ADB approves $300-M PPP loan

THE ASIAN Development Bank (ADB) has approved a $300-million loan for the Philippines, seeking to promote the development of public-private partnership (PPP) projects.

The regional lender announced in a statement on Monday that it has approved the loan for the Expanding Private Participation in Infrastructure Program (EPPIP) subprogram 2.

The program aims to strengthen financial support to the government’s PPP thrust, expand and help ensure effective implementation of the PPP project pipeline, as well as strengthen legal and regulatory frameworks for PPPs, according to an ADB brief.

The ADB said that the program “focuses on consolidating PPP reforms to stimulate and facilitate the development of the Philippines’ PPP market and to ensure the earlier reforms are successfully implemented.” It also provides technical assistance, focusing on “enhancing the capacity of the PPP Center and implementing agencies and facilitating PPPs by local government units.”

The bank approved the first $300-million loan tranche of the EPPIP in 2015.

“The Philippines has made significant progress since the PPP program was launched in late 2010,” the statement quoted ADB Country Director for the Philippines Kelly Bird as saying.

“With a huge project pipeline being rolled out under the BBB (‘Build Build Build’ infrastructure) program of President Rodrigo (R.) Duterte, leveraging public resources via private sector participation remains relevant.”

The Duterte administration aims to increase the share of state infrastructure investments to 7.4% of gross domestic product by 2022, from 5.1% in 2016, led by 75 flagship infrastructure projects, along with over 4,000 relatively smaller projects throughout the country.

In a bid to speed up spending on these projects, the government’s economic managers have opted to favor financing via state budget and official development assistance (ODA) for the construction phase, leaving the PPP for the operation-and-maintenance stage.

At the same time, the government continues to entertain unsolicited private sector proposals that, among others, introduce new technologies and do not need sovereign guarantees.

The PPP Center said in December last year that it was focusing the PPP scheme for local government units and has even

set up “knowledge corners” to provide information on bankable PPP projects at the local level.

“PPPs can raise the quality of life for citizens by providing reliable public services through efficient infrastructure. Reforms under the EPPIP program have been successful in stimulating the PPP market and improving the quality of infrastructure projects in the Philippines,” ADB Senior Trade Specialist Ms. Cristina Lozano said in the same statement.

According to the ADB, the EPPIP covered 12 of 16 PPP projects since 2010 that were tendered and awarded, as well as the feasibility studies of six other projects.

“ADB has been supporting reforms that have helped ensure sustainable funding for government direct and contingent support to PPPs, improve longterm infrastructure planning, strengthen the government’s capacity to manage the PPP program, and enhance the legal framework for PPP preparation, approval and implementation,” the statement read.

“Reforms also helped facilitate the use of PPPs by local government units (LGUs) as an alternative in pursuing infrastructure development. The governmentrun PPP Center provided support to LGUs to develop and implement PPP projects in priority sectors such as water supply and sanitation, solid waste management, and urban transport.”

ADB has a $7.1-billion indicative sovereign lending program for the Philippines covering 20192021, from $3.68 billion initially programmed for 2018-2020. —