ppp orientation-workshop for local government units of western

PPP ORIENTATION-

WORKSHOP FOR LOCAL

GOVERNMENT UNITS OF

WESTERN VISAYAS

Overview of the Activity

IMPLEMENTATION

PHASE PRE-IMPLEMENTATION PHASE

PHASE I PHASE II PHASE III

PP

P A

GR

EE

ME

NT

SIG

NE

D Implementation

Monitoring

Evaluation

INTRODUCTION AND INCEPTION

PPP: What and Why

Needs Analysis

Options Analysis

Economic Valuation

Policy and Institutional Setup

PLANNING / IDENTIFICATION / STRUCTURING / APPROVAL

Project Identification & Plan (Pre-FS/FS)

Project Preparation/ Structuring

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

Topical Outline of Presentations

PUBLIC PRIVATE PARTNERSHIPS AND THE PHILIPPINE PPP PROGRAM

PPP Legal and Institutional Framework

The Philippine PPP Center

PPP PROJECT PROCESSES AND CYCLE: Sample Projects

PPP Program Updates and Achievements

PPP MONITORING AND EVALUATION

Lessons and Challenges

PUBLIC-PRIVATE PARTNERSHIP CENTER

The Role of the Private Sector

• Private sector as the state’s partner in development

• Private business as governance actor

• Private sector finance, technology and innovation offer

efficiency gains – that may be too costly for the state

• Private sector participation can accelerate provision of

public services – that the state cannot provide/afford on

its own

• Public sector (government) role can be rationalized --

focus on social services; allocation of limited resources

for social needs

The Philippine PPP Program

… these (PPP) projects promise so much for our economy and for the Filipino, and they (private partners) will play a vital role in our administration’s fulfillment of our Social Contract with our people.



• Took off from the Philippine BOT Program

• Towards a more holistic approach to through the following:

Expanded and rationalized mechanisms (management contracts,

concessions, joint ventures, etc.) other than BOTs to engage private

sector funding, efficiency and innovation in critical public sector

infrastructure and development requirements

Broadened private investment opportunities; Incentives to private sector

efficiencies and innovation

More creative financing structures, innovative project engineering and

structuring techniques


PPP Definition

• A range of possible contractual agreement 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 partnership provides roles and responsibilities of the

parties/partners

• There is allocation of rewards/revenues/costs/risks among public

and private partners


Advantages of PPPs

• Financial (Monetary)

Transfers public sector burden of raising funds to private partner(s)

Facilitates public sector use of limited budget for other urgent (i.e. social)

requirements

Provides additional sources of revenues for public sector depending on the

contractual arrangement

Value for Money

• Non-Monetary (Efficiency Gains)

Efficient provision of infrastructure/development requirements/services

Superior technology and expertise

Technology transfer and training for the public sector


Private Sector Returns

• Right of Private Partner Collect

private partner is allowed to recover investments through tolls, fees,

rentals and other charges from the users of the PPP project facility

• Rate of Return

In general, the BOT Law entitles the private partner to reasonable return

to his invested capital.

The return should reflect the prevailing cost of capital in domestic and

international markets.

For negotiated contracts which are public utilities and monopolies, the

return is determined by existing laws, which in no case to exceed 12%

on rate base.


General PPP Policies

• Minimum government regulations and procedures

• PPP projects shall be consumer or end-user oriented

• Provision of incentives to private sector

• Risk sharing and management

• Consistency of the list of priority projects with PDP and

PDPFP and transparency in approval process

• Accountability in project implementation

• Close coordination between national government and

IAs/LGUs

Traditional Funding Modalities vs PPP

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

Utility

Restructuring

Corporatizati

on

Decentralizati

on

• 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)

PPP Modalities

Public Owns and

Operates Assets Public-Private Partnership

Private Sector Owns and

Operates Assets

Typical PPP Modalities

BOT Variants

Build-Operate-Transfer (BOT)

Build-and-Transfer (BT)

Build-Own-Operate (BOO)

Build-Lease-Transfer (BLT)

Build-Transfer-Operate (BTO)

Contract-Add-Operate (CAO)

Develop-Operate-and-Transfer (DOT)

Rehabilitate-Operate-and-Transfer (ROT)

Rehabilitate-Own-Operate (ROO)

