PPP conversations: No. 1 with PPP Center

PPP conversations: No. 1 with PPP Center

What do stakeholders have to say about public-private partnerships (PPPs)? What are their PPP stories? What are their roles and perceptions?

Starting today PPP Lead will feature PPP Conversations. This columnist will propound frequently asked questions to be answered by PPP stakeholders. Our first conversation will be with the PPP Center (PPPC), which will share with us its reason for being and its view on this developmental strategy.

  • Agra: What is your concept of PPP?

PPPC: PPPs are contractual arrangements between the government and the private sector, intended to accelerate the delivery of infrastructure and development projects or services. Republic Act (RA) 7718, or the Amended BOT law and its implementing rules and regulations (IRR), generally govern PPPs in the Philippines, supplemented by other relevant policies that make up the country’s legal and institutional framework for PPPs.

  • Is PPP critical for development? Why?

PPP is critical input to growth and development being a funding resource for selected infrastructure and development projects and a mechanism to free up government’s fiscal space for other development requirements. At the same time, it harnesses private sector efficiencies and innovation in the critical aspects of project design construction, operations, maintenance and actual service delivery.

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Popularizing PPPs: PPP Menu by Casa Agra and PPP 101 AVP

Popularizing PPPs: PPP Menu by Casa Agra and PPP 101 AVP

Should a handful of experts, lawyers and consultants have monopoly over knowledge about public-private partnerships (PPPs)? What constitutes the PPP learning ecology? Why is learning critical for success of the PPP program and projects?

We are all stakeholders. Parties to a PPP arrangement—a government agencies and private proponents—are not the only stakeholders of PPPs. We are all stakeholders. “We” here means the whole government bureaucracy, regulatory agencies, courts, legislators, civil-society organizations, church, academe, taxpayers, consumers and ordinary citizens. Whatever the government does, fails to do or improperly does affect all of us.

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Monkey wrenches to fast-tracking PPPs

Monkey wrenches to fast-tracking PPPs

(1) Turf clashes. A lot of projects can be implemented by more than one government agency. For example, the Department of Transportation, the Light Rail Transit Authority and a provincial government can implement a monorail project in a province. If they do not come to terms, all these three will assert their respective mandates. When jurisdictional issues are not resolved, either there is no project or there are redundant projects or white elephants.

(2) Paralysis-by-analysis. While master plans must come ahead of projects to ensure integrated development, master plans take time to prepare and not all aspects, arguably, are doable. There are some agencies that may have several plans and some features of macro plans are off tangent from micro or local plans. The obvious result is inaction or conflict.

(3) Layers upon layers of pre-award approvals. Depending on the PPP modality, governing law, project cost or amount of government contribution, there are levels of approval. Aside from the implementing agency, the go signal from the National Economic and Development Authority may be required. There could also be instances when positions of implementing agencies do not jive with those of the PPP Center and regulatory agencies. Without these approvals, there is no PPP contract.

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Legislation in the world of PPPs

Legislation in the world of PPPs

  • Supremacy of the fundamental law. Yes, PPP is a constitutional policy. It is a declared principle and state policy under the 1987 Constitution that “The State recognizes the indispensable role of the private sector, encourages private enterprise and provides incentives to needed investments.” PPPs cannot go out of existence by an act of Congress or by local councils.
  • Laws and regulations mirror this policy. As early as 1990, the stated policy of the build- operate-and-transfer (BOT) law was categorical and emphatic. In no uncertain terms, Congress then declared that the State recognizes the indispensable, not just important or critical, role of the private sector as the main engine for national growth and development. Simply put, there is no national development without the private sector. This constitutional policy is also reflected in the template ordinance being pushed by the Department of the Interior and Local Government.
  • They also supply details. While the basic law sets the policy and framework, it does not provide the “what, who, how and when”. Acts of Congress, like the BOT law, Government Procurement Reform Act, Corporation Code and Civil Code, supply the basic details, primarily what the law is, while administrative agencies, local governments included, provide the details.
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Changing the rules of the concession game – the 3 kinds (conclusion)

Changing the rules of the concession game – the 3 kinds (conclusion)

Conclusion

Will the next administration respect the public-private partnership (PPP) arrangements entered into by the previous one, continue the concession franchise under the original parameters, or will it alter the tariff mechanism, cancel the contract or change the interpretation of provisions of PPP contracts?

Not being certain about the answers to these questions raises fears about the sustainability and integrity of PPP and concession contracts. Every time a new president, governor, mayor, general manager or administrator assumes his or her position, the anxiety escalates. This is successor risk.

The worst kind—contract cancellation. Early this year, as reported in the media, the International Center for the Settlement of Investment Disputes of the World Bank directed the Philippine government to pay P1 billion.

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Changing the rules of the concession game

Changing the rules of the concession game (1st of 2 Parts)

 

Are concessions public-private partnership (PPP) arrangements? What is a concession? What are examples of concession agreements? What are the harmful effects of changing the rules of the concession game during the life of the contract?

  • Concession broadly speaking. Broadly, a concession is a license, franchise or grant of authority. Without a concession, a proprietary function or the “business” aspect of government cannot be “shared” or entrusted to a private-sector proponent (PSP) or concessionaire.
  • Concessions as PPPs. A concession is either a distinct type of a PPP embodied in a separate contract or is integrated into other PPP modalities. The transmission concession awarded to the National Grid Corp. of the Philippines and the two water concessions granted to Manila Water and Maynilad belong to the first type. These concessions were made by government corporations.

For the second type, all operate under the BOT law and its variants, i.e., build-operate-transfer, build-transfer-operate, build-own-operate, rehabilitate-operate-transfer (ROT) and rehabilitate-own-operate (ROO), and joint-venture arrangements carry with them concession provisions.

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