PPP Center lays out policy direction for LGU projects

MANILA, Philippines — The Public-Private Partnership (PPP) Center is laying down the groundwork for a more aggressive introduction of the PPP mode for the infrastructure projects of local government units (LGUs).

The attached agency of the National Economic and Development Authority (NEDA) has launched its LGU strategy that will serve as its policy direction in providing assistance to local governments that will pursue PPP projects.

As the national government increasingly favors the use of other modes of financing for flagship infrastructure projects such as official development assistance (ODA) and hybrid financing, the PPP Center is shifting its focus from projects of national significance to vital projects within LGUs.

Specifically, the strategy launched has three timeframes for providing assistance: short term (immediate), medium term (one to two years), and long term (two to five years).

Within the short term, the center will provide “focused advisory assistance” to LGUs keen on implementing PPP and joint venture projects to strengthen their knowledge base and capacity in partnering with the private sector. This will be in the form of customized trainings to LGUs and forging linkages with institutions that can conduct pre-investment activities and those that can finance the conduct of such.

Priority will be provided for projects in water supply and sanitation, solid waste management, vertical infrastructure and transportation terminals.

In the medium term, successful PPP projects in LGUs will be replicated by developing templates of project studies and PPP contracts that will in turn be used as guides in applicable LGUs.

Assistance in the long-term entails the expansion of PPP Center support to include project development services. Also being considered is the creation of a facility similar to the Project Development and Monitoring Facility (PDMF) for local PPPs. The PDMF finances the conduct of pre-investment activities that include pre-feasibility studies, feasibility studies, preparation of tender documents, drafting of contracts, and providing assistance in bidding processes and contract negotiations.

“The launch of the new strategy is part of the PPP Center’s assistance to local government projects which contribute to overall regional development,” said PPP Center executive director Ferdinand Pecson during the launch of the LGU strategy at the Asian Development Bank (ADB) headquarters.

The ADB supports the new direction taken by the PPP Center by opening its $73 million Asia-Pacific Project Preparation Facility (AP3F) – which receives funding from Japan, Canada and Australia – for utilization by Philippine LGUs for the conduct and financing of project preparation activities.

The facility can be tapped for assistance in obtaining transaction advisory services, PPP fund management and project coordination and support.

Takeo Koike, director of the ADB’s newly-founded Office of Public-Private Partnership, said priority would be given to projects covering target sectors such as energy (power generation, transmission and distribution), transport (ports, airports, railways and roads), as well as social infrastructure (healthcare an education).

Projects proposed for the conduct of pre-investment activities, however, must be new investments that meet the following considerations:  climate resilience, sustainability and having an impact on poverty reduction; enhancement of regional connectivity and regional economic integration; identification by the national government as priority projects; and economic viability.

All ADB member countries – their local and national government agencies and entities – may apply for support under the AP3F.

ADB country director Richard Bolt recognized the importance of the shift to the greater use of PPP in LGU projects.

“The Duterte administration has recognized the value of continuing the public-private partnership or PPP program as a strategy to promote economic and social development of the country.  More than that, there is now a stronger recognition and commitment to spur economic development in the countryside, which ensures that the benefits will trickle down to those truly in need,” he said.

“On behalf of our development partners, Australia and Canada, the ADB fully supports this initiative of the Philippine government and that of the PPP Center,” he added.