Private sector seeks role as gov’t downplays PPP
government chose to develop the five regional airports “through other modes” instead of bidding out the P108-billion contract.
The Duterte administration has expressed its preference for the “hybrid PPP” model, allowing the government to deliver essential public services sooner and at more affordable prices, Budget Secretary Benjamin E. Diokno has said.
The government will take advantage of lower rates via borrowings and overseas development assistance ( ODA) to help fund the P8- trillion infrastructure program, then auction off the operation and maintenance (O&M) contracts to the private sector that is widely perceived to run facilities more efficiently.
Ayala Corp., Metro Pacific Investments Corp., Aboitiz Equity Ventures, Inc. and Megawide Construction Corp. — active participants of the PPP program — remain keen on O&M deals the government will auction off later on, their respective officials said.
For companies that piggybacked on the PPP program for growth, this year will be a period of consolidating “what they have and what they can salvage,” as they digest potential investment opportunities under the Duterte administration, said Rens V. Cruz II, analyst at Regina Capital Development Corp.
“From a social perspective, big conglomerates with an infrastructure push are just overstepping what should have been the government’s job to begin with. Now that the government wants it back, it’s not really a loss for the companies. There is just a rebalancing in the way they manage your assets,” Mr. Cruz said.
Based on their capital expenditure plans, the country’s biggest companies are still financing the expansion of their existing businesses this year, said Michael Gerard D. Enriquez, chief investment officer at Sun Life of Canada Philippines, Inc.
Some of them are searching for new growth areas. Ayala, Metro Pacific and SM Investments Corp. have ventured into logistics, while JG Summit Holdings, Inc. has joined the Ayalas in riding the e-commerce wave.
With less focus on PPPs, BDO Capital & Investment Corp. President Eduardo V. Francisco said MPIC and San Miguel Corp. are two of the companies assured of growth opportunities in infrastructure given their pipeline of road and airport projects.
“As investors, it ( infrastructure opportunity) is more limited in this administration because there is less PPP, but the government is enabling infrastructure and the private sector can build new business to take advantage of the infrastructure,” Mr. Francisco said.
Without the PPP program and large-scale projects still in construction mode, the conglomerates have turned to unsolicited proposals to participate in the government’s infrastructure drive. Unlike its predecessor, the Duterte administration is more welcoming of unsolicited proposals, while criticizing the slow progress of PPP initiatives.
But nothing is certain in this modality.
After attracting several unsolicited proposals to operate and modernize the Clark International Airport — previously in the PPP pipeline in the previous administration — the Department of Transportation opted to