1st Meeting of the PPP and Infrastructure Financing Network of Asia and the Pacific

12 September 2018

1

Eleazar E. Ricote

Deputy Executive Director

PPP Center of the Philippines

The Philippine PPP Program

PPP Legal and Regulatory Framework

1987 Philippine Constitution “The State recognizes the indispensable role of the private sector, encourages

private enterprise, and provides incentives to needed investments.”

Republic Act (RA) 6957, as amended by RA 7718: The Amended Build-

Operate-and-Transfer (BOT) Law

Executive Order (EO) 8, series of 2010 as amended by EO 136, series of

2013 renaming the BOT Center to the PPP Center and expanding its

mandate

Other Major Policies

RA 10572 (Right of Way Acquisition Act)

RA 8975 (Expeditious Implementation and Completion of Government

Infrastructure Projects by Prohibiting Lower Courts from Issuing

Temporary Restraining Orders)

EO 423, s. 2005 (Section 8) - Guidelines on Joint Venture Agreements

EO 78, s. 2012 (Use of Alternative Dispute Resolution Mechanisms in

all PPP and JV Projects)

PPP Legal Frameworks

Contractual Arrangements/Modalities:

1. Build-and-Transfer (BT)

2. Build-Lease-and-Transfer (BLT)

3. Build-Operate-and-Transfer (BOT)

4. Build-Own-and-Operate (BOO)

5. Build-Transfer-and-Operate (BTO)

6. Contract-Add-and-Operate (CAO)

7. Develop-Operate-and-Transfer (DOT)

8. Rehabilitate-Operate-and-Transfer (ROT)

9. Rehabilitate-Own-and-Operate (ROO)

10. other variations thereof, as may be approved

by the President

Republic Act (RA) 6957 as amended by RA 7718 - An act authorizing the financing,

construction, operation and maintenance of infrastructure projects by the private

sector and for other purposes

Implementing Agencies: any department, bureau, office, commission, authority or agency of the

national government, including Government-Owned and/or -Controlled Corporations (GOCCs),

Government Financial Institutions (GFIs), State Universities and Colleges (SUCs), and Local

Government Units (LGUs) authorized by law or their respective charters to contract for or

undertake Infrastructure or Development Projects

Joint Venture Agreements

Own Local Government PPP Code/JV Ordinance: - DILG issued Memorandum Circular (MC) No. 2016-120 or the Guidelines for

the Implementation of PPP for the People Initiative for Local Governments

(LGU P4). The MC encourages LGUs to adopt an LGU P4 Code where one of

the suggested modalities is JV.

RA 7160 Local Government Code: - Section 35 “Local government units may enter into joint ventures and such

other cooperative arrangements with people’s and nongovernmental

organizations to engage in the delivery of certain basic services, capability-

building and livelihood projects, and to develop local enterprises…”

National Economic and Development Authority (NEDA) Joint Venture

Guidelines (2008 or 2013) Executive Order No. 423, series of 2005

- Section 8 “the NEDA, in consultation with the GPPB, shall issue guidelines

regarding joint venture agreements with the private entities with the objective of

promoting transparency, competitiveness and accountability in government

transactions, and, where applicable, complying with the requirements of an

open and competitive public bidding”

- LGUs not covered by the guidelines with respect to its local autonomy. However,

LGUs are not precluded from adopting the process stipulated in the guidelines.

5

Institutional Set-Up

Contracting Parties/ Implementing Agencies

o National Line Agencies (Departments)

o Government Corporations (GOCCs/SOEs)

o Local Government Units (Province, City, Municipality)

o State Colleges and Universities

Other National Agencies Involved

o Line Agencies/ Departments (policymaking bodies)

o National Regulatory Bodies

o Oversight Agencies

o Sectoral Regulatory Agencies/Bodies

Review and Approving Bodies

o Inter-Agency Investment Coordination Committee

o National Economic and Development Authority (NEDA) Board (Cabinet level

members and Chaired by the President)

o Local Government Councils

Coordinating and Monitoring Agency

o Public-Private Partnership Center (PPP Center)

