PPP bottleneck
With a year left in the Aquino administration, it’s unfair to say that the flagship public-private partnership (PPP) program has failed. But neither is it correct to call it a rousing success.
Since the program’s launch in 2010, less than 10 projects have been awarded to the private sector for implementation, among them two school-building contracts, the construction of a modern Mactan airport terminal (which has been delayed), a light rail transit (LRT) extension to Cavite, and a few expressways and toll roads.
It’s not that the government has been slow in choosing and approving which projects to undertake. In fact, as of last March, 25 projects have been given the go-ahead by the National Economic and Development Authority (Neda) Board chaired by President Aquino. Just this month, four other PPP projects worth P141 billion were cleared for presentation to the Neda Board for final approval— the LRT Line 4 to Taytay, Rizal; the Batangas-Manila natural gas pipeline; the C-5 modern bus transit system; and the Ninoy Aquino International Airport (Naia) development project. The list of infrastructure projects approved for implementation is indeed growing.
With so many projects in the pipeline, why are so few projects being bid out? Where does the PPP program get stalled? The government says the slow pace of implementation is due to the huge size of the projects requiring technical expertise and the legal complexities in bidding them out. True, the PPP concept was something new in 2010. But five years is long enough for the government to understand the program and iron out the kinks in project implementation—from bidding to awarding.
As early as July 2014, executive director Cosette Canilao of the PPP Center, which oversees the massive infrastructure campaign, said they had learned lessons and implemented reforms during the past three-and-a-half years that were enough to ensure that PPP deals could be ramped up until Mr. Aquino steps down in 2016. “We are going faster now,” she said then, adding that the government had “a healthy pipeline of projects, and everything is now moving.”
Also a year ago, Canilao indicated that the government was aiming to have 15 PPP contracts signed by the end of Mr. Aquino’s term, with 10 turned over to the private sector. She said then that over the next 12 months (or until Mr. Aquino’s last State of the Nation Address next month), the PPP Center planned to roll out another 20 projects.
Indeed, the Neda Board was able to approve several projects, but the problem has again been in the implementing capacity of the agencies involved. Most of the high-impact PPP deals are under the Departments of Transportation and Communications and of Public Works and Highways.
Canilao was correct in noting that strengthening these agencies’ capabilities was crucial to the program’s success. But the problem is such that even in the non-PPP projects of these agencies, delay seems to be the norm. Take, for instance, the P1.27-billion vehicle underpass project at the corner of Gil Puyat Avenue and Makati Avenue/Paseo de Roxas in Makati City. It was approved in early October 2014 with an estimated implementation schedule of 2014-2016. To date, the project proponent DPWH has yet to start digging.
Then there is the P4-billion Metro Manila Interchange project also of the DPWH. The project is aimed at easing the serious traffic congestion in Metro Manila through the construction of three interchanges at Edsa/North Avenue/West Avenue/Mindanao Avenue, C5-Greenmeadows-Calle Industria-Eastwood, and Edsa-Roosevelt Avenue-Congressional Avenue. These were to be implemented over a four-year period starting this year, but none has broken ground.
The DOTC’s situation seems worse. Take the long-delayed rehabilitation of the Metro Railway Transit (MRT) on Edsa as well as the LRT extension and common station in north Edsa. Then there are the problems relating to the provision of vehicle license plates and driver’s licenses, among others.
While the government believes that getting a steady pipeline is the key to ensure the PPP program’s sustainability and keeping investors interested, this is not enough. It has to improve the structure of the implementing agencies so they can be properly equipped to meet project schedules.
The government should strengthen or even revamp the implementing agencies to make them capable of implementing important infrastructure projects without delay. Otherwise, President Aquino will step down a year from now leaving a long list of approved PPP projects that are getting nowhere.
