Yearend Report

POLICY changes and musical chairs in the Aquino administration have delayed the implementation of the public-private partnership (PPP) program, dampening the Philippine economy in 2011.
The National Statistical Coordination Board (NSCB) earlier reported that the much delayed implementation of the PPP, weak government spending and the global crisis were responsible for the drop in the country’s gross domestic product (GDP) growth in the first three quarters to 3.6 percent, way below the revised full-year target of 4.5 percent to 5.5 percent.

The government’s original target for the year was between 5 percent and 6 percent. The National Economic and Development Authority said the PPP is a powerful impetus to attain inclusive growth for all Filipinos.

Under the Philippine Development Plan, the government is eyeing a 7 percent to 8 percent GDP growth for the period 2011 to 2016. The government is also targeting to create more than a million jobs a year until 2016.

Only one project bid out
In November 2010, the Aquino administration presented to local and foreign investors 10 priority infrastructure and transportation projects for PPP.

But out of the 10, only the Daang Hari Road linkup to the South Luzon Expressway (SLEX) was auctioned off by the government.

The Ayala Corp’s P902-million bid bested the P608-million offer of its only rival, San Miguel Corp., and was nearly triple the floor price of P371 million.

The project involves the construction, operation and maintenance of a four-kilometer road linking Daang Hari Road in Cavite to the South SLEX under a 30-year concession.

The other PPP infrastructure projects lined up for this year were the P70-billion South extension of the Light Rail Transit Line 1; the P11.3-billion East extension of LRT 2; the P7.7-billion privatization of LRT 1; the P6.3-billion privatization of the Metro Rail Transit Line 3; the P11.8-billion Cavite-Laguna Expressway; the P10.6 billion second phase of the Ninoy Aquino International Airport Expressway; the P7.6-billion New Bohol Airport; the P7.5-billion Puerto Princesa Airport; the P3.2-billion new Legaspi (Daraga) Airport; and the P1.5-billion privatization of the Laguindingan Airport.

Not one of these projects were bid out because of the lack of feasibility studies and continuous review.

The P14 billon operation and maintenance (O&M) contract of LRT 1 and MRT 3 – supposedly the first PPP project the government lined up – was put off after a change in leadership at the Department of Transportation and Communication.

President Benigno Aquino 3rd appointed losing running mate and former senator Manuel Roxas as DOTC chief to replace Jose de Jesus, who resigned for personal reasons.

Three other undersecretaries of the DOTC also tendered their resignation, affecting the bidding for the O&M of LRT 1-MRT 3. Roxas since ordered a review of the project.

The government is pursuing the PPP scheme to save money and have more funds for social services.

Socioeconomic Planning Secretary Cayetano Paderanga admitted that the government doesn’t have enough consultants to help them in the implementation of PPP projects.

The resignation of Philamer C. Torio, executive director of the PPP Center added to the delay in the implementation of the PPP projects.

Hybrid PPP
To address the delays, Roxas unveiled the hybrid model for PPP.

Under the hybrid model, foreign donors can come in and fund heavy infrastructure projects such as airport and railroad developments, while counterpart funding will be provided by a private sector consortium once operations commence.

Roxas said official development assistance (ODA) funding is a good complement to the PPP program in fast-tracking projects.

Cosette Canilao, deputy executive director of the PPP Center, said the DOTC’s hybrid model is still aligned with the government’s PPP initiative.

He said the ODA funding is meant to make mega-infrastructure projects financially viable.

Despite the delays in the implementation, the PPP Center is still optimistic that the government will bid out 16 projects next year.

Under the PPP scheme, the government would require P739.78 billion in investments in the next six years.