Other PPP

Modes

Service Contract

Management or Operation and Mgt (O&M) Contract

Lease/Affermage

Concession

Joint Ventures

Types of Contracts

Asset Owner-

ship

Capital Investment

Commercial Risk

O&M Duration

(Yrs)

Service Contract Public Public Public Private &

Public 1-2

Management Contract

Public Public Public Private 3-5

Lease Public Public Shared Private 8-15

Concession Public Private Private Private 25-30

BOT and Variants Private &

Public Private Private Private >30

Spectrum of Public and Private Participation

100%

Government

risk

0%

Complete

government

production

and delivery

100%

Private risk

0%

Traditional

public

procurement

PPP Concessions Privatization

Source: OECD, PPPs: In pursuit of Risk Sharing and VfM, 2008.

The spectrum of combination of public and private participation,

classified according to risk and mode of delivery

Philippine PPP Legal &

Institutional Framework


Legal Framework

• 1987 Constitution of the Republic of the Philippines

• RA 7718: The Amended Build-Operate-Transfer (BOT) Law

• BOT-IRR: BOT Law’s Implementing Rules and Regulations

• RA 7160: The Local Government Code of the Philippines 1991

• Other Related Laws

Charters of Government Owned and Controlled Corporations (Republic

Acts and Executive Issuances)

Legal Mandates of Implementing Agencies (Republic Acts)

Sectoral Regulatory Agencies (Republic Acts and Executive Issuances)


Other Related Laws

• CA 146, as amended (Public Service Act)

Limits foreign equity to 40% for operation of public utilities

• RA 8179 (Foreign Investments Act of 1991)

Provides regulations on foreign exchange transactions

• RA 4860 (Foreign Borrowings Act of 1966)

• EO 226, as amended (Omnibus Investments Code of 1987)

Provides fiscal incentives

• RA 8974 (Acquisition of ROW)

• RA 7160 DILG (Local Government Code)

• MC 2011-16 (PPP Sub-Committee in the LDC)

Modes of Procurement

SOLICITED

part of the list of priority projects (identified in the PIP for national projects and the RDIP/PDIP/LDIP for regional, provincial and local projects)

UNSOLICITED

refers to project proposals submitted by the private sector, not in response to a formal solicitation /request issued by an agency/LGU

Involves new concept or technology and/or is not part of the list of priority projects

No direct government guarantee, subsidy or equity is required


Quantifying NEW Technology for

Unsolicited Proposal

• A recognized process, design, methodology or

engineering concept which has demonstrated its ability

to significantly

reduce cost in construction, facility maintenance and operations

accelerate project execution

improve safety

enhance project performance

extend economic life

reduce negative environmental impact or social/economic

disturbances or disruptions


Quantifying NEW Technology for

Unsolicited Proposal

• A process for which the project proponent or any

member of the proponent consortium possesses

exclusive rights, either world-wide or regionally

• A design, methodology or engineering concept for

which the proponent or a member of the

proponent consortium or association possesses

intellectual property rights

Eligible Local Government Unit Projects

Infrastructure Sectors Eligible Projects

Agriculture and Fisheries Agricultural produce storage and

warehouse facilities; livestock

facilities; public fish ports; fish

ponds

Commercial and Industrial

Development

Markets; slaughterhouses;

business district development

facilities

Education School buildings; dormitories;

hostels; student centers

Environmental and Solid Waste

Management

Solid waste collection equipment;

composting plans and facilities;

sanitary landfills



Government Government Buildings and

operation centers

Forestry Community-based forestry

projects

Health Hospitals; heath centers; clinics;

lying-in centers; pharmacies and

drug stores; animal bite centers

Housing Housing projects

Information and Communication

Technology (ICT) Systems and

Facilities

IT modernization; geospatial

resource mapping; cadastral

survey for resource accounting

and planning


Land Use Land reclamation and dredging

Roads and Bridges Provincial/city/municipal roads

and bridges

Social Welfare Day care centers; emergency

response units; social welfare

distribution centers

Transportation Transport management and

transport terminals

Water and Sanitation Local water supply system;

sewerage system; drainage

facilities



Institutional Set-Up

• Contracting Parties/Implementing Agencies

Line Agencies (national agencies)

Government Corporations

Local Government Units

• Other National Agencies Concerned

Line Agencies/ Departments (policymaking)

National Regulatory Bodies

Sectoral Regulators (e.g. toll regulatory board)

• Review and Approving Bodies

Inter-Agency Investment Coordination Committee

Local Government Councils

• Coordinating and Monitoring Agency

Public-Private Partnership Center


Local Projects

PROJECT COST (PhP) APPROVING BODY

20M MDC

> 20M to 50M PDC

50M CDC

> 50M to 200M RDC / RDC for MM

> 200M ICC

Final approval Local Sanggunians

Approving Authority


ICC

Chairman

DOF Secretary Vice-Chairman

NEDA DG Members

Exec. Sec.