PH Administration’s 0-10 Point Socio-Economic Agenda

Accelerate annual infrastructure spending to account for more than 7% of GDP by 2022,* with PPPs playing a key role

Increase competitiveness and

ease of doing business

Promote rural and value chain dev’t toward

increasing agricultural/rural

enterprise productivity and rural tourism

Invest in human capital development, including

health and education systems, match skills

and training

Promote science, technology, and the

creative arts to enhance innovation and creative

capacity • Enhance mobility or increase passenger and cargo throughput

• Improve connectivity by addressing gaps in physical infrastructure

• Reduce economic losses and damages due to flooding

• Enhance digital connectivity

• Accelerate irrigation development

• Provide access to electricity services and encourage private sector privatization

• Provide universal access to water supply and sanitation

• Provide safe, secured, adequate, and satisfactory educational facilities

• Enhance the teaching-learning processes

• Improve/upgrade healthcare facilities

• Develop the country’s capacity in research and development and the application of nuclear science and technology

*Updated from 5% based on latest NEDA pronouncements

PPP Program for Infrastructure Development

4 Accelerated

Infrastructure Development

Financing and Implementation

Delivery Mechanisms

Government Financing General appropriations,

corporate funds

Government Borrowings Domestic & foreign debt,

official development assistance (ODA)

Private Sector Financing Public-Private Partnership

(PPP)

7

Local Infrastructure Development Agenda

and the PPP Program

Ambisyon Natin 2040 (Long-term vision of the Philippines)

Identifies infrastructure development as one of the bedrock strategies

and has a strong emphasis on spreading economic development

outside Metro Manila

2017 Investments Priorities Plan

Identifies local PPPs as a priority investment sector that is eligible for

incentives

The Local Government Unit PPP for the People Program (LGU P4)

Inter-agency collaboration among the Department of Interior and Local

Government (DILG), PPP Center, and local leagues

Focus on local initiation of PPP modalities in pursuing local

infrastructure and development projects

Places a premium on service delivery and affordability consideration

PPP Center’s Local PPP Strategy

Focus support to LGUs, Water Districts (WDs), and State Universities

and Colleges (SUCs)

Project Development, Structuring and Transaction Advisory Support

thru the Project Development and Monitoring Facility (PDMF)

Establishment of local PPP Knowledge Corners

PPPs in the Philippines

Contractual arrangement between government and the

private partner for the provision of a public asset or service

It is a long term contract (a fixed term that shall not exceed

50 years)

Role of private partner: finance, design, construct, operate,

and/or maintain government facilities

Risk is borne by the party who can best manage it

The facility is turned over to government at the end of

concession period

Local Infrastructure and Development Projects Eligible for PPPs

public markets, slaughter

houses, warehouses,

solid waste management,

land reclamation projects,

industrial estates or townships,

commercial/real estates,

housing, government buildings,

tourism projects

canals, dams, water supply

irrigation, sewerage, drainage,

dredging

telecommunications,

information

technology networks and

database infrastructure

other infrastructure and

development projects as may

be authorized by the concerned

government entity.

education and health facilities

PPP Benefits

Integrated

approach

• Proper alignment of incentives (among contractor, operator

and maintenance provider) in a whole-of-life approach

• Single procurement process

Optimized

risk allocation

• Allocation of risks to party who can best manage that

risk (e.g. risk of cost and time overruns allocated to

private partner)

Output

specifications

• Specifications are defined via desired project outputs

• Government can tap private partner’s innovation and expertise

in coming up with most efficient design that adheres to

specifications

Revenue

potential • Revenue sharing with private partner

• Revenues from commercial activities

Private sector

capacity

• Can address implementing agencies’ limited absorptive

capacity and government’s limited fiscal space

Openness to Unsolicited Proposals

• Stems from the Economic

Managers’ recognition

that the government

does not have a

monopoly of good ideas

• Twenty-one (21)

unsolicited proposals

officially in the PPP

pipeline, with more

expected to be added

• PPP Center provides

Implementing Agencies

free assistance from

evaluation, to Challenge

process, to monitoring

of implementation

• PPP Center also produces knowledge

products to guide stakeholders in the

unsolicited proposal process. The

approved guidelines on managing

unsolicited proposals is available at our

official website.

