Evaluation of Proposed PPP Projects The Philippines Investment Forum

September 24, 2019, Fairmont Makati

Millie Jane C. RigoPPP Center

2

Presentation Outline

Background of the PPP Program

Legal Framework for PPP Projects

The PPP Center of the Philippines

PPP Project Cycle

Project Evaluation and Approval

PPP Program for Infrastructure Development

4Accelerated

Infrastructure

Development

Financing and Implementation

Delivery Mechanisms

Government Financing General appropriations,

corporate funds

Government Borrowings Domestic & foreign debt,

official development assistance (ODA)

Private Sector FinancingPublic-Private Partnership

(PPP)

Legal Framework for PPP Projects (1/2)

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

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

Legal Framework for PPP Projects (2/2)

Own Local Government PPP Code/JV Ordinance:- Department of Interior and Local Government issued MC No. 2016-120 or the

Guidelines for the Implementation of Public-Private Partnership 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:Joint Venture Agreements

- 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…”

NEDA Joint Venture Guidelines (2008 or 2013)Executive Order No. 423 s. 2005

- 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.

Other rules adopted by LGU (e.g. Provincial PPP Ordinance)

The PPP Center’s Mandate

Policy reforms to enhance

enabling environment

2 Develop

3 Approve

4 Procure

5 Implement

1 Identify

Capacity building of implementing

and oversight agencies

Projects under

BOT Law &

Joint Ventures

Policy, Process, and Projects

7

PPP PROJECT DATABASE

Region No. of Projects

Nationwide 8

NCR 22

Luzon 60

Visayas 21

Mindanao 18

TOTAL 129

PPP Projects by

GEOGRAPHIC LOCATION

129 Projects in the Database

• 50 Projects (2010-present)

• 79 Projects (1990-2009)

117/129 (91%) projects validated; ongoing validation / site visits for other projects

PPP Projects by

TYPE OF IMPLEMENTING

AGENCY

27%

27%

46%

LGUs: 35BOT

Variants: 19

JVA: 16

NGAs: 35BOT

Variants: 28

JVA: 7

GOCCs: 59BOT Variants: 40

JVA: 19

8

PPP PROJECT DATABASE

PPP Projects by

STATUSPPP Projects by

SECTOR

SectorNo. of

Projects

Transportation 26

Airport 5Port 3Rail 3Terminal 3Roads 12

Education 2

Health 1

Information Technology 11

Power 40

Property Development 22

Tourism 1

Water and Sanitation 24

Solid Waste Management 2

TOTAL 129

43%

12%

8%7%

30%

15 Under

Construction

55 Operational

12 Pre-

Construction

9 Terminated

38 Concluded

129 Projects in the Database

• 50 Projects (2010-present)

• 79 Projects (1990-2009)

117/129 (91%) projects validated; ongoing validation / site visits for other projects

The Project Cycle

2 Develop

3 Approve

4 Procure

5 Implement

1 Identify

Submission by IA to Approving Authority

Evaluation and Endorsement for Approval

Approval by the ICC

Confirmation by the NEDA Board

22 PPP Projects for Approval

• 21 are unsolicited proposals

• 1 is a solicited proposal

10

Project Evaluation Parameters (1/3)

Completeness Check

Validity of submitted economic and financial modelsConsistency with other submissionsTraceability of modelsRobustness of the assumptions used

Technical AppraisalDesign parameters, service levels, location, size, timing/

schedule of implementation Interface/alignment with other infrastructure projects

11

Project Evaluation Parameters (2/3)

Legal and Institutional AppraisalReview of compliance with applicable laws, rules, and

regulations Review of institutional roles and responsibilities

Socio-economic AppraisalEconomic viability of the project (social discount rate:

10%) Identification and valuation of the project’s economic

costs and benefitsSocial safeguards analysis (environment, gender,

resettlement, etc.)

12

Project Evaluation Parameters (3/3)

Financial Appraisal Project CostDemand ForecastWACC, Financial viability and bankability of the project PPP scheme, including required government

undertaking, bid parameterRepayment scheme/ revenue streams (availability

payments, user fees, commercial development and revenues)

Risk analysis – Generic Preferred Risk Allocation Matrix (GPRAM) and contingent liabilities

Value for Money (VfM) Analysis

13

Project Evaluation Parameters– Unsolicited Proposals

Same parameters as mentioned above, plus:

Project Eligibility should not be part of the government’s priority list; or new concept or technology in the proposal

Mandatory Provisions in the draft agreement

Proponent Eligibility Legal qualifications Technical qualifications – experience and track record Financial qualifications – ability to raise debt and equity

Review of the Draft Concession Agreement

Reasonable Rate of Return (RROR) and other terms for negotiation

14

Common Issues Encountered

Incomplete submission/information

Inconsistent assumptions

Untraceable models

In the case of Unsolicited Proposals:

Direct government subsidy, equity or guaranty

www.ppp.gov.ph

PPPCenter.Philippines

@PPP_Ph

Public-private-partnership-Center-of-the-philippines

PPPPinas

For further information, please visit:

For inquiries, kindly e-mail:info@ppp.gov.ph