DA

DTI

DBM

BSP

Review fiscal, monetary & BOP implications of MCPs

Submit MCP status to the President

Review/Evaluate specific MCPs - technical

- financial

- economic

- social/institutional development

- feasibility/viability

- sectoral plans/geographical strategies

Oversight Committees


INFRACOM

Chairman

NEDA DG Vice-Chairman

DPWH Sec. Members

Exec. Sec.

DOTC DOF

DBM DOE

DOT DA

Advise the President/NEDA Board on infrastructure development

Coordinate activities of agencies involved in infra development

Recommend to the President policies, programs & projects concerning infra development



RDC

Chairman

NEDA DG Members

DBM

DILG

RDC Chair /

Co-Chair

4 RD Experts

Formulate/monitor policy implementation; promote rational resource allocation

Clearing house for regional development policy/ program proposals

Formulate/Monitor implementation of framework for regional development of PDP

Direct formulation & review guidelines for regional allocation of agency budgetary resources

Review viability of regional configuration & recommend region redelineation to the President

Review composition, structure & operating mechanism of the RDCs; recommend changes to the President


PPP Center

Executive Director

Dep Exec Director

PDS

PDMFS

CBKMS

LS

PFES

Coordinating Office

• Conduct project facilitation and assistance to the

IAs, GOCCs, LGUs

• Provide advisory services, technical assistance,

trainings and capacity development

• Recommend plans, policies and implementation

guidelines related to PPP in consultation

• Manage and administer a revolving fund to be

known as the Project Development and

Monitoring Facility for the preparation of business

case, pre-feasibility and feasibility studies and

tender documents of PPP programs and projects

• Monitor and facilitate the implementation of the

priority PPP Programs and Projects of the

agencies/LGUs

• Establish and manage a central database system

of PPP Programs and Projects

• Recommend improvements to timelines in

processing PPP programs and project proposals,

and monitor compliance of all agencies/LGUs


Government Undertakings

• Cost Sharing

provision of access infrastructure

Right of Way (ROW)

Transfer of Ownership/usufruct/possession of land, etc.

Partial Financing (50%)

• Direct Government Subsidy

Defray/pay/shoulder portion of project cost or expenses in

operation or maintenance

Condone or postpone payment

Contribute property/assets

Waive/Grant special rates on real property taxes (LGUs)

Waive charges/fees on business permits/licenses

The Philippine

PPP CENTER


PPP Center: Mandate and Functions

• Executive Order No. 8 (09 September 2010)

• DTI-BOT Center renamed as PPP Center and

transferred from DTI to the National Economic

and Development Authority (NEDA)

• Expanded mandate to cover PPPs, not just

BOT and its variants

PPP Center Services

• Monitor PPP Project implementation

• Advocate policy reforms for efficient PPP implementation

• Manage and administer the Project Development and Monitoring Facility (PDMF)

• Capacitate and train IAs/LGUs in PPP project preparation and development

• Provide project development advisory services and technical assistance to IAs/LGUs

Project Development

Service

Capacity Building and Knowledge

Management Service

Policy Formulation, Evaluation

and Monitoring

Service

Project Development

and Monitoring

Facility Service

Project Preparation

Project Review and Approval

Preparation of Bid Documents

PQ & Bid Evaluation

Contract Award and

Implementation

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

The Role of the PPP Center

www.ppp.gov.ph


The PDMF

• A 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

USD 7M initial contribution from the Philippine Government

USD 6M contribution from the Australian Government

(administered by ADB)

USD 9M additional contribution from the Australian Government

(administered by ADB)

USD 11.5M counterpart contribution of the Philippine

Government

Scope of Services

• preparation of project pre-feasibility studies (FS) and FS

• project structuring

• preparation of bid documents and draft contracts

• transaction advisory

• assistance in the tendering process including bid evaluation and award of PPP projects through competitive selection

