6-month approval time for PPP projects feasible–Paderanga

MANILA, Philippines – Amid ongoing changes to the government’s joint-venture guidelines and issues surrounding the build-operate-transfer (BOT) implementing rules and regulations, the National Economic and Development Authority (Neda) gave assurances on Thursday that the agency can already approve public-private partnership (PPP) projects in only 6 months.

In a speech at the “Infrastructure Philippines 2010: Investing and Financing in Public-Private-Partnership Projects,” Neda Director General Cayetano Paderanga Jr., also the Socioeconomic Planning secretary, said the hastening of project evaluation and approval will be made possible through the priorities that will be set by the government.

These priorities, Paderanga said, are embodied in the Medium Term Philippine Development Plan (MTPDP), Medium Term Philippine Investment Plan (MTPIP) and the Comprehensive Integrated Investment Program (CIIP).

“For the national PPP program, these projects will be driven by priorities based on the MTPDP/MTPIP and CIIP. We will have a list containing strategic projects. We will also streamline the government approval process, without compromising safeguards for transparency and accountability. In this process, the Neda Secretariat plays a key role to the Neda Board and the Investment Coordination Committee or ICC for the approval of priority PPP projects,” Paderanga explained.

“For PPP projects, the government will focus on the solicited mode. Priority projects identified in the MTPDP/MTPIP and CIIP will undergo the solicited mode and will be processed within 6 months, from submission for Neda-ICC approval up to competitive selection,” he said.

Paderanga said the shortened approval and processing time will be made feasible since government units will already be required to submit PPP priority projects that are already in the mature stages of project preparation.

He said qualified submissions for PPPs will also include those with completed feasibility studies, well-planned right-of-way-acquisition (Rowa) plans, draft concession agreement, proposed risk allocation between the government and the private sector; and the valuation of direct and contingent government support.

“The sponsoring government unit should have prepared a clear implementation plan, as well as organizational and administrative requirements. The PPP Center and the Neda Secretariat will provide templates of contracts and risk allocation matrices,” Paderanga added.

Paderanga said the implementation of the PPPs will be based on Republic Act (RA) 7718, also known as the BOT law, including its Implementing Rules and Regulations (IRR), as amended in 2006, and RA 9184, or the Procurement Law as well as the JV guidelines.

The Neda chief, however, said the changes, particularly in the JV guidelines, will not affect project evaluation, approval and tendering. He said amendments to JV guidelines only require the approval of the Neda Board and the Office of the Government Corporate Counsel.

Paderanga said one of the changes the Neda will be making is that all JV projects should now pass through the Neda ICC for evaluation, which is among the key points raised by industry associations like the Philippine Constructor’s Association (PCA) Inc.

PCA president Manolito Madrasto earlier explained that a thorough evaluation by the Neda ICC is needed to ensure transparency in all ICC projects. The ICC’s mandate includes evaluating and approving big-ticket government projects.

In the initial JV guidelines drafted and approved by the Neda, all JV-funded projects will have to go through the ICC process. However, the version approved by the Neda Board under former President Arroyo, JV-funded projects will no longer be required to go through the ICC process.

“Yes, we are happy with this development. [With the amendment of the JV guidelines] the check and balance is already in place,” Madrasto said in an interview at the sidelines of the PPP Conference.

Ultimately, Paderanga said the PPP projects will allow the government to finally address its infrastructure constraints. The PPPs, he said, will provide strategic infrastructure to support tourism, agriculture and other growth centers that are needed by an increasing population.

Earlier, Paderanga said the PPP projects will also allow the government to increase its infrastructure-to-gross domestic product ratio to 5% from the current level of 2% to 3%.

TUCP counsels caution

Meanwhile, the Trade Union Congress Party (TUCP) Party-list group urged the government to move with restraint in pursuing PPP arrangements in infrastructure development.

“The history of PPP in the Philippines has been rife with one-sided relationships. The private corporations end up earning huge revenues and the government ends up holding the bag. Ultimately it is the worker who is the first victim of PPP and the Filipino taxpayer or the consumer who ends up subsidizing the enormous earnings of the private corporations,” said TUCP Party-list Rep. Raymond Democrito Mendoza.

TUCP expressed apprehension that the scheduled “Infrastructure Philippines 2000 conference to run from November 18 to 19, would open up the country to further PPP without appropriate safeguards to protect workers and consumers, especially in the power and water sectors.” The conference is sponsored by Citibank, Deutsche Bank, Goldman Sachs, HSBC, ING, Standard Chartered Bank and SGV&Co. in partnership with the Investment Relations Office under the Office of the President.

“PPP is usually the path of least resistance taken up by many governments that are cash-strapped. PPP is viewed as quick-fix solution to set-up needed infrastructure. And yet PPP in the water and power sectors in the Philippines had resulted in particularly problematic high tariffs, allegations of regulatory capture, and clear and visible rent-seeking through take-or-pay contracts. We still pay for electricity that was never generated. It is an insidious form of capitalism without risk!” explained Mendoza.

He said the experience of both the Manila Waterworks and Sewerage System (MWSS) and the National Power Corp. were “failed privatizations whose first victims are their own retrenched workers with the hapless consumers left afterwards paying the skyrocketing water and power rates.”

He said the entire Cabinet is laying down the red carpet for PPP arrangements also for irrigation, rail and airport projects, toll roads and the local water utilities.

“This is being done without an attempt to learn how workers and consumers were affected. Consumers were further not consulted as to their problems with the SLEx [South Luzon Expressway], the NLEx [North Luzon Expressway], the SCTEx [Subic-Clark-Tarlac Expressway], the MRT [Metro Rail Transit], the LRT [Light Rail Transit], Maynilad and the independent power producers who bought the Napocor [National Power Corp.] plants,” said Mendoza.

TUCP called on the PPP’s promoters to bring workers and consumers to the table to discuss best practices.

It noted that even with PPP, competition never set in the power sector, as Philippine power rates remain second only to Japan.

“The complaints about the huge bonuses being enjoyed by MWSS [Metropolitan Waterworks and Sewerage System] staff may be directly related to the fact that the entire MWSS budget is answered for through the regulatory and concession fees paid by Maynilad and Manila Water. It is of little wonder that no rate-increase petition of Maynilad or Manila Water has ever been declined by the regulator which is MWSS,” said Mendoza. –Cai U. Ordinario, Business Mirror