Promote development of innovative ideas by private sector to support economic development and infrastructure needs

Ensure open, transparent and fair process that involves high standard of public accountability

Ensure that value for money for Government is achieved

13

Guiding Principles for Unsolicited PPPs

Policy Circulars

Appraisal of PPP Projects

Pipeline Development

Best Practices

Viability Gap Funding

Appointment of Probity Advisors

Termination Payment

Monitoring Framework and

Protocols

Managing Affected Government Employees

Assessing Value for Money

Public Consultation and Engagement

Framework on PPP Center Assistance on Joint Venture

Agreements

Guidelines on Managing

Unsolicited Proposals

The Generic Preferred Risk Allocation Matrix (GPRAM)

Envisioned to serve as a risk guide for government

entities and the private sector in structuring PPP

projects

Guided by the principle that risks should be borne by

the party that is best able to manage it

Lists the risk allocation preferences, including risk

mitigation measures, in the development and

implementation of PPP projects

Intended to be recommendatory and envisioned to

serve as reference of the Investment Coordination

Committee (ICC) and the proponent agencies in the

ICC review of PPP projects

Risk Management Program (RMP)

RMP is an account under the Philippine Treasury,

utilizing a Special Provision under the relevant law on

appropriation intended to cover commitments made

by, and obligations of the National Government (thru

the PPP implementing agencies) in PPP projects.

Implementing Agencies are required to submit a

Contract Management and Risk Mitigation Plan

(CMRMP) to Technical Working Group for Contingent

Liability (TWG – CL)

17

• Revolving pool of funds made available to enhance the investment

environment for PPP and to develop a robust pipeline of viable and well-

prepared PPP infrastructure projects

• Has three panels of international consultancy firms:

Project Preparation and Transaction Advisory Consultants (PPTA)

Independent consultancy

Probity advisory

• Fund Contributions

USD 7M initial contribution from the Philippine Government

USD 6M contribution from the Australian Government administered by the

Asian Development Bank (ADB-CDTA)

USD 12M contribution from the Australian Government administered by

Asian Development Bank (ADB-CDTA)

USD 77M counterpart contribution of the Philippine Government

The Project Development and Monitoring Facility (PDMF)

18

The Proposed PPP Act (Amendments to the BOT Law)

Sustaining Good Governance

Adopting best practices (e.g. institutionalization of the PPP Center, PPP

Governing Board, PDMF)

Establishing and enhancing mechanisms to ensure participation,

accountability, and transparency in the process of addressing critical

infrastructure needs

Enhancing Competition

Ensuring sufficient competition in the market through open, competitive,

and non-discriminatory tender processes, especially for unsolicited

proposals (longer challenge period, allowing unsolicited proposals for

priority projects, option for agencies to convert unsolicited proposal to

solicited)

Accelerating Implementation of PPP Projects

Streamlining processes to address implementation bottlenecks (e.g.

prescribing standard deadlines and requirements for needed

endorsements, approvals, and other relevant permits; setting standard

guidelines on real property tax computation and other local taxes; revised

approval threshold for PPPs)

SALIENT FEATURES

The PPP Center

Anchored on the BOT Law’s provision for a coordination and

monitoring entity, Executive Order No. 8, series of 2010, as

amended by Executive Order No. 136 signed on May 28,

2013:

BOT Center renamed as PPP Center under the

National Economic and Development Authority (NEDA)

Inter-agency (cabinet level) PPP Governing Board

providing policy and institutional direction to the

Philippine PPP Program and PPP Center

PPP Center Services: Provide technical assistance to Implementing

agencies in the entire PPP project life cycle

Capacity building on all aspects of PPP competencies

Formulate and reform PPP policies and guidelines

Manage the Project Development and Monitoring

Facility (PDMF) Fund

Establish and manage a PPP central database

1986-1992

• BOT Law (RA 6957)