Pre-investment activities of

potential PPP projects of

IAs/LGUs/GOCCs, including, but not

limited to:

IMPLEMENTATION

PHASE PRE-IMPLEMENTATION PHASE

PHASE I PHASE II PHASE III

PP

P A

GR

EE

ME

NT

SIG

NE

D Implementation

Monitoring

Evaluation

INTRODUCTION AND INCEPTION

PPP: What and Why

Needs Analysis

Options Analysis

Economic Valuation

Policy and Institutional Setup

PLANNING / IDENTIFICATION / STRUCTURING / APPROVAL

Project Identification & Plan (Pre-FS/FS)

Project Preparation/ Structuring

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

Capacity Building Program

Government Support for PPPs

Strategic

Support

Fund (SSF)

Project

Development

Monitoring

Facility (PDMF)

IDCA Panel of Firms

CPCS Transcom Ltd. ● Deloitte Touche Tohmatsu India Pvt. Ltd. ●

Ernst & Young Australia Infrastructure Advisory ● Hill International SA ●

ICRA Management Consulting Services Ltd. ● Manabat Sanagustin &

Co., CPAs ● PricewaterhouseCoopers Services LLP Singapore ● Rebel

Group International BV ● SMEC International Pty Ltd. (SMEC), Australia

Right of way acquisition (ROWA) and

related costs (including resettlement)

Costs of designing, building and otherwise

delivering any part of the project

Government Support for PPPs

Philippine Infrastructure

Development Fund (PIDF) o GFIs pooled funds (GSIS, SSS,

DBP, LBP)

Private Equity Fund o Multilateral and government financial

institutions

Local Banking Institutions o 1.3 trillion pesos cash in special

deposit accounts

Other

Financing

Avenues for

PPP Projects

Understanding PPP

Project Processes

Development

Approval

Competition

Cooperation

Mo

nit

ori

ng

an

d

Evalu

ati

on

Project

Identification

Project

Preparation Contractual

Considerations

Contractual

Arrangement

NEDA ICC

NEDA BOARD

Tariff Setting Independent Regulator

Bidding/Solicitation of Comparative Proposals

Award/Construction/Development of Facility

Concession/Cooperation Facility Users/Public

PPP Process Framework


Phase 1: Development

PROJECT IDENTIFICATION

• PPP projects could be identified from the following

origins:

Public Planning

• Local Development Planning

Strategic Financial Approach

• Budgeting and Expenditure Management System

• Investment Programming and Revenue Generation

Private Initiative (unsolicited proposals)

PROJECT

IDENTIFICATION RDP/RPFP

PDPFP

C/MDP

Impact and

Information

Base


Factors to be Considered in Selecting

Projects for PPP

• Commercial sustainability

• Potential development impact

• Moderate complexity

• High operating costs relative to total project

costs

• Other planning and policy inputs based on

development plans


Suggested Criteria for PPP project selection

• Socio-economic

benefits

• Likely financial viability

• Land acquisition

• Environmental impacts

• Social Safeguards

• Risks

• Demand

• Regional development

• Stakeholder support

• Sector Strategy and

plan

• Safety aspects


Project Development Cycle

• Project Preparation

Pre-Feasibility Study / Business Case / Feasibility

Study

To appraise:

• Project feasibility

• Commercial viability of PPP / Bankability

• Value for Money Analysis

To structure the project:

• Identify risks

• Allocate risks and responsibilities


Project Feasibility

• Does the project adhere to the vision, mission, goals and

objectives set out in the local development plan?

• Who will implement the project? (mandate, authority, and

capacity)

• Is there demand for the project? How was this validated

with intended beneficiaries?

• Does the project comply with proposed standards and

specifications for facilities and services?

• Were all assumptions for the valuation of costs and

revenues reasonable, realistic and acceptable?


Project Feasibility

• Were all the development impacts of the projects clearly

identified and properly valued?

• What is the extent and impact of the environmental risks

and threats of the project to the community and

surrounding environment?

• How we the gender issues identified and addressed in

the project design?

• Is the proposed organizational setup responsive to the

requirement of the project implementation and

operation?

