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PPP designed for wealthy conglomerates only, data show

By Jerry Maglunog

There are plenty of big-ticket projects in the Philippines that cost billions of pesos, and only the giant conglomerates can complete them.

These projects are those classified as public-private partnerships (PPP), the battlecry of the Aquino administration seemed to decrease severe lack in public infrastructure ranging from expressways, ports, roads, bridges and airports.

There is no problem in this endeavor, except that only those megarich listed firms are able to win in project biddings, according to some critics. In data obtained from the PPP Center, it was learned that only three conglomerates are able to bag projects under this scheme.

They are San Miguel Corp. (Naia expressway), Manila North Tollways Corp. (North-South Luzon expressway connector) and Ayala Corp. (SLEx-Daang Hari, Metro Rail Transit 3 rehabilitation). The data don’t lie and it only tells the truth, according to many critics.

Despite the win of these biggest conglomerates in the country for almost all PPPs, the Philippines still severely lacks infrastructure.

“These firms sometimes commit wild bidding just to win the projects. Definitely, we don’t want to commit such indecent act just for the purpose of winning,” said a foreign bidder for the most expensive and most complicated PPP ever—the P123-billion Laguna Lake expressway-dike.

He gave the example of what SMC did to win the Naia expressway wherein the conglomerate paid P11 billion to the national government in exchange for winning the project. Its closest rival, the MNTC of Manuel Pangilinan, only promised to give P300 million for the seven-kilometer expressway.

The source didn’t elaborate if the act by SMC can be considered wild bidding. However, he defined wild bidding as “an act that doesn’t aim to make money but just to win.”

Former senator Ernesto Herrera also said that PPP in the Philippines is really just for mega rich. They go to Visayas and they will see the effects of underspending. Many are jobless. PPP alone cannot solve joblessness but spending what is intended for infrastructure will do,” Herrera said.

PPP has been in the Philippines since 1990. It took effect by virtue of RA 6957 known as “An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for the Other Purposes.”

It was signed by the late President Corazon Aquino on July 9, 1990. Under Section 1, Declaration of Policy, RA 6957 recognized the “indispensable role of the private sector as the main engine for national growth and development.”

The Act was meant to mobilize the private sector to invest in building, operating and maintaining infrastructure projects and other developmental programs that have been under the responsibility of the government.

In signing the order, Aquino didn’t say anything that only the mega rich can bag a project classified as PPP. RA 6957 was amended on May 5, 1994 when former president Ramos signed RA 7718 otherwise known as an act amending certain sections of Republic Act 6957.

RA 7718 is known as “An Act amending certain sections of Republic Act no. 6957, entitled “An Act authorizing the Financing, Construction, Operation and Maintenance of projects by the private sector, and for other purposes.”

Under Section 1, Declaration of Policy, Republic Act 7718 clearly stated its intent to provide financial incentives and minimize government regulations to motivate and support the private sector undertake certain projects.

On Sept. 9, 2010, President Aquino signed Executive Order Number 8, entitled “Reorganizing and Renaming the Build-Operate and Transfer (BOT) Center to the Public-Private Partnership (PPP) Center of the Philippines and Transferring its Attachment from the Department of Trade and Industry to the National Economic and Development Authority and for Other Purposes.”

The Executive Order emphasized the need to expedite programs and projects as it is a major strategy for achieving the country’s economic growth.

The PPP under EO 8 is not a totally new concept, but an improvement of the previous ones in terms of speedy process of selecting and approving proposals for infrastructure projects.

Under the Executive Order, the PPP Center is now under the management of the National Economic and Development Authority (Neda), with the purpose of expediting public-private partnership programs.

In his first State-of-the-Nation Address in July 2010, Mr. Aquino said: “There is a need to fast-track the implementation of the public-private partnership programs and projects as a cornerstone strategy of the national development to accelerate the infrastructure development of the country and sustain economic growth.”

The Center will be in charge of providing assistance to local government units and agencies in implementing projects, from project preparation and development and policy recommendations to monitoring projects and programs, as well as managing the Project Development and Monitoring Facility, the revolving fund intended for the center.

Under EO No. 8, a working budget of P300 million has been appropriated for its initial operations, especially to study and develop public-partnership programs.

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