1992-1998

• Amended BOT Law (RA 7718)

• BOT Center under Office of the President –Coordinating Council of the Philippine Assistance Program (CCPAP)

1998-2001

• Renamed BOT program to PSP program

• Coordinating Council for Private Sector Participation (CCPSP) under the Office of the President

2001-2010

• Revert to

BOT

Program

• BOT

Center

under the

Dept. of

Trade and

Industry

2010- 2016

• PPP Program

• Renamed PPP Center and attached to NEDA

2016-present

• PPP Program

• PPP Center attached to NEDA

PPP Center’s Roles Through the Years

CABINET Reporting to Economic Development Cluster

PPP GOVERNING BOARD NEDA | DOF | DTI | DBM | DOJ | OES | NCC

PPP CENTER

Executive Director

Deputy Executive Director

Deputy Executive Director

Project Development

and Monitoring

Facility Service

Project Development

Service

Policy Formulation,

Project Evaluation and

Monitoring Service

Legal Service

Admin Service

Development Partners

IMPLEMENTING AGENCIES (IAs) National Agencies | Line Agencies, GOCCs, SUCs Local Government Units | Province, City, Municipality

Capacity Building and Knowledge

Management Service

NEDA (attached agency)

ADB Technical Assistance:

CDTA-7796 (ADB, Canada

& Australia)

JICA

World Bank

CDIA (ADB & Germany)

PPP Center Institutional Framework

Key Development Partners

Asian

Development

Bank (ADB)

ADB TA 7796-PHI: Strengthening Public-

Private Partnerships, which is a technical

assistance grant from the governments of

Australia and Canada, under the stewardship

of the ADB

Cities

Development

Initiative for

Asia

Collaboration on areas of capacity

development, knowledge products, and

project development towards the

implementation of local PPP projects of LGUs

Key Local Partnerships

DILG LGU PPP

for the People

(P4) Initiative

The LGU P4 Program aims to promote local economic

development through partnership between the LGU and

the private sector. DILG Interventions in Promoting LGU

P4 include: (1) Policy Issuance on LGU P4; (2) PPP

Training Program; (3) LGU P4 Database; and (4) LGU-

CSO PPP Watch

Mindanao

Development

Authority

Implementation of Capacity Building Program for the

Mindanao Development Authority to enable the institution

to move local PPP projects in the Mindanao region

League of Cities

of the

Philippines

Cooperation towards promoting well-structured and viable

infrastructure projects through public-private partnerships

to spur local economic development.

Local Capacity

Building

Institutions

(LCBIs)

Partnership with SUCs/HEIs as conduit in the conduct of

capacity building activities in various regions.

Milestones and Ongoing Initiatives

24

Policy

Enhancements

Process

Improvements Capacity

Building

Building a

Robust

Pipeline

Updated the Implementing Rules and Regulations of the current BOT Law

Established Dispute Mechanisms in PPP contracts

Institutionalized the PPP Governing Board

Enhanced PPP framework through issuance of policy circulars and guidelines

Further enhancement of legal and regulatory framework for PPPs through enactment of PPP Act and issuance of circulars/guidelines

Streamlined PPP appraisal process

Close coordination with bidders and other stakeholders

Fast-track and improve hiring of independent consultants through the PDMF

Standardize PPP concession agreements

Establish more streamlined project monitoring and evaluation protocols

Hiring of probity advisors for big-ticket project

Continuous strengthening of capacities of implementing agencies and local government units (LGUs)

Further develop communication strategies and knowledge management (KM) through the PPP KM Portal

Continuous institutional partnerships with development partners to build capacities of PPPC, oversight agencies, implementing agencies, and LGUs