PPP Center

PROJECT APPROVAL PROCESS

Priority Projects under the MTPDP/MTPIP and CIIP

IAs/GOCCs

(Sponsoring

Government

Units)

Solicited Proposals (6 months)

Unsolicited Proposals (9 months or more)

Phase 2: Approval

NEDA BOARD

National Projects

costing more than P300M (upon ICC recommendation)

Natl. Negotiated Projects regardless of amount

(upon ICC recommendation)

INVESTMENT COORDINATION

COMMITTEE

National Projects costing below P300M

National Projects costing above P300M

(for NEDA Board approval)

Negotiated Projects regardless of amount

(for NEDA Board approval)

Local Projects costing above P200M

LOCAL DEVELOPMENT COUNCIL

Regional Development Council (local projects costing > P50M-

P200M)

City Development Council (local projects costing up to

P50M)

Provincial Development Council (local projects costing

> P20M-P50M)

Municipal Development Council (local projects up to

P20M)

Phase 2: Approval

ICC Structure and Membership

NEDA BOARD

ICC CABINET

COMMITTEE

ICC TECHNICAL

BOARD

NEDA

SECRETARIAT


Requirements for ICC Review

• Project proposal (based on data not older than 3 years);

• ICC Project Evaluation Forms:

PPP PE Form No. 1: General Information

PPP PE Form No. 2: Estimated Project Cost

PPP PE Form No. 3: Project Revenue

PPP PE Form No. 4: Estimated Project Benefits and Costs

• PPP PE Form No. 4a: Financial

• PPP PE Form No. 4b: Economic

PPP PE Form No. 5: Risk Allocation Matrix (see Annex B for the

discussion on Risk)

PPP PE Form No. 6: Logical Framework

PPP PE Form No. 7: Maximum Government Exposure


Requirements for ICC Review

• Two sets of electronic copies of the economic and financial analyses in traceable

• formula format based on the submitted PPP PE Forms;

• Endorsements by head of oversight/mother department;

• Environmental Impact Statement (EIS)/Environmental Compliance

• Certificate/Certificate of Non-Coverage;

• Department of Finance-Corporate Affairs Group (DOF-CAG) review for GOCC

• projects;

• Location map;

• Right-of-way (ROW) acquisition and resettlement action plan;

• RDC endorsements (prior to notice of award);

• Department of Budget and Management (DBM) certification of budget cover

availability for Government of the Philippines (GOP) counterpart (prior to NEDA

Board confirmation of ICC approval)

• IAs/GOCCs evaluate project proposal

• Approving body to recommend Rate of

Return (ROR)

• Negotiation and Contract Approval



• Pre-qualification • Qualification Procedure

Phase 3: Competition

Phase 3: Competition

• IAs/GOCCs evaluate project proposal

• Approving body to recommend Rate of

Return (ROR)

• Negotiation and Contract Approval



• Pre-qualification • Qualification Procedure

Bidding procedures

Advertiseme

nt/ Invitation

to PQ and

Bid (21)

PQ of

Bidders

(30) Prepare the

Bid (90 /

120)

Issuance of

RFP / Bid

Preparation

(30 / 60-

120)

Approval of

Contract of

Award (14)

Execution of

Contract (14)

Bid Evaluation Technical (30)

Financial (15)

Bid Submission

Issuance of

NOA (7)

Receipt and

Compliance

with NOA

(30)

Issuance of

NTCI (7)

Contract

Implementati

on

Legend:

Blue – Government

Red – Private Sector 1. All days herein are

Calendar Days (cd).

2. Maximum No of CD =

453-indefinite

3. Minimum No of CD =

256

Project ID

and

Preparation

(90)

Approval of

Project by

Appropriate

Body

(30)

Preparation

of PQ Docs

(30- 45)

Bidding Process Under RA 7718 (BOT Law)

Sample LGU

PPP Projects Government Administrative Center

Shopping Center and Public Market

Water System

Shopping Center and

Public Market

Project Specifications and Design


Project Description

• Name of Project: Shopping Center and Public

Market

• Land Area: Approximately 1.0- 1.5 hectares

• Implementor: LGU

• Private Investor: Name of the Company

• Proposed PPP Scheme: Build-Operate-

Transfer or Build-Transfer-Operate


Project Description

• a commercial shopping center building (which is mainly of interest to the investor),

• a public market (which is mainly of interest to the LGU), and

• a parking lot and open spaces (needed to support both).

The project will have

three components:


Project Financing

• The private sector proponent is responsible for

raising capital for the construction of the entire

complex, including all miscellaneous expenses

that may be incurred as a result of this project.

