No money-out option for govt
ARE implementing agencies (IAs) required to shell out money for public private partnership (PPP) arrangements? What is the appropriate PPP modality for a no cash-out option on the part of the government? Why is this option popular for IAs, particularly local government units (LGUs)? Aside from cash, what can an IA contribute so that it will have a “skin” in the project?
The government has the option to or not to contribute cash; extend subsidy; provide viability gap funding; guarantee, or give equity to a PPP arrangement. Depending on the modality, priority, governing law or viability of the project, the choice partakes of a legal, political, socioeconomic, even a leadership question and challenge.
Under the build-operate-transfer law, the government may provide for a direct government guarantee, subsidy or equity for solicited projects. Depending on the modality, lease payments and grantor payments from the government may be part of its contractual obligations. For the School Infrastructure Project and South Integrated Transport System Project, the government will make such payments to the private-sector proponents (PSPs). The annual budget to be approved by Congress must provide for an appropriation for these payments.