ASEAN KEY DESTINATIONS
Philippines may ditch public-private plan
The Aquino administration may ditch its stalled public-private partnership (PPP) scheme and instead go it alone in pursuing key infrastructure projects, according to the Department of Transportation and Communications (DOTC).
On the sidelines of a forum on Thursday, DOTC Secretary Manuel Roxas said the government is tweaking the PPP policy in funding the agency's "unviable" infrastructure projects to avoid having to issue state guarantees and subsidies to the private sector.
"We are reconfiguring the financing of many projects so that we can avail of the long-term low-interest capital that is available to the government. As originally conceived, several of these projects could have been concession agreements with the private sector. We have reconfigured the projects so that the large basic hard infrastructure will be undertaken by the government availing of low-interest 30-year money that is in official development assistance," Roxas told reporters.
He said the government would still bid out the actual construction of the infrastructure, after which the operation and maintenance of these projects would be transferred to the private sector. "In short, the area where the private sector is good, which is in operations, maintenance, disciplines, timetables and so and so forth, we will avail of that by having them operate it through the concession agreements," the DOTC chief said.
President Benigno Aquino 3rd last year launched the PPP scheme, a revival of a program first implemented by his late mother, then President Corazon Cojuangco-Aquino. The PPP involves pursuing big infrastructure projects by tapping private-sector funds because of the government's fiscal straits.
Many of the projects lined up for PPP fall under the DOTC.
"We expect more reasonable user fees" if the government funds the construction using ODA, Roxas said, as this would no longer involve the private sector recovering its capital expenditure.
"We also expect not to be able to have to guarantee as previous governments did. In MRT 3, they had to guarantee ridership and returns regardless of what would actually happen," he said, referring to the Metro Rail Transit Line 3, which the government had to take over to trim its financial hemorrhage.
"So in this way, the government knows exactly what it will pay and what it is going to get for the resource and the private sector then bears the market risks for undertaking the O&M," he said.
Roxas said ODA is a good complement to the PPP program in fast-tracking projects lined up by the government.
"The ODA loans would benefit the consumers as well since there is no rush in recovering costs. It is a cheaper yet effective option because of the sovereignty of the partnership since governments of foreign donors are involved," the DOTC chief said.
With ODA, the government would pay low interest rates spread over 30 years. In contrast, the private sector is subject to commercial rates of 7 percent to 8 percent for the same period. The existing Light Rail Transit Lines 1 and 2 were funded by ODA.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below