The Philippine PPP Program

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The Philippine PPP Agenda

PPP Program is geared towards

INCLUSIVE GROWTH

PPP as one of the strategies

to accelerate

INFRASTRUCTURE

DEVELOPMENT

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Private sector as

PARTNER IN

DEVELOPMENT

PPP Center as the

CHAMPION FOR

PUBLIC-PRIVATE

PARTNERSHIPS

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

encourages private enterprise, and provides incentives to needed

investments.”

RA 6957, as amended by RA 7718: The Amended Build-

Operate-and-Transfer (BOT) Law

Revised BOT Law Implementing Rules and Regulations

Other Major Laws

RA 8974 (Right of Way Acquisition Act)

RA 8975 (Expeditious Implementation and Completion of Government

Infrastructure Projects by Prohibiting Lower Courts from Issuing Temporary

Restraining Orders)

RA 7160 (Local Government Code)

PPP Legal and Regulatory Framework

Contracting Parties/ Implementing

Agencies o National Line Agencies

o Government Corporations

o Local Government Units

o State Universities and Colleges

Other National Agencies Concerned o Line Agencies/ Departments

(policymaking bodies)

o National and Sectoral Regulatory

Bodies

Review and Approving Bodies o Inter-Agency Investment Coordination

Committee

o National Economic and Development

Authority

(NEDA) Board

o Local Government Councils

Coordinating and Monitoring Agency

o Public-Private Partnership Center 5

PPP Institutional Arrangement

PREQUALIFICATION, BIDS

AND AWARDS COMMITTEE

(PBAC)

• Responsible for all aspects of

the pre-bidding and bidding

process, including the

preparation of tender documents,

conduct and evaluation of bids,

and interpretation of the rules

regarding the bidding, among

others

“In the ASEAN region, Philippines ranked highest in terms of PPP readiness…”

--Infrascope 2011 Study (By the Economist Intelligence Unit as commissioned by the Asian Development Bank)

Result: Overall Index Analysis of a benchmark index and

learning tool that assesses the

readiness and capacity of countries

in the Asia-Pacific Region to carry

out sustainable, long term PPPs

Ranking Criteria: Legal and regulatory framework (25%)

Institutional framework (20%)

Operational maturity (15%)

Investment climate (15%)

Financial facilities (15%)

Sub-national adjustment factor (10%)

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Infrascope 2011: PHL as the Most PPP-Ready in Southeast Asia

The Philippines

10.95 8.34 6.72 6.95 1.17 5.0

Introduction to PPP

Definition of PPP

A range of possible contractual

arrangements between the Public

(Implementing Agency or Local

Government Unit) and private entities to

accelerate provision and/or

implementation of infrastructure and/or

development projects or services

The contractual agreement provides

clearly-defined roles and

responsibilities of the parties/partners.

There is allocation of rewards/revenues/

costs/risks among public and private

partners.

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Forms of PPP

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Utility

Restructuring Corporatization

Decentralization

Civil Works Service Contracts

Management & Operating Contracts

Leases/ Affermage

• Concessions • BOT Projects • DBOs

JV/ Partial Divestiture

of Public Assets

Full Divestiture

Low High Extent of Private Sector Participation

Source: (Delmon, 2010)

Public Owns and

Operates Assets Public-Private Partnership

Private Sector Owns and

Operates Assets

SERVICE CONTRACT

Government procures the services of a

private entity to carry out one or more

specified task/s or service/s for a fixed

period, typically 1-3 years for a fixed cost;

government control remains

MANAGEMENT CONTRACT

Government hires private entity for the

daily operation and management of a

particular task or service; government

ultimately remains responsible for service

provision

LEASE CONTRACT

Private partner is responsible for

service provision in its entirety, and bears

financial risk of Operation and

Maintenance (O&M); government retains

ownership of the facility/ infrastructure

PPP Contractual Arrangements

CONCESSION

Private partner is

responsible for capital

investment and full

delivery of services,

including O&M, collection,

construction/ rehabilitation

of the infrastructure facility

or system; government

retains ownership of the

public assets during the

concession period

JOINT VENTURE

Government and private

partner pool resources

(money/ capital, services,

assets) to pursue a

specific infrastructure

facility or project;

government and private

partner share in the

profits, losses, and risks of

the project

BOT (and its

variants)

Private partner finances,

constructs, and, in some

cases, operates and

maintains a facility or

project. Private partner is

allowed to charge user

fees to recover its

investment. Government

and private partner share

project risks.

