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Salceda: Big infra offers to hasten PPP bill

Recent unsolicited offers from giant conglomerates to fund and undertake big-ticket infrastructure projects will surely spur the country’s economic growth and will likely speed up the passage of House Bill 788 or the PPP Rationalization Act, the enhanced Public-Private Partnership bill now pending in Congress.

Albay Rep. Joey Sarte Salceda, who authored HB 788, said the Filinvest-RLC-JG Summit Holdings consortium’s offer to build the P839-billion Clark International Airport, and San Miguel Corp.-RSA’s tender to build the proposed P700-billion Bulacan Airport, both under the PPP scheme, will trigger his bill’s passage.

The congressional technical working group that Salceda heads has already drafted a substitute measure for the enhanced PPP bill. It provides clearer parameters on unsolicited proposals, limiting the original proponent status to only one year, and compelling the proponent to work on its execution and giving other players the crack once it expires, he said.

The lawmaker said an enhanced PPP Program “with clearer and simpler rules that foster competition while keenly protecting public interest” is what the government needs as a pillar of infrastructure development, especially with the entry of players encouraged by President Duterte’s “Build, Build, Build” campaign.

The consortium’s offer for Clark is more than 400 percent higher than its previous proposal, Salceda noted. It recently submitted its new tender to the Bases Conversion and Development Authority and the Department of Transportation.

The consortium also proposes to develop, operate and maintain the commercial assets of the Clark International Airport, which include facilities for general aviation, fixed-base operations and real estate, according to reports. 

San Miguel-RSA, on the other hand, has already obtained an original proponent status for the P700-billion Bulacan Airport project.

Salceda said these and other upcoming proposals from big players aiming to latch on to the country’s “Golden Era of Infrastructure” bandwagon under the “Build, Build, Build” program, need an enhanced and strong PPP with clearer parameters. 

“These offers from giant players prove the private sector’s renewed trust in the government, which need to be backed up by reforms,” he added.

The Albay lawmaker said his PPP bill aims to accelerate the implementation of the Philippine Development Plan (PDP) 2017-2022, under which giant transport and industrial projects are listed. 

He said big ticket projects, such as the Clark and Bulacan projects, need clearer and simpler rules towards faster implementation and protection of public interest, which HB 788 provides.

The enactment of the PPP Rationalization Act is seen to help fund up to P6.3 trillion projects under the Duterte’s “Build, Build, Build” program. 

Based on the PDP 2017-2022, Salceda said the country would require “an intensified infrastructure spending and better selected infrastructure investments to support a higher growth trajectory and improved quality of life in both urban and rural communities.”

HB 788 also seeks the creation of a “Risk Management Fund to ensure fiscal sustainability and enhance the ability of implementing agencies (IAs) in the discharge of their contractual obligations.” 

It also provides the necessary “Investment Recovery Schemes” within allowable brackets that are “revenue- based, availability-based, and other non-monetary incentives (e.g. commercial development rights, or the grant of a portion or percentage of the reclaimed land),” said Salceda.

The proposed legislation sets the “maximum allowable revenue/return at post-tax weighted average cost of capital or WACC, based on comparable businesses using established methodologies such as capital asset pricing model or CAPM. The reforms introduced by HB 788 provide for:

1) Clearer and simpler rules leading to faster decision points that are “time-bound and decision maker-specific procedures on Project Approval, reduced current project timetable of 30 months to 18-24 months, and increased threshold amount of PPP projects to be approved;

2) Enhanced competition and protection of public Interest, with its new framework on unsolicited projects (USP) that would allow their inclusion m the priority list, or convert USP into solicited projects subject to reasonable compensation of the original proponent, and provide a more competitive challenge period – maximum 6 months, and the adoption of a Best and Final Offer (BAFO) rule;

3) Promotion of public infrastructure and financing, with the inclusion of joint venture as a PPP variant, and harmonize all PPP modalities under one legal framework, exemption from any and all taxes, fees and charges for select PPP projects of “national significance,” providing incentives for the private sector to enter the PPP, standard guidelines on taxes and permits for all PPP projects, and inclusion of PPPs in the Investment Priority Plan; and 4) Good governance.

Topics: PPP Rationalization Act

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