• The LGU’s main contribution to this partnership is

the land on which the complex will be built.


Preconditions for Successful Tender

• Existence of an Available Site

• Local Support: Sanggunian Endorsement,

tax incentives etc.

• Adequate Consumer Base to Support a

Shopping Center

• Absence of Competition from other Centers

• Favorable Market Conditions


Government Center

Project Description

• Name of Project: Government

Administrative Center

• Land Area: 6,000 square meters

• Implementing Agency: National Food

Authority

• Private Partner: Real Estate Developer

• Proposed PPP Scheme: Build, Lease,

and Transfer (BLT)

Building and Model Design

• Office Modules: (permits natural lighting and ventilations), 350-525 Employees

• Specialized Functions Module: Electronic Data Processing, Telecommunications, Records Keeping and Storage, and Training and Seminar Facilities

• Circulation/Utilities Core: Main Lobby, Elevator Lobbies, Elevators, Main Stairs, Toilets and Utility Rooms


• Vehicular Parking and Open Spaces:

Parking Space for 45-50 Vehicles,

Landscape and Future Expansions

• “Smart” Building: electrical raceways,

access-floor system, computer network,

fiber optics, communication lines, interior

environment control


• Efficiency = Rentable Space: Total Space

• Average Efficiency 70%-85%

• 4,740 sq. m. leasable space

• Building can accommodate an average of

475 to 700 employees

Figure 3-7: Government Administrative Center

Perspective


Conceptual Site Plan, Vehicular Circulation


Conceptual Floor Plan, Pedestrian Circulation


Conceptual Section, Pedestrian Circulation

LGU Water Supply System


Project Description

• Nature of Project: Water Source Development, Treatment and Distribution

• Land and Bldg. Requirements: Land for 10 deep wells and a 5,000 sq. m. administration and maintenance center, storage tanks, distribution system and 20,000 service connections

• Implementor: LGU

• Private Partner: Contractor with experience in water supply backed by a reputable financing institution or individual

• Proposed PPP Scheme: Build-Operate-Transfer

Project Description

• A water supply and distribution system

with 20,000 service connections for an

LGU with a population of 100,000

• Water will be sourced from 10 deep wells

• The distribution system consists of: four 500 cubic meter capacity storage tanks, 50,000 meters of

distribution system mains and laterals, and 20,000 metered

service connections (plus fire hydrants for the city center).

Project Description

Project Financing

• The private sector is responsible for raising all

financing required for the construction,

operation, and maintenance of the facility. The

LGU contributes the land required for wells,

distribution lines and buildings.

Sources of Revenue

• Project revenues will come from water sales,

connection fees, and other water related

charges.

Preconditions for Successful Tender

• Land Availability and Right of Way

• Private Sector Capability

• Willingness to Pay for Services and

Support of the LGU

• Sufficient Household Clustering

• Availability of a Good Water Source

Updates and

Achievements


PPP Achievements

• Reorganization of the PPP Center

• Capacity Building of PPP Units of Implementing Agencies

• Improved inter-agency coordination and involvement

INSTITUTIONAL STRENGTHENING

• BOT Law and its amended Implementing Rules and Regulations

• Executive Order on Arbitration and Dispute Resolution

• Reviewed and streamlined processes in evaluation and approval of projects

ENHANCED LEGAL AND REGULATORY FRAMEWORKS

• Dialogues and consultative meetings with foreign and local private investors, banks, development partners, foreign trade missions, and other stakeholders

CONSULTATIVE AND SYSTEMATIZED PARTNERSHIPS

PPP Achievements

• Capacitated over 350 IAs and LGUs in PPP project preparation in less than a year

• Successful launch of the LGU PPP Manual Vols. 1-3; regional training roll-out ongoing

• DILG-PPP Center Memorandum of Agreement on PPP Capacity Building for local government units

• Partnerships with various institutions to conduct relevant capacity building interventions on PPP

PPP-ENABLED IMPLEMENTING AGENCIES AND LOCAL GOVERNMENT UNITS

• 14 PPP projects approved for PDMF support (total of USD 16M earmarked for pre-investment and other transaction advisory support)

• Successful tender of the DPWH’s Daang Hari-SLEX Link Road project; bidding for DepEd’s PPP for School Infrastructure Project, LRT Line 1 Cavite Extension, and NAIA Expressway Phase II Project ongoing

