BY DARWIN G. AMOJELAR SENIOR REPORTER

THE government wants the private sector to fund half of the Philippines’ infrastructure needs for the next five years because of the state’s fund lack. Based on documents obtained from the National Economic and Development Authority (NEDA), the government’s Comprehensive and Integrated Infrastructure Program (CIIP) would require P3.33 trillion from 2009 to 2013.

This is higher than its funding requirement of P2 trillion for the 2008 to 2010 CIIP.

Of the total P3.33 trillion, the power sector would require the biggest chunk at 30.19 percent, followed by transportation, 25.32 percent; water, 15.47 percent; social service, 13.40 percent; agrarian reform, 12.33 percent; communications, 1.68 percent; and relending programs, 1.60 percent.

The NEDA document showed that the private sector would have to finance P1.55 trillion, as the national government plans to spend only P780.54 billion.

Because of the government’s budget deficit, other funds will come from official development assistance worth P769.43 billion; government-owned and -controlled corporations, P73.56 billion; government financial institutions, P78.90 billion; local governments, P25.20 billion; and other sources, P48.50 billion.

The Department of Finance had said the government would suffer from funding shortfalls up to 2013.
The government had planned to balance its budget last year but moved the day of reckoning to next year, as it expected an up tick in public expenditures aimed at cushioning the domestic economy from the global financial crisis.

Among the power-sector projects in the CIIP are the P2.74-billion Eastern Panay Backbone Transmission
Project that would be implemented by the National Grid Corporation of the Philippines. Two other projects to be implemented by Philippine National Oil Co.-Exploration Corp. (PNOC-EC) are the P46.52 billion Integrated Liquefied Natural Gas Terminal and the Bataan to Manila Pipeline Project (Batman-2).

PNOC-EC and its parent, PNOC, will implement the P1.5-billion Batangas to Manila Pipeline (Batman-1).

The private sector will fund the P144-billion Power Generation for Luzon Island Grid, which would have a capacity of 750 megawatts (MW). Also set aside for the private sector are the P1.68-billion 17.5-MW Isabela Biomass Power Project Phase 2, the P9.91-billion 86 MW Burgos Wind Project in Burgos, Ilocos Norte, the P4.61-billion 40 MW Pagudpud Wind Power Project, and the P3.46-billion Northwind Pamplona Wind Power Project.

Under the transportation portfolio, the government has proposed private funding for the P36.2-billion Light Rail Transit (LRT) Line 1 South Extension Project, the P11.43-billion Metro Rail Transit (MRT) Line 2 Phase 2, the P51.46-billion MRT 8, and the P4.12-billion MRT Line 2 West Extension Project.

Other transport projects lined up for the private sector are the P5.2-billion Cavite-Laguna North-South Roads, and the P8.75-billion Cavite-Laguna Expressway, among others.

In the water sector, the government would pursue the P1.25-billion Carmen Bulk Water Supply Project, the P7.28-billion Mananga Dam Project, and the P1.08-billion Boracay Water and Sewarage System.

The controversial P48-billion Laiban Dam Project, which generated public opposition because of its generous subsidy to the private proponent, is also a priority project under the CIIP, according to the NEDA document.

Over the last 10 years, investments in public-private partnership projects averaged $2.18 billion a year, or 1.9 percent of gross domestic product (GDP), the World Bank said. This is a little above the public investment of 1.6 percent of GDP for 2006.

In the last three years, private investments slowed to an average of only $1.4 billion a year, or 1.4
percent of GDP. An indicator of economic performance, GDP is the final value of goods and services produced in a country.

The World Bank said infrastructure spending in the Philippines was 4.3 percentage points below nominal GDP growth and 3.5 percentage points below total tax collection growth.