PPP route seen suitable for irrigation projects

The commercial viability of irrigation projects will make them attractive to investors through the public-private partnership (PPP) model, the chief of the Public-Private Partnership Center of the Philippines said.

The National Irrigation Administration (NIA) earlier said it wanted to hit the ground running to develop irrigation facilities using the PPP framework within the first 12 months of the Marcos administration.

So far, the NIA has received investment pledges worth more than P1 trillion, mostly from Filipino companies, much higher than around the P800 billion it would need to bankroll 50 potential irrigation projects nationwide.

“The question really for implementing these via PPP rather than the two financing options… through ODA (official development assistance) or direct government funding is that would there be a commercial dimension to the irrigation projects,” PPP Center executive director Ma. Cynthia Hernandez said on Monday in a forum organized by the Economic Journalists Association of the Philippines.

“These are the components that would make an irrigation project viable for PPP because there’s a business side to it that might help offset future capital costs and future O&Ms (operation and maintenance),” she added.

The PPP is helping the national government prioritize, sort and classify projects which are suitable for this long-term financing arrangement.

That way, Hernandez said pertinent government agencies could put together either a project concept note or business case to develop these via PPPs. Currently, there are no irrigation-related ventures in the PPP Center’s pipeline.

“We do hope to be able to add some in the near future,” said Hernandez.

The NIA first indicated in June that it was exploring the PPP route to fast-track the development of several irrigation projects, majority of which are big-ticket multipurpose projects with hydropower component, such as small river irrigation with reservoirs that can be utilized for floating solar power farm and/or mini-hydroelectric power plant.

of these projects include the Balog-Balog Multipurpose Project (hydropower component) in Tarlac, Ilocos Sur-Ilocos Norte-Abra Irrigation Project in Region I, Panay River Basin Integrated Development Project in Capiz, Ilaguen Multipurpose Irrigation and Power Project in Isabela and Balintingon Multipurpose Project in Nueva Ecija.

Public-private partnership, as defined by the PPP Center, is a contractual agreement between the government and a private firm to finance, develop and operate infrastructure facilities and services traditionally provided by the public sector.

“It embodies optimal risk allocation between the parties – minimizing cost while realizing project developmental objectives. Thus, the project is to be structured in such a way that the private sector gets a reasonable rate of return on its investment,” the PPP said on its website.