Aquino’s PPP tap runs dry

May 6, 2016 at 12:00

THE GOVERNMENT will be hard-put to award any more public-private partnership (PPP) projects within the barely two months left before President Benigno S.C. Aquino III steps down.

“We have run out of time. We will just gift-wrap these projects for the next administration,” PPP Center Executive Director Andre C. Palacios said in a text message yesterday.

The government had initially hoped to award nine more PPP contracts before the next administration takes over at noon of June 30, noted Mr. Palacios, who assumed the PPP Center’s leadership just last March.

The projects include the operations, maintenance and development of the P2.34-billion New Bohol (Panglao) Airport, P14.62-billion Laguindingan Airport, P40.57-billion Davao Airport, P20.26-billion Bacolod Airport and P30.40-billion Iloilo Airport; the P18.99-billion modernization of the Davao Sasa Port; the operation and maintenance of the Light Rail Transit-Line 2; and the P298-million second phase of the Road Transport Information Technology Infrastructure Project.

The Department of Transportation and Communications (DoTC) — the lead implementing agency for these eight PPP projects — failed to set the deadline for bid submission last week, Mr. Palacios noted.

“The window of opportunity to complete the procurement of the eight DoTC projects by June 30 has closed. The bid date should have been decided last week at the latest, so bidders have time to prepare their bids and submit by this Friday at the latest.”

The PPP Center had also expected the Department of Justice to have awarded the P50.18-billion contract for the construction and maintenance of the Regional Prison Facilities in Fort Magsaysay in Nueva Ecija by June 30.

The auction for the prison PPP contract was originally scheduled for April 20. The Justice department, however, deferred the bidding to Aug. 25 to iron out issues concerning the project site.

The government’s failure to award the nine projects before the next administration takes over was no surprise for Peter L. Wallace, who heads The Wallace Business Forum.

“It was not unexpected, although [it was] disappointing the rural airport projects weren’t awarded. They’ve been delayed far too long,” Mr. Wallace said in a text message.

The next administration must spend “no longer than three months” in reviewing the PPP projects, Mr. Wallace said, citing the regional airports and the P23.2-billion North Luzon Expressway (NLEx)-South Luzon Expressway (SLEx) Connector Road among the priorities.

“I would expect the next president to move swiftly on the key ones. They need only a quick review, although there are one or two I would question,” he said, particularly citing the contracts for the Metro Rail Transit (MRT) Line 3 operation and maintenance — which is not listed under the PPP program — and the government’s Civil Registry System.

“MRT 3 should be reverted to the original maintenance contractor as should the civil registration service, which is going well under the present contractor. So why change it?”

In an earlier interview, Institute for Development and Econometric Analysis (IDEA), Inc. Research Director Remrick E. Patagan also expressed doubt over the contract auction and awarding of more PPP projects before the leadership change next month.

“I think it would be better off that way in order to avoid rushing project preparations and potential issues on public perception towards the timeliness and appropriateness of bidding out contracts at the last minute.”

Mr. Patagan said poorly prepared projects would undermine the interest of the government and the public, as in the case of the P65.09-billion LRT 6 project that will build a 19-kilometer railway from Niyog, Bacoor to Dasmariñas City in Cavite that could have formed part of the P64.9-billion LRT Line 1 Extension Project that will stretch from Baclaran to Bacoor, Cavite.

“[T]he current setup where the two are independent of each other does not provide for interconnection and interoperability between the two lines. You might just end up with a similar situation to the disjointed MRT and LRT systems that we have today,” Mr. Patagan said, adding: “There may also be some degree of uncertainty among private sector participants on the status of projects going into the change in administration. So not rushing PPP projects in the… homestretch of this administration would be best for everyone.”

The government has another five PPP projects under procurement. These include the LRT Line 6 and the P170.7-billion North-South Railway Project (South Line) that have advanced to the pre-qualification stage.

The remaining three, namely: P1.59-billion the Civil Registry System-Information Technology Project (Phase II), the P18.72-billion New Centennial Water Source-Kaliwa Dam Project and the NLEx-SLEx Connector Road will be awarded after June 30, Mr. Palacios said.

The government has a total of 53 projects in the PPP pipeline. Of these, 12 — cumulatively worth some P217.4 billion — have been awarded thus far.

“All in all, I think the government has done quite a good job in terms of partnering with the private sector in pursuing PPP projects,” IDEA’s Mr. Patagan said.

“Though progress has generally been slow, this is understandable as the administration needed time to build a robust pipeline of projects and fine-tune the institutional setup.”

Mr. Patagan added that acquiring capabilities to prepare, structure and participate in PPP projects takes time for both the government and private sector.

The economist further noted the implementation of PPP projects been delayed by right-of-way issues aside from challenges in the preparatory work.

“Let’s hope for a much faster pace in the next administration and [for] departments professionally led that can work together,” Mr. Wallace said.

Kash Aristotle Salvador, associate director at real estate advisory and services firm CB Richard Ellis Philippines, Inc., noted the increase in PPP projects awarded reflects improved confidence among investors toward the country.

“Foreign groups that are tied up with local partners and have participated in multi-billion projects are a sign of the strong confidence in our country and economy,” Mr. Salvador said via e-mail.