Home Top News PPP rules must consider LGU officials’ short tenures — PCCI

PPP rules must consider LGU officials’ short tenures — PCCI

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PHILIPPINE STAR/EDD GUMBAN

By Beatriz Marie D. Cruz, Reporter

THE short tenures of local officials could pose a challenge in implementing Public-Private Partnership (PPP) infrastructure projects at the local level, the Philippine Chamber of Commerce and Industry (PCCI) said.

PCCI President Enunina V. Mangio said in a Viber message that local projects must be weighed with an eye towards the short terms in office for local officials.

“The budgetary commitment may be compromised with frequent changes of administration. In the past PPP projects tended to overrun cost projections, and government was saddled with debt servicing,” Ms. Mangio said.

She said the PPP Code is considered favorable because it “recognizes the need of the private sector for profit to sustain operations while also continually improving the delivery of public services.” 

 The PPP Code was intended to address bottlenecks in the Build-Operate-Transfer (BOT) Law, involving the recognition of past contracts and delays in obtaining approval.

The law’s implementing rules and regulations (IRR) include a provision allowing the private partner to recover investments through commercial development rights, or the grant of a portion of reclaimed land for both solicited projects and unsolicited proposals.

Private partners may also profit by collecting fees from users or through pre-determined payments from the implementing agency.

“Expanding the avenues by which the private sector can earn profit and lessen the market risk associated in providing government infrastructure and facilities helps make projects under the PPP arrangement more attractive to investors,” Ms. Mangio said.

Streamlined approvals are also expected by setting a threshold of P15 billion for a project to go before the National Economic and Development Authority (NEDA) Board. Those below the threshold but do not require government assistance will be sent to the implementing agency.

Projects that require government subsidy must be sent to the NEDA Investment Coordination Committee (ICC), while local projects go before the respective councils.

“That, in a sense, can also diminish the number of PPP projects going to the NEDA board, and that’s part of the streamlining that we are pushing,” NEDA Secretary Arsenio M. Balisacan said during the IRR signing.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said implementing agencies must remain transparent and accountable to ensure that maximum value from PPPs is extracted.

“The new PPP Code also provides a particular emphasis on limiting government undertakings, particularly on unsolicited proposals, to ensure that government maximizes its upside in each and every PPP proposal,” Mr. Ridon said in an e-mail.

The BOT law previously set a P300-million threshold per project to be evaluated by the NEDA-ICC, which “forced a lot of local government units (LGUs) to structure their projects as joint ventures (JVs) to avoid the tedious approval process.”

“The new Code takes out the need for LGUs to force the structure of big projects into JVs if it is not the optimal structure,” Ronilo Balbieran, an economics professor at the University of Asia and the Pacific (UA&P) said via Viber.

PPP Center Executive Director Ma. Cynthia C. Hernandez has said that around 20 PPPs in the government’s flagship infrastructure list are set for approval by the NEDA-ICC Board this year.

Around 119 PPP projects worth P2.4 trillion are in the pipeline, according to the NEDA. Of these, 95 are national projects, while 24 are local projects.

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