PPP gets moving

Bracing news to usher in 2014: Something positive is happening to the Aquino administration’s flagship public-private partnership (PPP) program, which had been roundly panned for failing to take off. (Some have even begun to refer to PPP as “PowerPoint presentation”—a term to twit the administration for supposedly failing to go beyond presenting projects to prospective investors three years since it was announced by President Aquino in 2010.)

Last Dec. 12, the Department of Transportation and Communications finally opened the financial proposals for the P17.5-billion Mactan-Cebu International Airport project, the biggest PPP deal so far offered. Megawide Construction Corp. and India’s GMR Infrastructure Ltd. beat six others, including the Philippines’ top conglomerates, by offering a premium of P14.4 billion for a 25-year concession to operate the country’s second-biggest airport and build a new terminal.

“This is the highest, I think, premium paid to government thus far. The last one was [the Ninoy Aquino International Airport] expressway, which is P11 billion,” PPP Center Executive Director Cosette V. Canilao said, referring to the up-front fee offered by a unit of San Miguel Corp. to win the P15.86-billion Naia project last year. A notice of award for the Mactan airport project will be issued on Jan. 6; the signing of the concessionaire agreement has been scheduled for Feb. 6.

Megawide is not new to the PPP as it has so far won three of five government contracts worth P26 billion. Early last month, Megawide bagged a 25-year contract for the P5.7-billion new Philippine Orthopedic Center project. In 2012, it won the first phase of a school-building project involving the construction of 68,000 classrooms, followed by the second phase last October.

Delays in the bidding process for major PPP projects had dimmed the prospects of an infrastructure boom needed to sustain a high level of economic growth. But the administration seems to be exerting more effort to speed up the process. Aside from the Mactan airport project, it was announced in December that a joint venture between Ayala Corp. and Metro Pacific Investments Corp. had offered the best bid for a P1.72-billion contract to operate a smart-card system for the elevated rail network in Metro Manila.

This year will be a very busy year as far as the PPP program is concerned. Many of the projects approved in 2013 by the government to be undertaken via the PPP route will get on stream. In mid-November, the National Economic and Development Authority board chaired by the President approved seven major infrastructure projects worth P184.2 billion. Among these were the P62.7-billion Metro Rail Transit 7, the P24.4-billion Bulacan bulk water supply project of the Metropolitan Waterworks and Sewerage System, the modernization of the orthopedic center, the P1.4-billion MRT-LRT common station, and the P7.7-billion development of a transportation system at the Food Terminal Inc. complex and Philippine Reclamation Authority property.

Last June, the President also approved six PPP projects worth a combined P76.5 billion. These included the P6.7-billion post-“Ondoy” and “Pepeng” short-term infrastructure rehabilitation project and the Department of Public Works and Highways’ P5.5-billion Phase II of the Pasig-Marikina River channel improvement project, the Department of Energy’s P21.6-billion market transformation through energy-efficient e-vehicles, and the Department of Education’s P9.4-billion basic education sector transformation program. During its meeting last Jan. 18, the Neda board approved two PPP and three rural-infrastructure projects with a combined cost of P146.83 billion. The PPP projects are the P35.58-billion Cavite-Laguna Expressway and the P25.56-billion North Luzon Expressway-South Luzon Expressway connector road.

These PPP projects will not be lacking in investor interest. Top Philippine conglomerates—including the Ayalas, businessmen Ramon Ang of SMC and Manuel Pangilinan of the PLDT group, and the Sys of SM—have expressed interest in practically all of these infrastructure undertakings and are just waiting for the terms of reference to determine their viability.

Now, if only the losing bidders in various PPP projects will accept defeat and not file suits that have delayed many important projects in the past, the Aquino administration’s flagship program will get moving—finally.