The Transport Department said Thursday it will build all its infrastructure projects and will not entertain proposals from the private sector to reduce cost.
Transportation Secretary Manuel Roxas told reporters Thursday the agency would tap official development assistance loans to finance the projects and eventually privatize them.
“We studied and reconfigured the financing element and the sequencing element so that we can have these at the lowest possible cost to the public,” Roxas said.
He said the government would build large and basic hard infrastructure by availing low-interest ODA loans. He added the government will privatize the operation and maintenance aspects once the infrastructure is completed.
“What we are trying to do in reconfiguring is to put the market risks to the private sector. The execution risks, meaning the building of the infrastructure with the low-cost money, will be on the government side,” Roxas said. He called the mode a “hybrid-PPP scheme.”
“This way, the government knows exactly what it will pay and what it is going to get for the resource, while the private sector then bears the market risks for undertaking the O&M,” he added.
Roxas enumerated priority projects that include Light Rail Transit Line 1 extension to Bacoor in Cavite, LRT 2 extension to Masinag in Antipolo, airport development projects in Puerto Princesa and Laguindingan and the additional low-cost terminal in Mactan International Airport.
He said the Korean, Japanese and Chinese governments have expressed interest to assist to provide funding for LRT 1 South Extension project. The Romero group in 2009 earlier submitted an unsolicited proposal to build the project.
The extension of the LRT Line 1 South Extension will feature a 16-kilometer stretch from Baclaran station to Imus, Cavite.
Roxas said the Korean and the Japanese governments were also willing to fund the LRT 2 extension project. This project, including the line’s extension to Divisoria in Manila, was earlier estimated to cost P15.72 billion.
Roxas said the hybrid-PPP scheme would cut the cost of projects because of cheap foreign funds that would eventually result in lower cost of transportation.
The government will just pay a 1-percent interest rate spread over 30 years on ODA loans, compared with commercial bank rates of 7 percent to 8 percent annually for the same period. –Jeremiah F. de Guzman, Manila Standard Today
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