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• Smaller ‘ ’ marks indicate Only for the term of

concession

PPP Contractual Arrangements BOT Variants

• Highways/Roads

• Railroads & Railways • Ports • Airports • Transport Systems

• Power Plants • Telecommunications • ICT Systems/Facilities • Agriculture • Canals, Dams, Irrigation

• Water Supply • Land Reclamation • Solid Waste Management • Tourism Facilities • Education

• Health Facilities • Industrial & Tourism Estates • Markets, Warehouses, Slaughterhouses • Housing, Government Buildings • Climate change mitigation/adaptation infrastructure projects

• Other Infrastructure/ Development Projects/ Systems

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Eligible Types of PPP Projects

Philippine Modes of Procurement

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GPRA PPP JV

LEGAL BASIS RA 9184 RA 6957/7718 and its

IRR EO 243

FINANCING GAA / ODA Private Sector Joint

TERM Short Term Long Term Short or Long

Term

OWNERSHIP Government Government Government or

Private

APPLICATION All All

GOCCs / GFIs /

GCEs / GICPs /

SUCs

Philippine Modes of Procurement

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GPRA PPP JV

ENTITIES /

PARTIES

INVOLVED

BAC PBAC JV-SC (Selection

Committee)

Head of Procuring

Entity (HOPE) Head of Agency

Head of Government

Entity / Private Sector

partner

Procuring Agency Implementing Agency LGUs, GOCCs, GCEs,

GFIs, GICPs, and SUCs

BAC Secretariat /

TWG

No counterpart

provision / By common

practice these parties

are also formed

No counterpart provision

MONITORING GPPB PPP Center NEDA / PPP Center

Traditional vs. PPP Procurement

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Traditional Funding Modalities PPP

Provides limited role of private sector in local

infrastructure and development Plan

Recognizes the essential role of the private sector

as main engine for national growth and development

Provides important services as designed by

the public sector without considering the

revenue stream

Enhances the provision of services by utilizing the

most appropriate technology and expertise which

can be transferred to the public

Limited coverage to implement local

infrastructure and development projects due

to availability of funds

Can implement priority infrastructure and

development projects without the burden of raising

funds

Allows public sector to utilize funds for other

purposes

Faster project implementation and ensured

operating efficiency

High probability of absorbing risk by

government

Delegation of responsibility and risk between the

public and private partners; Less risks on

government due to risk-shared allocation

Defined cost ceiling for projects Cost ceiling is more on the project’s viable revenue

stream

Financing option is defined and structured Flexible financing including use of private capital

Ready source of funds during lean periods

Traditional vs. PPP Procurement

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Actors Involved in the Procurement Process

PROJECT COMPANY

Concession Agreement

Loan Covenants

Operating and Maintenance

Agreement

Fixed-price, Date-certain, Lump-sum, Turnkey

Contract

Shareholders’ Agreement

Government Agency Lenders

Operator Construction Consortia

Investors

The PPP Center: Its Evolving Roles and Mandate

The PPP Center

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Per Executive Order No. 8, s. 2010,

as amended by Executive Order No. 136

signed last 28 May 2013:

BOT Center renamed as PPP

Center

PPP Center Services: o Provide advisory services

o Facilitate development of PPP

projects

o Manage the Project Development

and Monitoring Facility

o Capacitate national implementing

agencies and LGUs

o Advocate policy reforms

o Monitor implementation of PPP

projects

Expanded mandate: o BOT Law

o Joint Venture arrangements

o Other PPP arrangements

PPP Center to directly report to the

PPP Governing Board

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Institutional Evolution

of the PPP center

Evolving Institutional Role in

Critical Phases of Private

Sector Engagement Arroyo

Administration

2001-2010

• Revert to

BOT

Program • BOT Center

under DTI

Comparative PPP Procurement Timelines

PHILIPPINES UNITED

KINGDOM CANADA AUSTRALIA INDIA EUROPE SOUTH

AFRICA

12-26/

(Ave.18.8)

Months

22-35

Months

16-18

Months

14-18

Months

24

Months

22.3

Months

35

Months

SOURCES: Public–Private Partnership Infrastructure Projects: Case Studies from the Republic of Korea, Volume 1: Institutional Arrangements and Performance by Jay-Hyung Kim, Jungwook Kim, Sunghwan Shin, Seung-yeon Lee; PPPs and Public Procurement – Darin Grimsey and Mervyn Lewis, Australia; Are We There Yet? The Length of Tendering Periods for PPPs in Ireland Eoin Reeves, Darragh Flannery, and Donal Palcic Department of Economics, University of Limerick, Limerick, Ireland; KPMG 2010 study; Source: Official Journal of European Communities 2005

ITPB

FINANCIAL CLOSE

*

*Length of procurement process for the Philippines includes the start of the issuance of the Invitation to Pre-Qualify to Bid (ITPB) to the issuance of Notice to Proceed

(NTP) or start of construction/groundbreaking.

