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2015/SFOM13/030 Session: 6

The Philippine PPP Experience

Purpose: Information Submitted by: Philippines

13th Senior Finance Officials’ Meeting Bagac, Philippines

11-12 June 2015

Eleazar E. RicoteDeputy Executive Director

PPP Center of the Philippines

APEC Senior Finance Officials Meeting

Bagac, Bataan

12 June 2015

2

PPP Program is geared towards

INCLUSIVE GROWTH

PPP as one of the strategies

to accelerate

INFRASTRUCTURE

DEVELOPMENT

2

Private sector as

PARTNER IN

DEVELOPMENT

PPP Center as the

CHAMPION FOR

PUBLIC-PRIVATE

PARTNERSHIPS

33

Aside from public spending,

PPPs will bring in private

sector capital and expertise to

address the infrastructure gap.

The Philippine Government

aims to increase infrastructure

spending to 5% of the country's

GDP by 2016. Public-Private Partnerships

Official Development Assistance

Government-Funded

*Total infrastructure spending for 2013-2016 amounts to

PHP 1.8 Trillion or 55% of the public investment program.

4

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

Expanded mandate:o BOT Law

o Joint Venture arrangements

o Other PPP arrangements

PPP Center to directly report to the PPP Governing Board

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 projectso Establish a repository of database on PPPs

Creation of the Project Development and Monitoring Facility (PDMF)

5

PROJECT PREPARATION

AND DEVELOPMENT

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

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 REVEW & APPROVAL/

PREPARATION OF BID DOCUMENTS

PQ & BID EVALUATION

CONTRACT AWARD &

IMPLEMENTATION

7

Enhanced Legal & Regulatory Framework

Revised BOT Law Implementing Rules and Regulations

EO 78 mandating the inclusion of Alternative Dispute Resolution

mechanisms in PPP contracts

Revised Joint Venture Guidelines

PPP Code for Local Government Units

Establishment of the Contingent Liability Fund in the annual

General Appropriations Act (GAA)

Next Steps

Enactment of the PPP Act

Issuance of Policy Circular and Guidelines on Pipeline

Development, Termination Payments, Viability Gap Funding,

Material Adverse Government Actions, and PPP Best Practices

Institutionalization of the Contingent Liability Fund into the PPP Act

8

Developed Robust PPP Pipeline

10 awarded projects with a total value of USD 4.2 Billion

44 projects in the pipeline in various stages of development amounting to over USD 18 Billion

40 Projects with Project Development and Monitoring Facility (PDMF) support

22 renowned PDMF panel of consulting firms

Next Steps

Hiring of independent consultants through the PDMF

Probity advisory for big-ticket projects

Contract Standardization

LGU PDMF Conceptualization

9

Building Capacities

PPP Manual for LGUs and NGAs

PPP Capacity Building Program for national implementing and

oversight agencies, LGUs, government corporations, and SUCs

Implementation of the LGU PPP Strategy

Next Steps

Development of PPP Knowledge Management Portal

Establishment of Project Monitoring and Evaluation Protocols

Institutional Partnerships with Infrastructure New South Wales

Australia and Japan International Cooperation Agency

Review of the PH PPP Program conducted by OECD to determine

key success points and lessons that can be learned

10

Improvements in the PPP Process

New PPP Appraisal Process

Conduct of Market Sounding

Conduct of One-on-One meetings with Prequalified

Bidders

Next Steps

Strengthening framework, processes, and inter-agency

coordination in implementation of awarded projects

Enhancing the PPP monitoring framework

11

Participation and involvement in regional PPP

initiatives through the APEC PPP Experts Advisory

Panel

Hosting of the Third Asia Pacific Infrastructure

Partnership (APIP) Dialogue and support to

upcoming collaborative discussion

Collaboration with APEC member-economies for

PPP knowledge sharing, capacity building, and

consolidation of resources, development partners’

support, and country initiatives towards a regional

PPP strategy in pursuit of regional connectivity

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Status No. of

Projects

Estimated Cost

(in billion USD)

PROJECTS UNDER IMPLEMENTATION

Awarded 10 4.20

Other projects for implementation 2 2.13

Sub-total 12 6.33

PPP PIPELINE

Projects under procurement 13 7.85

Projects approved for roll-out 3 4.24

For approval of relevant government bodies 6 4.62

Projects with ongoing studies 5 1.50*

For procurement of consultants 6 TBD

Under conceptualization or development 10 TBD

Sub-total 43 18.21*

TOTAL 55 24.54*

*This does not include projects with no estimated costs yet.

