PPP program put on high gear in ’12
MANILA, Philippines—The year 2012 will be a “very busy” one for the Aquino government’s public-private partnership (PPP) program, according to PPP Center executive director Cosette Canilao.
And to help push it into higher gear, the agency will be working closely with local government units.
“LGU work is a very important component of our PPP program,” Canilao said, adding that capacity building workshops are being held for LGUs.
Higher-level training sessions are also being conducted for personnel of government’s implementing agencies involved in the PPP program.
The P900-million Vaccine Self-Sufficiency Program of the Department of Health could be the first one on the auction block, Canilao said, and it will soon be followed by many more.
Project review
The PPP Center continues to review prospective projects and to accept applications for Project Development and Monitoring Facility funding.
There are currently a lot of proposals for sanitation, water services, commercial and tourism projects.
The PPP Center is even considering a proposal on the restoration of heritage buildings, starting in Metro Manila, which could enhance the country’s tourism campaign.
These projects are in the early stages and may be developed next year, but this early, companies which may not be able to participate in the bigger national projects can start looking into LGU-specific projects, Canilao said.
“The PPP program is exactly the framework where big and small, foreign and local companies all have a level playing field and can participate in a transparent bidding process,” Canilao said.
Socioeconomic Planning Secretary Cayetano W. Paderanga Jr., who is also director-general of the National Economic and Development Authority (NEDA), said the government is continuing to screen projects and working on ways to allow as many companies to participate as possible.
Foreign ownership
On concerns about foreign ownership and related issues that may hamper foreign investment in PPP programs, Paderanga said that foreign firms can participate in components of projects or partner with Filipino companies when it comes to operating such critical infrastructure as utilities.
Paderanga also said that the Philippines’ development partners are open to providing financial support to replenish the P550 million Project Development and Monitoring Facility, which the PPP Center taps for pre-investment studies of PPP projects, as needed.
Financial experts, meanwhile, said that market players are “managing” their expectations.
BDO Capital and Investment Corp. president Eduardo V. Francisco said that he was very optimistic on PPP.
“Even three to four successful auctions would be already good signal,” he said.
Francisco said a faster pace in the PPP program would help shield the Philippines from external risks and build the country’s image as an investor-friendly market.
Astro C. del Castillo, managing director of brokerage firm First Grade Holdings Inc., said there is a “bigger window of opportunity” this year since companies were very liquid last year and government also had a lot of savings that can be used for more projects. This means more financing options for implementors of good projects.
“However, the ball is still in the government’s court. Maybe three to four successful biddings would be a positive sign considering that last year, only one project was bid out, which was Daang Hari (the Daang Hari-South Luzon Expressway Link road project won by an Ayala-led group), although there may still be changes to that project.
“Of course we would want more than three to four (projects), if possible,” Del Castillo said.
Definitely, if nothing happens by the first half, the market will be asking, “what’s really wrong?” Del Castillo said. “If it comes to that, heads should roll. I hope the PPP program will not become ’Puro Power Point’ or ‘Puro Pun in the Philippines,’” Del Castillo said.
The Aquino government would definitely want the ball rolling, instead.
NEDA estimates that the Philippine Investment Plan 2011-2016, where the PPP program is a critical component, would create 1.9 million jobs and boost economic activity by 5.5 percent of gross domestic product on average every year—if fully implemented.
That means the government’s targets of curbing poverty by creating 1 million new jobs a year and generating high-level growth averaging 7 to 8 percent per year would be largely taken care of.
Economists say it all hangs on 2012 whether the PPP program will gain momentum. That is, the government must have at least “some” clear successes in order to sustain investor interest and public support in the program.
Project list
Aside from the vaccine program, the P25-billion Metropolitan Waterworks and Sewerage System New Water Supply is also slated for rollout. If it is bid out this year, it may be the largest project to be launched.
The P20.18-billion NLEx-SLEx Connector Road; P20-billion Balara Water Hub; P19.69-billion Cala Expressway (Cavite & Laguna Side); P11.3-billion LRT 2 East Extension; P10.4-billion PPP for School Infrastructure Project (Batch 1); P10.15-billion Mactan Terminal 2 Airport Development; and P8-billion New Bohol Airport could be on the auction block this year.
The P7.8-billion Laguindingan Airport Operations & Maintenance; P5.3-billion Cold Chain Systems Project; P5-billion Modernization of the Philippine Orthopedic Center; P4.2-billion Puerto Princesa Airport; P1.8-billion Common Fare Collection System; P1.5-billion Rehabilitate-Operate-Transfer of the Angat Hydro Electric Power Plant Turbines 4 & 5; and P1.25-billion Grains Central Project round up the “8 to 16 projects” lined up this year.
The PPP Center, an attached agency of NEDA, leads government’s PPP program, which is the cornerstone of the government’s Philippine Development Plan 2011-2016. The Philippine Investment Plan concretizes that plan into actual projects.
Private economists say it is crucial for government to pump up public spending, both within and beyond the PPP program, to spur the economy and create jobs.
Even the government has acknowledged that low infrastructure spending and the slow start to the PPP program contributed to the lower-than-expected growth of the Philippine economy in 2011.
In the first nine months of 2011, gross domestic product or GDP growth averaged only 3.6 percent—way below even the government’s reduced 2011 growth target of 4.5 to 5.5 percent.