PPP FOR SCHOOL

INFRASTRUCTURE PROJECT

shortlisted under the category

BEST PATHFINDER.

It is the lone ASEAN entry to

Partnerships Awards 2013. www.partnershipsbulletin.com/awards/categories.html

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Best Central Government PPP Promoter

PPP CENTER

recognized as

“Best Central

Government PPP

Promoter”

It is the LONE ASIAN

entry in the category

and the LONE ASEAN

entry to Partnerships

Awards 2014

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Capacity Development

Pre-investment financing (PDMF)

Advisory services (legal, technical,

financial matters)

Preparation of PPP

transaction documents

(bid documents, draft

contract, etc)

Monitor project

implementation and

contract compliance

Participate as non-voting

observer of BAC

Provide advice during

procurement process

PPP Center is involved in

every part of the project cycle,

ensuring that projects are

bankable, transparent and

advancing public interest.

PROJECT PREPARATION

AND DEVELOPMENT

PROJECT REVIEW & APPROVAL/

PREPARATION OF BID DOCUMENTS

PQ & BID EVALUATION

CONTRACT AWARD &

IMPLEMENTATION

The Roles of PPP Center

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PPP Center Services

Provides project development

and advisory services;

technical assistance to NGAs

and LGUs

Manages and administers the

Project Development and

Monitoring Facility (PDMF)

Capacitates NGAs and LGUs

in PPP project preparation and

development

Monitors PPP project

implementation and advocates

policy reforms for efficient

PPP implementation

Project Development and Monitoring Facility (PDMF)

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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

22 consortia of Internationally-

renowned consulting firms

PDMF Funds | USD 69.47

million USD 18 million from AusAID through ADB

USD 51.47 million from the Philippine Government

PDMF SCOPE OF SERVICES

include pre-investment activities

of potential PPP projects,

including but not limited to: o preparation of project pre-

feasibility and feasibility studies

o project structuring

o preparation of bid documents and

draft contracts

o transaction advisory

o assistance in the tendering

process including bid evaluation and

project award through competitive

selection

PDMF Consultant Procurement

through PDMF is faster and more

efficient (63 calendar days)

compared to regular procurement

(123 calendar days).

IMPLEMENTATION

PHASE PRE-IMPLEMENTATION PHASE

PHASE I PHASE II PHASE III

P

P

P

A

G

R

E

E

M

E

N

T

SI

G

N

E

D

Implementation

Monitoring

Evaluation

INTRODUCTION AND INCEPTION PPP: What and Why

Needs Analysis

Options Analysis

Economic Valuation

Policy and Institutional Setup

Project Identification

PLANNING / IDENTIFICATION / STRUCTURING / APPROVAL Project Preparation & Plan/Structuring (Pre-FS/FS)

Review and Appraisal Processes/ Requirements

Procurement Documents Preparation

Procurement Plan

PROCUREMENT AND AWARD Invitation and Prequalification

Transparency and Competitive Requirements

Evaluation, Review and Selection

Negotiation and Award Processes

Construction and Commissioning

Contractual Compliance Monitoring and Evaluation

Risk Monitoring and Mitigation

Project Management

Progress Reporting

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Capacity Building Program

PPP Manual for Implementing Agencies

The LGU PPP Manual is envisioned as a

tool that should guide its users in developing

infrastructure projects using PPP processes.

VOLUME 1: Understanding PPP Concepts and

Framework.

VOLUME 2: Developing PPP Projects

for Local Government Units.

VOLUME 3: PPP Project Templates

and Bid Documents.

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The National Government Agency (NGA) Manual is a guide related to project

preparation and procurement processes,

and specific aspects of the design and

implementation of PPPs.

VOLUME 1: Identification, Selection and

Prioritization of PPP Project

VOLUME 2: Project Preparation, Evaluation, and

Approval

VOLUME 3: Tendering, Negotiation,

Implementation, and Operation

VOLUME 4: Annexes

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THANK YOU

ppp.gov.ph