A HYBRID approach is the fastest and cost-effective way of pursuing the public-private partnership (PPP) initiative to partly implement the Duterte administration’s infrastructure buildup over the next five years, according to the Department of Finance (DoF).
In a statement on Wednesday, Finance Secretary Carlos Dominguez 3rd said a hybrid PPP approach allows the government to select, finance and build big-ticket projects via public bidding. Once completed, the government can then auction off the operation and maintenance (O&M) contract to the private sector.
What prompted the government to take the hybrid approach to PPP is the timeframe, the Cabinet official said. “When we examined the length of time it took to negotiate the PPP, the average time was 29 months before you start the project,” Dominguez said.
“So we’re saying, ‘You know, we can do it a bit faster’. And, secondly, we can also borrow money cheaper. And we can PPP the project at any stage: we can PPP it in the middle or we can PPP it at the end,” he said.
The government has been in discussions with large foreign retirement funds that typically don’t invest early because they don’t want to take on the risks associated with the construction phase.
“In that way, we think we can even attract more funds. Or the private sector can attract more investors in the PPP project if we do it towards the end,” Dominguez noted. “So, we can borrow money cheaper, we can save time in the negotiations, but eventually we will either sell the project or go into an O&M method.”
The DoF said the makeover of the PPP program via a novel hybrid approach has led to fast-track the implementation of two road projects in Luzon in barely nine months of the Duterte administration.
“There were two road expansions that were done in the north of Manila, which we decided that we were going to just do the projects ourselves and by deciding to do that, we have already started it in less than nine months,” Dominguez said.
The Plaridel Bypass Road will link the North Luzon Expressway (NLEX) in Balagtas, Bulacan with the Maharlika Highway in San Rafael, Bulacan, and the Central Luzon Link Expressway (CLEx) will connect Cabanatuan City in Nueva Ecija to Tarlac. Both projects are now under construction.
MAYVELIN U. CARABALLO