ADB supports growing pipeline of PPP projects by LGUs

MANILA, Philippines — The Asian Development Bank (ADB) is encouraged by the growing pipeline of public-private partnership (PPP) projects in local government units (LGUs) as it is supportive of the bank’s regional development agenda for the country, a key AD official said.

In an article published on the bank’s Philippine website titled “Public-Private Partnership Center to Play Key Role in Infrastructure Upgrades in Small Towns, Cities in the Philippines,” ADB director general for Southeast Asia Ramesh Subramaniam said the bank is committed to support the country’s goals of connecting regions and markets and spurring growth in rural areas through infrastructure buildup.

The international finance institution announced on Monday the approval of a $300 million policy loan for the Philippines to support the strengthening of the country’s PPP framework.

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.

As the administration’s ambitious Build Build Build program requires around $168 billion in investments for 75 high-impact priority projects nationwide, ADB said this necessitates the use of an optimal funding mix of government spending, official development assistance (ODA), and private capital through PPP.

As the national government still prefers to build hard infrastructure of big-ticket projects through the use of ODA and privatizing the operations and maintenance, the use of PPP is now highly encouraged to help in the delivery of infrastructure and vital services in the regions.

Since 2017, the Public-Private Partnership (PPP) Center has shifted its focus from national projects to assisting LGUs in the use of the PPP mode of project delivery for vital infrastructure and services like water supply and sanitation, solid waste management, and urban transport.

 “We are happy to see a growing pipeline of PPP projects at the LGU level, as this supports our thrust of promoting local economic development,” said Subramaniam. “We are committed to supporting the Philippine government’s vision of connecting regions and markets, generating jobs, and spurring economic development through better infrastructure.”

There have been two LGU PPPs awarded so far, one involving a public market redevelopment and the other a slaughterhouse project. Apart from the Baggao water supply project that has been tendered, two feasibility studies for wastewater treatment in Cagayan de Oro and a water supply project in Bohol were completed. Ten other LGU PPP projects are in project development stages.

Even as PPP is more encouraged in the regions, the national government is still entertaining PPP proposals for large projects.

ADB said that under the Expanding Private Participation in Infrastructure Program (EPPIP), the second phase of which is funded by the $300 million loan, it would further sustain major PPP policy initiatives.

These include the passage of the PPP Act which seeks to modernize the 28-year-old Build-Operate-Transfer Law, the legal framework governing private sector participation in infrastructure development and financing. The proposed law would institutionalize existing PPP best practices, simplify and clarify project development procedures, and create a risk management program, among other reforms.

“The last seven years of the PPP program highlighted numerous lessons in infrastructure development, financing, and implementation which are critical building blocks in the next phases of its evolution under the current infrastructure development regime.

The EPPIP has significantly supported the PPP Center and infrastructure institutions in their key objectives: policy enhancements, project pipeline development, and continuous capacity building,” said PPP Center Deputy Executive director Eleazar Ricote.

The program would also strengthen support for the PPP center’s new direction of bringing down PPP options to local governments through the provision of technical assistance.

 “The Philippine PPP program, now expanding to local and regional jurisdictions and openly enjoining private sector initiated unsolicited proposals, will continue to be a reliable infrastructure financing and development option, as consistently advocated by government institutions such as the PPP Center and enabled by ADB’s committed support through the EPPIP,” Ricote said.