New PPP rules to attract private sector

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    The National Economic and Development Authority said the planned issuance of guidelines for public-private partnership (PPP) projects, following its approval of a revised list of flagship infrastructure projects which included PPPs, is not seen to deter the private sector.

    The Investment Coordination Committee-Cabinet level and the Committee on Infrastructure approved last week the updated list of infrastructure flagship projects of the Duterte administration, which is now at 100.

    Of the total projects, 26 will be implemented through PPP.

    “They will be encouraged because there are about 26 projects. They know that (refinements) already because we’ve done that for the Bulacan airport, we’ve done it for Clark, we are doing it on Bohol Panglao airport which will be the template for Laguindingan, Iloilo. It’s definitely more stringent than during the previous administration,” Ernesto Pernia, socioeconomic planning secretary, said last Thursday.

    Asked what the Department of Finance (DOF) thinks of the revised list of projects, Pernia said the agency is not against it.

    “We just need to be more vigilant about the usual things that were given by the previous administration,” Pernia said.

    Last month, Karen Singson, DOF undersecretary, said PPP contracts in the past contained provisions which stripped the government of its regulatory authority and increased contingent liabilities of government.

    “The fund used by government to pay concessionaires are sourced from taxpayers’ money – money of the Filipino people which government is mandated to judiciously manage,” Singson said.

    She said the following provisions are considered detrimental to regulators, government and Filipinos: automatic rate increases, where government is forced to approve required rate increases proposed by concessionaires without regulators’ ability to determine whether the increases are just and proper; non-interference commitments, where government promised not to interfere with provisions such as rate-setting mechanism provided in the contract; and non-compete clauses, where government ensures a monopoly during the entire term of concession.

    “These types of provisions restrict the power of government to perform its functions and address the needs of the Filipino People quickly and efficiently, leaving public infrastructure to the unregulated control of companies fueled primarily by profit motive. Government simply will not subsidize private sector interest to the detriment of serving the public,” Singson said.

    In spite of the presence of these provisions in PPP contracts, Singson clarified that the Duterte administration is not closing its doors on PPPs.

    She advocates the rollout of PPPs that are “Public-Private partnerships for the People.”

    Singson emphasized that private proponents must be willing to accept terms imposed by government in order to hasten evaluation and implementation of PPP projects, since actual returns of private proponents have already significantly surpassed projected returns.

    She also highlighted that “the private sector is allowed to engage in commercial activities in the infrastructure project.”

    “Government has taken the position that it can no longer accept advice to continue to provide guarantees for a significant portion of project risk, when the private sector makes more than adequate returns for taking on limited share of risk,” Singson said.