PIPELINE BUILD-UP AND ROLLOUT OF PROPERLY PREPARED PROJECTS

2012 Thrusts & Priorities

Legal and Policy Framework Enhancements

• PPP Law BOT Law amendments under Congress deliberations (both Houses)

• Amendments to E.O. No. 8 Endorsed to the Office of the President

• Executive Order: Rules on Arbitration and Dispute Resolution Published last 09 July, 2012

• JV Guidelines for GOCCs

• Policy briefs (project selection, identification, and prioritization; viability gap funding; unsolicited proposals; etc.) being developed

• BOT Law revised IRR Published last 20 July 2012 in the PDI; filed last 27 July 2012 at the UP Law Center; and took effect last 4 August 2012

Establishment of Template LGU Assistance on PPP

• Standard technical assistance (TA) for LGUs being developed through two live PPP projects

• TA on LGU project screening being considered


Contract Management/ Performance Management

• Policy Briefs on monitoring and evaluation & contract management being prepared through ADB TA

Capacity Building for IAs and LGUs

• Ongoing arrangements with DAP National Government Career Executive Service Development Program (NGCESDP) and Graduate School for Public Management and Development for the creation of a PPP sub module/ course in their respective curricula

• Ongoing discussion with DILG on capacity development interventions for LGUs (e.g. Trainers’ Training for designated PPP officers)

• PPP Training Program on water districts being developed

• PPP Training Program on SUCs being developed


Creation of the PPP Knowledge Portal

• Planned/proposed content being finalized under the ADB TA

• Website content currently being improved

PPP Pipeline Build-up

• At least 8 PPP projects in the pipeline may be rolled out this year

Pipeline of PPP Projects

TRANSPORTATION 8 projects | USD 1.88B

ROAD NETWORK 3 projects | USD 1.29B

WATER SECTOR 3 projects | USD 1.08B

LGU PROJECTS 2 projects | TBD

AGRICULTURE 3 projects | USD 186.9M

EDUCATION 1 project | USD 233M

HEALTH SECTOR 2 projects | USD 126M

*Project Costs of O&M of LRT-2, O&M of Puerto Princesa, ITS= TBD

TOTAL PROJECT COST: USD 4.80B*

STATUS OF PPP PROJECTS as of August 16

*Approved PDMF Support

*Approved PDMF Support


LGU Projects in the Pipeline

• Talisay City Plaza Complex Heritage

Restoration and Redevelopment Project -

Talisay City, Negros Occidental

• El Nido Solid and Liquid Waste Management

Facility – El Nido, Palawan

PPP Monitoring and

Evaluation Forms


Philippines PPP M&E Network

• A system of M&E tools used to determine whether the Philippine PPP

initiative is delivering the result it has committed to deliver, i.e. to

increase investments in quality PPP projects in the Philippines

• The M&E system is comprised by:

Project level reports

• Quarterly project supervision report (PSR)

• Project completion report (PCR)

• Periodic project evaluation reports

• Periodic rapid project evaluation reports

Annual report

Program / thematic evaluation reports

• The M&E System is implemented by the PPP Center and the national

PPP M&E network


Institutional Framework

Monitoring of PPP

Projects

IAs/

LGUs

PPP

Center

Two-tier mechanism for monitoring the

performance of PPP projects


Tools, Methods, Approaches

• Reporting

• Field Visits / Site Inspections

• Surveys

• Interviews


Coverage of the M&E

• All PPP projects undertaken by

Implementing Agencies and LGUs

including all the variants or

arrangements under the BOT Law and

its IRR


Pre-

Construction

Phase

• compliance

of conditions

precedent

• DED Plans

• permits and

approvals

• Clearances

• Financial

Closure

• work

schedule

• resource

utilization

• financing

plan

• performance

security

• testing

• compliance

with all

operations

and

maintenance

parameters

and

performance

indicators

• preparation

for asset

transfer

• termination

of contract

• Compliance

with

prescribed

standards and

specifications

Construction

Phase O&M Phase

Asset

Transferring

Monitoring and the PPP Project Cycle


Responsibilities of the IAs/LGUs

• Creation of a monitoring unit at the project level

• Preparation of work plan and schedule

• Submission of monitoring reports and other

project documents

• Conduct of regular project field visits/inspections

• Coordination with the project proponent

• Conduct of regular meetings


Responsibilities of the PPP Center

• Preparation of work plan and schedule

• Review of submitted monitoring reports and other

project documents

• Conduct of regular project field visits/inspections

• Coordination/Establish linkage with IAs/LGUs

• Conduct of stakeholders meetings

• Preparation of quarterly/annual status reports of

PPP projects


Project Status Report (PSR)

