Sona: Investors now pay premium to build PPP projects


IN his final State of the Nation Address (SONA) on Monday, President Benigno Aquino 3rd said from having to beg investors to participate in public-private partnership (PPP) projects, the government now receives more than enough offers of premium from private builders scrambling for a part in constructing the needed infrastructure in the country.

“Halos magmakaawa ang pamahalaan sa mga pribadong sector na lumahok sa mga proyekto. Ngayon sila na ang nagbabayad sa atin [In the past, the government had to almost beg the private sector to participate in government projects. Now the private sector is the one paying premium to us],” Aquino said.

“Dito sa [MCX] binayaran pa tayo ng premium na P925 million para sa pribilehiyong itayo ang imprastrakturang kailangan natin. Sa taas din ng kumpyansa nilang nakikita sa proyekto, sabi ng private proponent libre na ang unang buwan ng toll sa MCX [In this project, the private proponent paid a P925 million premium for the privilege to build the infrastructure we need. And because of their strong confidence in the project, the private proponent said the MCX toll will free for the first month],” Aquino added.

First PPP road project
Last week, President Aquino inaugurated the Muntinlupa-Cavite Expressway (MCX), the first PPP road project completed under his Administration.

Riding a white SUV, Aquino was the first person to drive through the P2-billion expressway, also called the Daang Hari-South Luzon Expressway (SLEX) Link Road Project—a PPP initiative of the Department of Public Works and Highways (DPWH) with Ayala Corp. as the private sector partner.

“We are delighted that although this is not a large project, it is a very significant one because it is the first one bid out by government,” Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corp. told reporters on the sidelines of the inauguration.

“Statistics will show how even a small project like this can make a significant impact on the people,” he added.

Motorist can use the MCX toll free from July 24 to August 24. The regular toll rates are P17 for Class 1 vehicles, P34 for Class 2 and P51 for Class 3. The four-kilometer, four-lane toll road connects Bacoor, Cavite to the South Luzon Expressway.

As an alternative Metro Manila-Cavite route, the MCX is expected to cut travel time by an average of 45 minutes and decongest traffic in Cavite, Las Piñas, and Muntinlupa.

John Eric Francia, Ayala Corp. managing director, said the road project has helped set the momentum for the company to take in other PPP projects, especially after experiencing end-to-end development of MCX. “From a momentum experience we will continue that,” Francia said.

“We hope that the whole idea of using the PPP structure to allow private capital to contribute to infrastructure will continue . But that depends on future leadership, I guess.

It’s a formula that is working. People have seen the benefits of it, so I see no reason for it to stop,” Zobel noted.

13 projects eyed for approval before June 2015

Meanwhile, the PPP Center said that it is hoping to award 13 projects totaling an estimated P517.98 billion before the end of President Aquino’s term next year.

“We’re currently bidding 13 projects that include airports, ports, the Light Rail Transit Line 2 O&M [operations and maintenance], among others. If those 13 have no glitches, then the bid submissions would be this year or the first quarter of next year,” Cosette Canilao, PPP Center executive director, told reporters over the weekend.

“If there are no requests for extensions, then we could award the 13 projects before the end of PNoy’s term,” Canilao added.

“Now, there are three that have already been approved by the ICC (Investment Coordinating Council) and the NEDA (National Economic and Development Authority) Board,” Canilao said.

During The Manila Times 2nd Business Forum on Wednesday, July 22, the PPP Center brushed aside criticisms over delayed biddings and project implementations of some PPP projects, noting that the project pipeline consists of real projects.

“This is not a wish list,” Canilao has said of the projects lined up.

As of July 2015, there are 13 projects under procurement with a cost of P517.98 billion; with three projects for roll-out with a total cost of P25 billion; four projects for approval of relevant government bodies with a total cost of P201.19 billion, and six projects with ongoing studies with a total cost of P86.75 billion.

In addition, the PPP Center has more than 40 projects worth an estimated P24 billion in various stages of study in the pipeline.

She stressed that they are continuously developing new projects for PPP implementation in coordination with government implementing agencies.

Since 2011, when the PPP program was implemented, the Philippines ranked eighth in the world in terms of the legal framework for PPPs, Canilao pointed out. “We are now considered as a country with a well-developed PPP program,” she added.

Including the MCX, the government has awarded 10 projects since the PPP program began.


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