Public-Private Partnership projects can augment Build Build Build thrust

With the Philippine economy showing little signs of faltering despite global trade problems and a slowdown in developed countries like Germany and China, the scope for more partnerships with the private sector in projects, not just for infrastructure, is expanding.

Of note in recent months is the increased collaboration of private businesses and local governments for projects that greatly matter to those who live in the districts and cities that the national government is not in the best position to care for.

It’s a good thing that the Local Government Code of 1991 that aimed to decentralize governance by strengthening local units basically through increased empowerment and a bigger slice of local earnings, has found wings to take care on its own some of its big-budget needs.

Many local governments, especially those that have limited revenues allocations, had in the past failed to monetize future revenues through international funding agencies for basic projects that their communities needed.

By having passed their own public-private partnership codes, and with the appropriate guidance by the Public-Private Partnership Center (PPPC) and the National Economic Development Authority (NEDA), local governments have been able to tap the private sector expertise and financial capabilities.

Growing list

It’s an interesting and growing list of projects that have been completed and are operational. A number call for the improvement of existing public markets and water systems, installation of information management systems, and the operation of waste sewerage systems.

Some of them were solicited projects, while a number are unsolicited-like the proposal of Ayala-led Manila Water  Co. Inc. and the Davao del Norte Water Infrastructure Co. Inc. to build a bulk water supply system to augment the current water supply source of Tagum City.

The P527-million project carries a 15-year concession that will supply water to all of the 23 barangays in the city with improved water quality and quality on a 24/7 basis. This is Manila Water’s second project with a local government in Mindanao after its venture in Zamboanga City.

Recently, Chelsea Logistics Holdings Corp. made an unsolicited proposal to improve the Davao International Airport with additional facilities as well as equipment for better safety, security, access, and passenger and cargo movement.

This is a bigger project that will call for an investment of P40.57 billion, but is not included in the list of Build Build Build (BBB) projects. The Davao International Airport, however, needs an upgrading that, unfortunately, is not included in the national government’s P8-trillion BBB line-up.

Clearly, partnerships with the private sector are needed at a time when the national government is focusing on the completion of the much-needed 75 big-ticket infrastructure projects during the coming years.

Business first or altruism?

There’s been some criticism on unsolicited projects supposedly because the companies that submit proposals are more focused on getting back their investment at the quickest time with a corresponding healthy return.

Of particular focus has been San Miguel Corporation, which has currently pitched for three projects that would call for a combined capital expenditure of P1.9 trillion if given the green light – meaning they pass through the mandatory Swiss challenge.

The biggest of SMC’s projects is the proposed P700-billion New Manila International Airport in Bulacan, now on its last stages of vetting. The other two are the P554-billion expansion of the Metro Manila Skyway and the South Luzon Expressway, and the P338.8-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project.

SMC is one of the biggest – if not the biggest – of companies operating in the country, and Ramon Ang, who currently helms the conglomerate, is in a hurry. Like many of the Filipino tycoons, he understands well how important it is for business to grow.

Mobility is one of Ang’s pet concerns, hence his focus on building expressways. SMC’s unsolicited project proposals, however, are definitely not just borne of altruistic motives, and every centavo that the conglomerate puts into the projects is linked to solidifying its presence in the country.

Towards inclusive growth

But he is not alone in this kind of thinking, and most of the Filipino tycoons realize that the demands of infrastructure building will be too big for the national government to do alone – and in every little (or big) way, they do their bit.

Meralco chairman Manny Pangilinan, for example, was approached by a local politician of Batangas City to bring electricity to Verde Island, which has never been connected to the main grid. Residents had forever relied on generators and privately-owned solar panels that were switched on usually only in the evening.

Together with the Department of Energy and the United States Agency for International Aid, Meralco and the Batangas City government came up with an agreement to initially supply electricity to 40 of the 300 households of Barangay San Agapito through the Isla Verde Solar Photovoltaic Plant.

The contract involves the operation, maintenance, and management services of the plant, which would generate about 0.1920 megawatt using solar panels for 25 years.

Projects like this by the private sector in partnership with the government may not necessarily bring in substantial earnings for the companies involved, but such efforts – big or small – are seen as part and parcel of their commitment to stay in the country.

It may be a few million pesos or several billion pesos, but what matters is that the money is being reinvested to generate jobs and profits that will help bring the country closer to its goal of inclusive growth.

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