After wasting six years on the infrastructure momentum of previous presidents since Fidel Ramos, the Philippines under President Ferdinand “Bongbong” Marcos Jr. is catching up for lost time in terms of public private partnerships (PPs) that were abandoned by the Duterte administration, who favored only official development assistance (ODAs) for mega projects.
Right now, the momentum is again picking up and the PPP Center under Executive Director Ma. Cynthia Hernandez is reporting the total number of PPP projects of 143 valued at P3.095 trillion.
She reported that in early June, there were 134 projects valued at P3.03 trillion. Most of the newly-added projects originated as unsolicited proposals from the private sector, as quoted by business blog site Bilyonaryo.
The projects are spread across the country, with 100 at the national level and 43 planned for implementation by local government units (LGUs).
Hernandez said that of the total projects in the pipeline, 102 are currently in the preparation phase, 21 in the negotiation phase, 10 awaiting approval, and eight in procurement phase.
“The PPP Center is actually the touchpoint of a lot of international agencies that want to also assist in developing PPPs,” Hernandez said.
Benefits and risks
PPPs allow large-scale government projects like roads, bridges or hospitals and schools to be completed with private funding.
These partnerships work well when private sector technology and innovation combine with public sector incentives to complete work on time and within budget.
Risks for private enterprises include cost overruns, technical defects and an inability to meet quality standards, while for public partners, the agreed-upon usage fees may not be supported by demand for example for a toll road or a bridge.
Despite such benefits, PPPs are criticized for blurring the lines between legitimate public purposes and private for-profit activity and for perceived exploitation of the public due to self-dealing and rent-seeking that may occur, according to some studies.
Local PPPs abound because many LGUs are heavily indebted and can’t undertake a capital-intensive building project but a private enterprise is interested in funding its construction in exchange for operating profits, once complete. PPP contracts usually last 20 to 30 years or longer.
Financing comes mostly from the private sector but requires payments from the public sector and/or users over the project’s lifetime.
The private partner is involved in designing, completing, implementing and funding the project while the public partner focuses on defining and monitoring compliance with the objectives.
New projects
The most recently-signed PPP project was between the Department of Public Works and Highways (DPWH) on July 03, 2024 with the SMC TPLEX Extension Infrastructure Corporation (STEIC) for the Tarlac-Pangasinan-La Union Expressway (TPLEX) Extension Project. The ceremonial handover of the signed Concession Agreement to the President was held last July 10 at the Malacañang Palace.
DPWH, on June 3, declared San Miguel Holdings Corporation (SMHC) as the winning private proponent for the design, financing, construction, operation, and maintenance of the TPLEX Extension Project.
STEIC, a Special Purpose Company formed by SMHC, will handle the P23.4 billion project, which reduces travel time between Rosario and San Juan in La Union from 1.5 hours to just 40 minutes.
The concession period for the project is 34 years from the signing of the contract.
DPWH Secretary Manuel Bonoan highlighted that the project will not only reduce travel time and logistics costs, but will also increase economic opportunities, improve access to key services, and support the growth of Northern Luzon’s commercial and tourism industries.
In his speech, President Marcos emphasized the importance and impact of public-private partnerships in pursuing big-ticket projects under the Build-Better-More Program for the country’s development.
The TPLEX Extension project was an unsolicited proposal submitted by SMHC. It is a 59.4-kilometer, four-lane extension from the last exit of the existing TPLEX in Rosario, La Union that will connect the Ilocos Region, Central Luzon, and Metro Manila.
The project will be divided into three (3) segments, with Segment 1 targeted for completion before the end of President Marcos’s term in 2028.
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