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SMC, Clark airport projects moving up the review process

“It’s with NEDA now. It’s been undergoing ICC technical board process. That is an example of an unsolicited proposal that was given original proponent status,” said Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia. PPD/Toto Lozano, File

MANILA, Philippines — San Miguel Corp.’s unsolicited proposal to put up a P700-billion airport in Bulacan is slowly moving up the review and approval process by the technical board of the National Economic and Development Authority-Investment Coordination Committee (NEDA-ICC), the country’s economic planning head said.

“It’s with NEDA now. It’s been undergoing ICC technical board process. That is an example of an unsolicited proposal that was given original proponent status,” said Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia.

“If the ICC technical board comes out with good results, it’s likely to be approved by the ICC Cabinet Committee. Then it goes to the NEDA Board, then there will be a Swiss challenge,” he added.

He said the technical board is expected to complete the assessment by December as SMC submitted all the requirements and has agreed to the conditions for unsolicited proposals.

“There will be no subsidy, guarantee and flight allocations. They will just have to compete,” said Pernia.

He said this is a good example of government awarding big-ticket projects to the private sector on condition that the projects are of good quality and can match the speed of execution of projects implemented using government funds and official development assistance (ODA).

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During a policy forum yesterday, Pernia said the government would accept unsolicited proposals for large infrastructure projects but would demand  the projects break ground within a minimum of 18 months and would be subject to conditions such as non-provision of subsidies or guarantees. The proposal will still have to be subjected to a Swiss challenge.

The oft-used example is the construction of a new terminal building in the Clark International Airport which is now in the advanced stages of the procurement process and is expected to break ground this quarter. The construction would be financed using government funds, while the operations and maintenance (O&M) component will be auctioned off to the private sector.

“We are open to a mix of funding sources. Having experienced the long delays in PPP (public-private partnership) in the previous administration, we are trying to experiment with different modalities. An example is the new terminal of the Clark Airport. By the time it breaks ground, it will only be 18 months. We have been telling the private sector that if you can come up with that kind of speed, using PPP, we can consider giving you projects again,” said Pernia.

Economic managers recently met with top business leaders to assure them the government is open to team up with the private sector on big-ticket infrastructure projects under the ambitious Build Build Build program through solicited and unsolicited proposals for PPP or joint venture (JV) schemes.

Solicited proposals should be consistent with conditions under the law such as the 50 percent cap on government undertakings on project cost. Negotiated JVs, on the other hand, can be initiated by the private sector or by the government if the competitive selection fails. This, however, would still be subjected to a Swiss challenge.

Budget Secretary Benjamin Diokno said the administration wants to move projects at an unprecedented speed, even importing labor if local manpower is not sufficient to carry out key projects.

“We have not abandoned PPP. We have actually widened the options. Our priority is to get these projects done. If the private sector can start the project in 18 months, then it’s yours, unsolicited proposal,” he said yesterday.

“Their interest is mostly airports. That’s what they want,” said Pernia

As airports are a focus for the private sector, Pernia said the government is open to auctioning off the O&M component for the regional airport projects that were scrapped from the PPP pipeline this year in favor of funding the construction via  government appropriations.

The project covers the development, operations and maintenance of the New Bohol (Panglao), Davao, Iloilo, Laguindingan and Bacolod airports.

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