15 awarded projects with a total value of USD 6.81 Billion

36 projects in the pipeline

39 Projects with Project Development and Monitoring Facility (PDMF) support

22 internationally-renowned PDMF panel of consulting firms

Building pipeline of LGU projects through PDMF

PPP Project Pipeline (Solicited Projects) as of 10 September 2018

30 PROJECTS

USD 4.53 Billion**

Awarded

USD 4.41 Billion* 14

Under Procurement

USD 0.11 Billion

3

1 For Evaluation & Approval

Under Development 10

*Projects started from 2010 onwards

**Amount does not include 11 projects with no estimated costs yet or those with costs yet to be finalized through final approval by relevant government approving body

Approved Project for Procurement 1 USD 2.4 Million

Under Review by the IAs 1

25

BSP Reference Exchange Rate: PHP53.75/USD as of 10 September 2018

PPP Project Pipeline (Unsolicited Projects) as of 10 September 2018

21 PROJECTS

USD 116.12 Billion

Awarded

USD 2.25 Billion* 1

Under Pre-Construction/Construction

USD 1.60 Billion 2

2 For Evaluation by IA

*Projects started from 2010 onwards

Under/For Negotiation 5 USD 14.32 Billion

For Approval/Deliberation/Endorsement 11

26

USD 97.73 Billion

USD 0.22 Billion

BSP Reference Exchange Rate: PHP53.75/USD as of 10 September 2018

27

PROJECT DATABASE

109 projects in the database

• 17 projects (2010-present)

• 74 projects (1990-2009)

Region No. of Projects

Nationwide 8

NCR 23

Luzon 51

Visayas 14

Mindanao 13

TOTAL 109

PPP Projects by Geographic Location

35%

24%

41% NGA

LGU

GOCC

GOCCs – 45

BOT Variants – 8

JVA – 37

NGAs – 38 BOT Variants – 30

JVA– 8

LGUs– 26 BOT Variants – 5

JVA– 21

PPP Projects by Type of Implementing Agency

28

PROJECT DATABASE

Sector No. of Projects

Transportation 12

Airport 3

Port 2

Rail 3

Terminal 4

Education 2

Health 1

Power 40

Property

Development

16

Roads 12

Tourism 1

Water 14

TOTAL 109

PPP Projects by Sector

PPP Projects by Status

Concluded – 37 (34%)

Operational – 44 (40%)

Terminated– 9 (8%)

Pre-construction - 5 (5%) Under

Construction – 14 (13%)

PPP Center - Recognitions

PH: Most-

improved in

Asia-Pacific for

PPP Readiness

INFRASCOPE

2014

PPP Agency of the Year

The ASSET Triple A Asia

Infrastructure Awards 2015

Asia-Pacific

Grantor of the Year

IJGlobal Awards 2014

Best Central Government

PPP Promoter - Gold Award

Partnerships Awards 2014

Best Central Government

PPP Promoter - Silver

Award Partnerships

Awards 2016

29

Continuing PPP Program directions..

30

Sustainable Development Goals

9, 11 and 17

Master Plan on ASEAN Connectivity

2025

0-10 Point Socioeconomic

Agenda

Philippine Development Plan

2017-2022

Open doors to Unsolicited

Proposals (USPs) Hybrid PPPs

Pursue PPPs in local and regional

jurisdictions

Climate Change/Resiliency

Projects that improve inclusivity

Challenges and Lessons

www.ppp.gov.ph

Thank You! For further information, please visit:

For inquiries, kindly e-mail:

info@ppp.gov.ph

PPPCenter.Philippines

@PPP_Ph

Public-private-partnership- Center-of-the-Philippines

PPPPinas 32

THE GLOBAL PPP NETWORK

WORLD ASSOCIATION OF PPP UNITS AND INFRASTRUCTURE AGENCIES

33

Proposing industry-wide

standards: professional, sectorial, and

ethical

34

Support implementation of best practices

in order to: avoid costly disputes, do successful

projects and allay public

criticism

Networking, to gain access to

peer knowledge,

contacts and expertise

Promoting “People First” projects and

the adoption of proper

legislative and regulatory

frameworks

Organizing international

events, conferences, and training workshops

1 2 3 4 5

ONE VOICE

WAPPPU proposes to be the global voice to address issues that concern us all, and to help us achieve the following objectives: