Government to tap ODA to bankroll major infra projects
September 28, 2011 at 16:43
MANILA, Philippines – The government is planning to tap official development assistance (ODA) to bankroll major infrastructure projects as this would allow it to pay the loan for a longer period, Transportation Secretary Manuel Roxas II said yesterday.
Using long-term ODA loans to fund projects would benefit consumers, as there would be no rush to recover costs, Roxas said.
“The predisposition of DOTC (Department of Transportation and Communications) is to do all heavy infrastructure via ODA,” Roxas said.
“The funding would be cheaper since it would be ODA funding as compared to the private sector, which would be subject to bank rates of about six percent to seven percent,” he added.
Roxas said Japan has expressed interest to grant ODA to support key projects including railways and airports.
“Japan is looking at several projects on the ODA side. These include the Cavite railway extension into Bacoor and several airports. JICA (Japan International Cooperation Agency) has been one of the biggest funders of ODA,” he said.
Roxas said the government would only pay a one percent interest in a period of 30 years if it taps an ODA. This is in contrast with that of the private sector, which is subject to bank rates of six to seven percent.
“They (private sector) would have to borrow from capital markers and pay six to seven percent 10-year money. They recoup fast and the user fees would be too high,” Roxas said.
Roxas, however, clarified the private sector would still participate in these projects.
He said the operations of airports and the train as well as the rolling stock could be handled by the private sector.
“For example, the LRT (Light Rail Transit) going to Cavite, we will tap ODA to fund the physical infrastructure, the tower rails,” Roxas said.
“We are reconfiguring the projects so the heavy infrastructure would be supported through ODA financing,” he added.
Roxas said they are making sure that the projects’ terms would not be disadvantageous to the government.
“We don’t want to repeat the situation wherein the project is privatized and yet the government pays the private sector. In the structures of DOTC, we are removing the viability gap and changing the structure of concessions wherein the government would do heavy infrastructure,” he said.
Earlier, the National Economic and Development Authority (NEDA) reported that the total net ODA loan commitment reached $8.31 billion as of June 2011.
The figure is higher than the $8.03 billion total net ODA loan commitment as of March 2011 but lower than the $8.84 billion as of June 2010.
NEDA said the biggest ODA donor as of June is the Japanese government and the JICA, with a share of 31.69 percent of the total ODA commitments, followed by the World Bank with a 23.75-percent share. China came third with a share of 13.73 percent and fourth was the Asian Development Bank with a share of 8.77 percent.
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By: Alexis Romero
Source: The Philippine Star, Sept. 26, 2011
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