DOF sets conditions for PPP projects

MANILA, Philippines —  The Department of Finance (DOF) has set two conditions for the acceptance of public-private partnership (PPP) projects to avoid delays and to spare the government and the tax paying public from contingent liabilities.

During the recent International Finance Forum (IFF) in Guangzhou, China, Finance Secretary Carlos Dominguez informed prospective foreign investors that they should fulfill two prerequisites before they can participate in PPP projects under the Duterte administration’s Build Build Build program.

Firstly, Dominguez said investors must ensure that the projects are processed and implemented speedily.

“We have taken the attitude that the PPP is insufficient, it should not be public-private partnership. It should be PPPP—public private partnership for the people…Infrastructure projects must be delivered quickly and we cannot take too much time negotiating with the private sector on this,” Dominguez said.

He said PPP contracts must also not be disadvantageous to the government and the public.

 “The second issue that we have seen on our PPPs again—I don’t know if it’s true with other countries—is that not enough attention in the past had been paid to the contingent liabilities on the government that PPP contracts involve in. And because of that, we have taken a very serious position that we will limit severely the contingent liabilities on the government, and really the taxpayers, with regards to PPP projects,” Dominguez said.

The DOF said Dominguez’s statements were given in response to Ding Huamei, the chairman and president of Tianjin Financial Assets Exchange, who suggested that China and the member-states of the Association of Southeast Asian Nations (ASEAN) should explore the PPP mode to enhance cooperation in the implementation of infrastructure projects in the region.

Tianjin Financial Assets Exchange is China’s first national assets trading platform for PPP projects.  

 According to the DOF, Dominguez has expressed interest to learn from the ideas and practices of Tianjin on how to deal with PPP projects. 

The government earlier shunned the use of the traditional PPP mode as this process tended to slow down the implementation of projects. Instead, the government shifted to what it calls the hybrid PPP mode, wherein the government would construct the project, and later on bid out the operation and maintenance to the private sector.

However, the government recently recalibrated its Build Build Build program by adding 26 projects which will be pursued via PPP.

 This expanded the list of flagship infrastructure projects to 100, which the National Economic and Development Authority (NEDA) estimates to cost collectively at P4.2 trillion.

 Vince Dizon, the presidential adviser for flagship programs, said concession agreements in the past tied the government to provisions, such as automatic rate increases, commitments of non-interference and non-compete clauses.