PPP projects by LGUs to draw investor interest

MANILA, Philippines — Public-private partnership (PPP) projects in local government units (LGUs) would be ensured of sufficiency in scale to make it attractive for investors and would focus on vital services to make sure the projects survive changes in administration over long life cycles, the PPP Center said. 

As the national government now prefers to use its own funds and official development assistance (ODA) for most big-ticket infrastructure projects, the PPP Center is shifting its focus on facilitating the use of the PPP mode of project delivery for important projects in LGUs. 

Since this new direction was implemented, concerns have been raised on the investment viability of projects and if the long life cyle of the projects, which cover preparation and implementation, can outlast several turnovers in leadership. 

While the agency continues to assist implementing agencies in reviewing unsolicited proposals for major infrastructure projects, it is now building a pipeline of projects in water supply and sanitation, municipal solid water management and property development, among others. 

The bulk of the LGU projects now being assisted by the center is in the water sector. Around five to eight projects, including unsolicited proposals, are expected to be rolled out next year. Some of these projects are in Bohol, Oriental Mindoro, Cagayan de Oro and Cagayan Valley. 

PPP Center executive director Fernand Pecson said they are now looking into bundling several service areas to expand the scope of the projects and make them more attractive to the private sector. 

“In terms of projects, the biggest sector we’ve seen really is in water and sanitation,” he said. “One thing also with water that we are looking at is how we can bundle either several municipalities, town or cities together to make the project bigger in scope and more interesting to investors.” 

PPP Center director for project development Lawrence Velasco said the water unit of Pangilinan-led infrastructure and tollways conglomerate Metro Pacific Investment Corp. (MPIC) has submitted an unsolicited proposal for water service in Pampanga. 

“We are helping the province evaluate the proposal and in the negotiation proper. Because it is an unsolicited proposal, it will undergo negotiations and later on a Swiss challenge,” he said. 

As technical capacity remains lacking in LGUs, the center currently provides trainings on government procurement and the PPP process. 

“In the case of LGUs, one thing is still quite universal and that is the lack of capabilities to develop projects. That is already the bottleneck,” said Pecson. 

Since the rollout of the center’s LGU strategy, local governments have put forward several proposals for PPP projects, many of which still fall under the traditional projects like the modernization of public markets and other municipal infrastructure. 

The center, however, would be selecting projects that have greater socioeconomic benefits and would ensure that the projects are sustained throughout their lifespan of between 25 to 35 years and across several administrations. 

“That is a real risk, because the terms (of local government executives) are shorter, only three years,” said Pecson. “It’s therefore very important that the projects that we are working on are projects that can stand the test of political uncertainty as much as possible…. So these are projects that solve a basic need and it has to become the best value for the government so it will continue in the next administrations.”

Velasco said there is lesser risk for projects like water and solid waste management. 

“That’s why one of the priority sectors that we’ve been pushing for are those sectors are very much needed, those that are part of the basic needs of municipalities. Because these projects, like water, you cannot just terminate them. It’s a fundamental need. Hopefully, PPP Center assistance in these projects can provide comfort to LGUs that these projects have been studied well,”he said.

“The risk is there but for projects like water and solid waste manegement,  we feel that the risk is a little bit less.” 

He also urged LGUs to have thorough consultations with stakeholders before proposing projects to make sure these are really needed by the community. 

“Our suggestion to LGUs is to have thorough stakeholder engagement with their projects. If the people need it, it’s the people who will clamor for the project to be fully implemented,” he said.  

Jeffrey Manalo, director of the center’s policy formulation, project evaluation and monitoring service, said the center will also guide LGUs in crafting iron-clad contracts to ensure the legality of contracts. 

 “To make sure that the projects will actually be delivered even past the present administration, one thing to make sure is that the process is above board and that the contracts are airtight and will stand legal scrutiny,” he said.