged quarantine.

“Project implementation has been progressing slower than originally agreed timelines. The modernization of one pumping station, Balut, progressed well until the enhanced community quarantine was put in place on March 16, 2020. The extended COVID-19 lockdown has significantly impacted the project progress, particularly the procurement process over the first half of 2020,” the AIIB said in its updated monitoring report for the Metro Manila flood management project.

The AIIB’s latest project implementation monitoring report echoed the bank’s similar concern in an earlier document last November.

“Various procurement activities are ongoing, including procurement for Vitas, Paco and Labasan pumping station modernization; the first procurement package for dredging, and procurement of modern desilting equipment. The contract for consultancy services for the preparation of the solid waste master plan has been awarded,” the AIIB said.