Thursday, 29 July 2010

LRT 2 extension, Laiban Dam eyed in initial PPPs

Written by Cai U. Ordinario
Business Mirror

THE National Economic and Development Authority (Neda) has indicated that the extension of the Light Rail Transit 2 (LRT2) to the Marcos Highway and the previously proposed road linking the South Luzon Expressway (Slex) to the North Luzon Expressway (Nlex) were among the “strongest contenders” for the public-private partnerships (PPP) being pushed by the Aquino administration.

Rolando Tungpalan, Neda deputy director-general for investment programming also mentioned Laiban Dam as a “good candidate” for PPP. In this connection, the Abacus Consolidated Resources & Holdings Inc. yesterday disclosed to the local bourse its proposal to undertake the Laiban Dam project through a P60-billion joint venture with the government.

The extension of the LRT2-to-Marcos-Highway line will start from the Santolan Station where the line now ends, to the Masinag Market. The previously proposed connector road that would link Slex with Nlex was initially proposed to be funded through a loan from the Chinese government.

Tungpalan said PPP projects could also be derived from the Comprehensive Infrastructure Investment Program, which already identified “ready to go” projects. The only thing lacking in these projects is funding.

“I think the marching orders are we want the PPP processing time reduced to six months. This now puts the onus on the implementing agencies to have better quality proposals so that implementation bottlenecks are addressed,” Tungpalan said.

He also said that if the government was bent on changing some provisions in the joint venture guidelines and the build-operate-transfer (BOT) implementing rules and regulations, the President only needed to issue an Executive Order (EO) to adopt and implement the changes.

If an EO would be used, the changes in the joint-venture guidelines or BOT rules will not hamper the government’s plan to increase PPPs to spur economic growth, Tungpalan said.

Joint ventures and BOT projects would reduce government expenses in public undertakings like infrastructure projects.

The joint-venture guidelines and the BOT rules are currently being reviewed by the interagency Infrastructure Committee in preparation for the government’s plans for more PPPs to help finance big-ticket infrastructure projects.

In his first State of the Nation Address (Sona), the President said undertaking PPPs can boost the economy and address the country’s development constraints, considering that of the P1.54-trillion 2010 budget, only P100 billion or 6.5 percent can be used for the remaining six months of the year. This means that only around 1 percent of the total budget can be used for each month until the end of 2010.

Tungpalan said that because of this, Neda wanted to be more proactive in seeking PPPs. He noted that in the past, the government merely waited for proposals to come in. Now, given the need to significantly push for PPPs, Neda will have to start telling agencies which projects can have the most economic benefits, in line with the priorities of the Aquino administration.

Earlier, the Philippine Constructors Association (PCA) Inc. urged the Aquino administration to revise the joint-venture guidelines created by the Arroyo administration to increase transparency and accountability in these kinds of PPPs.

PCA executive director Manolito Madrasto said the PCA is seeking the extension of the Swiss Challenge to at least 180 days from the current 30 calendar days and the inclusion of the Neda Investment Coordination Committee oversight on all joint-venture projects.

A Swiss challenge is a process by which other private groups could still come forward to make an offer to match the bid of the proponent.

Under the guidelines, only the head of the government entity concerned is given the authority to approve the proposed joint- venture agreement, regardless of amount. Clearance from the departments of Finance and Budget and Management would be required only when the joint-venture agreement requires national government undertakings, subsidies or guarantees.

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