PPP mode suits LGUs

As the national government leans toward the use of other modes of financing for flagship projects, the public-private partnership (PPP) Center said it will be more aggressive in facilitating the use of the PPP mode of procurement in local government units (LGUs).

PPP executive director Ferdinand Pecson said despite the decreased preference for the PPP mode of project financing and implementation, this mode of procurement is getting a new lease on life.

As of December 2016, there were 53 projects in the PPP Center’s pipeline. This has been whittled down to 35 because of the shift in the government’s approach to financing projects.

“PPP is very much alive and we are rebuilding the pipeline. What has been highlighted so far are national government projects especially those that aim to decongest Metro Manila but if you look closely at local government units, there are huge opportunities for PPPs,” he told businessmen during the 2nd Annual Philippines Energy & Infrastructure Finance Forum hosted by Euromoney.

In July, the PPP Center signed with the League of Cities of the Philippines (LCP) a memorandum of understanding (MOU) for the provision of assistance to LGUs in implementing projects via the PPP route.

This is part of a larger project to establish a protocol for stakeholder engagement for local PPP projects.

“What we’re trying to do here is be more aggressive in introducing to local government units how can tap the PPP program,” said Pecson.

The center is launching on Sept. 18 its so-called LGU Strategy in partnership with the Asian Development Bank (ADB). The event aims to raise awareness in the services offered by the PPP Center at the local level, link local governments with potential PPP projects, and strategically identify priority pilot projects.

At the national level, PPP is shunned in favor of project financing using official development assistance (ODA) loans and funding from multilateral development banks (MDBs).

A so-called hybrid financing mode for large projects is also being considered, meaning a combination of ODA loan proceeds and loans from MDBs.

In terms of implementation, the national government has expressed preference for so-called hybrid PPPs in which the government would build the hard infrastructure while the operations and maintenance component would be bid out to the private sector.