Unleash PH infra potential via PPP
Good infrastructure enables a county to serve its people and to better accommodate investors and tourists, generating economic activity and allowing for sustained and sustainable growth. To enhance the quality and increase the quantity of our infrastructure, it’s essential to collaborate with the private sector. Their technical expertise, capital access, and emphasis on efficiency are invaluable.
Public-private partnership (PPP) is not a new concept. The government has effectively engaged in PPPs, seen as a more transparent and efficient means of delivering projects, in key infrastructure projects.
The Stratbase ADR Institute conducted a comparative study, authored by Dr. Rizal Buendia, of the two dam projects being developed to achieve water security in Metro Manila and nearby areas. Specifically, we looked into the Kaliwa Dam (New Centennial Water Source) and the Wawa Dam (Wawa Bulk Water Supply) projects, both implemented and regulated by the Metropolitan Waterworks and Sewerage System.
The key difference between the two projects lies in their financing. The Kaliwa Dam project, costing P12.25 billion, is financed through an overseas development assistance loan from China’s Belt and Road Initiative. On the other hand, the P26-billion Wawa Dam project is funded by an offtake agreement, a hybrid of PPP engagement, comprising an 80-percent loan from BDO Unibank, Inc., and a 20-percent investment from Prime Infrastructure Capital, Inc.
Using metrics through the infrastructure data standard of the Construction Sector Transparency Initiative, the study looked at the project’s preparation, completion, contract phase, procurement, and implementation stages. The Wawa Dam project was rated with a score of 178 revealing it to be more transparent compared to the Kaliwa Dam project which received a lower score of 104 points. The Wawa project is also more comprehensive in disclosing information on its website, and in case of disputes, the venue for arbitration proceedings will be in the country.
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The Philippines urgently needs an upgraded gateway airport, capable of handling 62 million passengers, a significant leap from its current and inadequate capacity of 32 million.
Thus, we welcome the responsive decision by the Department of Transportation (DOTr) and the Manila International Airport Authority to bid out the P170.6-billion contract for the rehabilitation, operation, optimization, and maintenance of the Ninoy Aquino International Airport.
As of Sept. 22, six potential bidders have shown interest. The selection process is set to be competitive and transparent, with proponents evaluated solely on merit. This important tender will be closely watched.
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The institute recently hosted the forum, “Revitalizing the Philippines’ Infrastructure Development through Public-Private Partnerships,” following the second reading of Senate Bill No. 2233 or the Public-Private Partnership Act.
The forum identified lengthy approval and regulatory processes as a significant hurdle to government infrastructure projects, creating an environment unattractive to potential investors and operators. The PPP act aims to streamline these processes.
Sen. JV Ejercito expressed concern over the Philippines falling behind other regional countries in infrastructure development.
Sen. Grace Poe highlighted the need for a balance between public welfare and reasonable returns for private partners to ensure sustained quality of service. She also stressed the importance of a stable regulatory environment for successful PPPs.
Most significant is the DOTr’s recent consideration to terminate the loan contracts of three major railway projects, funded by Chinese official development assistance (ODA) due to noncompliance with requirements which underscores the need for stringent oversight of flagship infrastructure projects. This is particularly crucial for those financed by Chinese ODA, which could potentially be used to bypass Philippine laws.
It’s imperative to establish safeguards against corrosive capital and its associated political motives that could undermine our democratic institutions and expose us to economic and political manipulation.
Our infrastructure’s condition mirrors our nation’s preparedness to engage in the evolving tech-driven global order. The synergy between public and private sectors is crucial for maximizing our natural, human, and financial resources, which are essential for the Philippines to ascend to the ranks of developed economies.
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Dindo Manhit is founder and CEO of the Stratbase Group.