• For: On-going PPP projects

• Track the progress of projects under construction such as the TPLEX

• Ensure proper construction and maintenance of operational projects

such as the MRT 3, MWSS Privatization Project

• Frequency of Submission: Every quarter to PPP Center

• Deadline of Submission: Within a month after every quarter

1st Q Report due in April, 2nd Q Report due in July…

• Major Parts:

• Project Profile

• Project Status

• Documents Submitted

Lessons and

Challenges


Properly Structured PPP

• Ameliorates/satisfies lenders’ concerns

• Recognizes that projects must be profitable

• Recognizes that PPPs are primarily financing

constructs, not an engineering proposition

• Has some form of government support

• Reflects proper unbundling

• Has a reasonable risk sharing arrangement

• Has a solid legal/contractual structure


Key Success Factors

Well-structured Competitive

Project

Transparent process that can

stand scrutiny

Selection of a Competent

Private Partner

Credible and Capable

Institutions

Presence of “Champions”


PPP Challenges

• PPPs are long-term contracts

• PPPs do not achieve absolute risk

transfer

• PPP procurement may be long and

costly

• Private sector subject to higher cost of

capital

• Perceived loss of public sector control


Key Success Factors

Well-structured Competitive

Project

Transparent process that can

stand scrutiny

Selection of a Competent

Private Partner

Credible and Capable

Institutions

Presence of “Champions”

PPP WORKSHOP

Initial Project Preparation


Mechanics and Instructions

• Grouping (5 mins) – Grouping (per LGU) – based on existing project concepts/notes – Designation of lead person/presentor

• Group Review of the Project at hand in terms of: (30

mins) – Consistency with Regional/Provincial Plans/Priorities – Project’s PPP Option – Contracting Party – mandate and authority – Role of other LGUs or agencies concerned – Initial viability indicators – Possible PPP Structure/Arrangement – Assistance needed from PPP Center

• Group Presentation/Discussion (10 mins per group)


Guide Questions

• Is the project consistent or aligned with Regional/Provincial priorities?

• Is there any previous effort or initiative on the project? Studies already prepared? What is the status? How does the concerned LGU plan to proceed?

• Why the PPP option? Why not ODA or through GAA?

• Which LGU shall serve as contracting party? Will the project involve any other LGU or agency? Has there been any legal action (local resolution, MOA, etc) already initiated between and among them?


Guide Questions

• What are the project’s (initial) viability indicators? - Project revenue streams? Other sources of repayment

mechanisms? - Basic project design? Economic benefits? - Other considerations – environmental, social considerations, etc.

• What is the proposed PPP Structure (Concession, MC, BOT, etc)? Briefly outline roles/responsibilities of public sector (LGU) and private partner

• What will the LGU be willing and able to bring into the project?

What risks (responsibilities and costs) it is willing and can bear under the partnership?

• What form of assistance is needed from PPP Center? (Additional Training, PDMF Support, Technical Assistance, etc.). Will this entail drafting of a new FS or an update of an existing FS? What is the indicative amount of assistance needed?

THANK YOU

www.ppp.gov.ph


Module 2 for LGUs

• Sub-module 1: Project Management

• Understanding the Project Management Concept including project lifecycle • Assess the effectiveness of a Project Management Plan • Learn to identify and manage project risks and issues • Define progress monitoring and reporting requirements for PPP programs and

projects

• Sub-module 2: Business Case Development and Fundamentals • Equipping LGU financial planners with the capacity to develop robust,

comprehensive and relevant business case intended to assess the viability of a certain project

• Enhancing the capability of LGU officials in planning, facilitating and controlling PPP Programs and Projects

• This training aims to enable participants to: • Develop an effective Project Management Plan • Identify and manage project risks and issues • Define progress monitoring and reporting requirements for PPP Programs and

projects

ppp orientation-workshop for local government units of western

Documents

private sector private

private sector efficiencies

private sector funding

private entities

ppp projects

ppp agreement

development private

inception ppp