ADB lends $300 million to boost PPP flow

MANILA, Philippines — The Asian Development Bank (ADB) has approved a $300 million policy-based loan to support the strengthening of the country’s public-private partnership (PPP) framework.

In a statement, the multilateral finance institution said the government reforms it supports under the Expanding Private Participation in Infrastructure Program (EPPIP) Subprogram 2 aims to create the enabling policy environment that would allow PPP projects to flourish through public sector expertise and innovation.

“PPPs can raise the quality of life for citizens by providing reliable public services through efficient infrastructure. Reforms under the EPPIP program have been successful in stimulating the PPP market and improving the quality of infrastructure projects in the Philippines,” said ADB senior trade specialist Cristina Lozano.

The government aims to raise infrastructure investments to 7.4 percent of gross domestic product (GDP) by 2022 from 5.1 percent in 2016 to respond to the connectivity and transportation needs of a fast-growing economy confronted by expanding population and rapid urbanization.

ADB noted that the administration’s ambitious Build Build Build program requires around $168 billion in investments for 75 high-impact priority projects nationwide, hence the need for the government to use an optimal funding mix of government spending, official development assistance and private capital.

ADB country director for the Philippines Kelly Bird said public participation in the BBB program remains a viable option because of the huge funding requirement and expertise to carry out big-ticket projects.

“The Philippines has made significant progress since the PPP program was launched in late 2010,” he said. “With a huge pipeline being rolled out under the BBB program of President Rodrigo Duterte, leveraging public resources via private sector participation remains relevant,” Bird said.

ADB has been supporting reforms aimed at improving the environment for PPPs such as long-term infrastructure planning, strengthening the government’s capacity to manage the PPP program, and enhancing the legal framework for PPP preparation, approval and implementation.

Reforms have also helped facilitate the use of PPPs by local government units (LGUs) in infrastructure development. The bank has partnered with the government-run PPP Center in providing technical support to LGUs in developing and implementing PPP projects in priority sectors such as water supply and sanitation, solid waste management and urban transport.

Since 2010, the government has awarded a total of 16 national PPP projects worth around $6.2 billion, of which 12 were tendered and awarded during the implementation of EPPIP. Feasibility studies for six projects were also completed during the program period.

ADB noted the improved assessment of the international community on the country’s PPP environment. In 2014 for instance, the Infrascope report of The Economist Intelligence Unit ranked the Philippines seventh in the group of developed PPP markets, joining India, Japan and Korea.

It also noted the positive review of the Philippine PPP market by the Organization for Economic Cooperation and Development.