DOTC keen on fast-tracking PPP projects
MANILA, Philippines - The Department of Transportation and Communications (DOTC) is keen on fast-tracking transportation projects that will be undertaken through Public-Private Partnerships (PPPs).
At the Economic Journalists Association of the Philippines (EJAP) Economic Forum 2012 on Thursday, November 22, DOTC Secretary Joseph Emilio Abaya said he will "hound undersecretaries" to speed up the work on these PPPs.
Since the PPP initiative of the Aquino administration was unveiled in November 2010, only two projects have been bid out. The initial promise was 10 projects by 2011 and 8 to 16 projects by 2012.
"What does fast-track mean? Faster than previous. From my end, I think I can hound our undersecretaries that we wouldn't waste any time in between biddings and meetings. We have to inch these projects forward," Abaya said.
"My predecessor was pretty much into details and processes, assessments and calculations. I am pretty confident that he has done the home work, that a system has been set up. We have an assembly line in DOTC and my priority is just to push things out, not to re-assess what he has done," he explained.
Abaya replaced Manuel Roxas at the DOTC. Roxas was appointed Interior Secretary, replacing the late Jesse Robredo.
Abaya also assured investors and the public that the Aquino administration will not change the rules on PPPs. He, however, admitted that one of the causes of delay in the PPP rollout was the definition of hybrid PPPs.
He explained that hybrid PPPs are funded through Official Development Assitance (ODA) and private funding. This means that if a project costs P60 billion, half will be funded through an ODA loan by the government, and half will be funded by the private sector, which will bid for the project.
Abaya said that while these ODA loans are tied, these are concessional loans. When the government takes out tied ODA loans, projects that will be financed by these loans will involve only contractors from the funding donor.
In the case of LRT Line 1, the ODA loan was taken out by the government from the Japan International Cooperation Agency (JICA). This means the contractors who will undertake the provision of LRT cars will be Japan-based firms only.
While this is the case, Abaya said tied loans usually result in lower interest rates and longer grace periods. This makes these loans more affordable for the government, ultimately easing the debt burden of the Filipino people.
Abaya said hybrid PPPs will also benefit the private sector in the sense that they do not need to pay for the full amount of a project while they earn from it.
"If you compute the cost of having tied loans, our right to choose will be somehow curtailed, but if you input that you can take out a loan at a low interest rate and a longer grace period, then you start thinking. At the end of the day, these people are the rail experts. They are not fly-by-night firms. So we might as well resort to these loans," Abaya said.
The PPP Center is already in the process of drafting the list of projects to be included in the pipeline for 2013 and 2014.
In an interview at the sidelines of the 2012 Philippine Energy & Infrastructure Business Meeting on Tuesday, September 25, PPP Center Executive Director Cosette Canilao said the projects to be included in the list will depend on how viable they are for PPP financing.
Canilao said the PPP Center's current pipeline includes projects worth $4.8 billion. These projects include 8 transportation projects worth $1.88 billion; 4 road network projects worth $1.29 billion; and 3 water sector projects worth $1.08 billion.
Other projects include two health sector projects worth $126 million; two agriculture projects worth $186.9 million; two local government unit projects worth $6.28 million; and an education project worth $233 million. - Rappler.com