ProjectProject Cost

(US$ billion)Private Partner Status

1. Daang Hari-Slex

Link Road Project

0.045 Ayala Corporation Construction ongoing, 96%

complete as of 25 May

2015

2. PPP for School

Infrastructure

Project (PSIP)

Phase I

0.37 Contract Package A: Bright Future

Educational Facilities Inc.

Contract Package B & C: Citicore –

Megawide Consortium Inc.

8,870 classrooms (95.36%)

completed and delivered

as of 15 May 2015

3. NAIA

Expressway

Phase II

0.35 Vertex Tollways Development Inc.

(a wholly owned subsidiary of San

Miguel Corp.)

Construction ongoing,

43.1% complete as of 24

May 2015

4. PSIP Phase II 0.09 Contract Package A: Megawide

Construction Corporation

Contract Package E: Consortium of

BSP & Co., Inc. and Vicente T. Lao

Construction

1,020 classrooms (23 %)

completed/substantially

completed as of 30 April

2015

5. Modernization of

the Philippine

Orthopedic

Center

0.19 Megawide-World Citi Consortium

Inc.

Ongoing pre-construction

activities

ProjectProject Cost

(US$ billion)Private Partner Status

6. Automatic Fare

Collection System

Project

0.04 AF Payments Inc. (formerly Automated

Fare Collection Services, Inc.)

Members: Ayala Corp. (BPI Card Finance Corp., AC Infrastructure Holdings, Globe telecom, Inc.); and Metro Pacific Holdings, Inc. (MeralcoFinancial Services Corp., Metro Pacific Investments Corp., and Smart Communications, Inc.)

Ongoing

pre-operation

activities

7. Mactan-Cebu

International

Airport Passenger

Terminal Building

0.39 GMR-Megawide Cebu Airport Corp.

(GMCAC)

Members: GMR Infrastructure Ltd., and MegawideConstruction Corp

Ongoing

pre-operation

activities

8. LRT Line 1 Cavite

Extension and O&M

1.44 Light Rail Manila

Corporation (LRMC)

Members: AC Infrastructure Holdings, Metro Pacific Light Rail Corporation, Macquarie Infrastructure Holdings

Ongoing

pre-construction

activities

9. Integrated

Transport System –

Southwest Terminal

Project

0.056 MWM Terminals

Members: Megawide Construction Corp., and WM Property Management, Inc.

Contract signed on

24 April 2015;

Ongoing IC

procurement

10. Cavite-Laguna

Expressway

1.23 MPCALA Holdings NOA issued on 08

June 2015

TOTAL 4.20

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NLEX-SLEX Connector

O&M of New

Bohol Airport

O&M of Puerto Princesa Airport

Regional Prison

Facilities thru PPP

Bulacan Bulk Water

SupplyITS-South Terminal

O&M of LRT Line 2

Laguna Lakeshore

Expressway Dike

New Centennial

Water Source

O&M of Laguindingan Airport

O&M of Davao Airport

O&M of Iloilo Airport

O&M of Bacolod Airport

Davao Sasa Port Modernization

North-South Railway

CRS-ITP Phase II

Motor Vehicle Inspection System

San Fernando Airport

LRT 1 Dasmarinas Extension

Batangas-Manila Natural Gas Pipeline

Manila Bay-Pasig River-Laguna Lake Ferry System

C5 Transport Service

Clark International Airport

NAIA Development Project

16

Projects under Procurement (13) Integrated Transport System – South

Terminal ProjectBulacan Bulk Water Supply Project

LRT Line 2 O&M Laguna Lakeshore Expressway Dike

Project New Centennial Water Source – Kaliwa

Dam Airport O&M and Development Projects

(Panglao, Laguindingan, Davao, Bacolod, Iloilo, Puerto Princesa)

Regional Prison Facilities through PPP Davao Sasa Port Modernization Project

Projects for Rollout (3) North-South Railway Project – South Line NLEX-SLEX Connector Road Road Transport IT Infrastructure Project

(Phase II)

Projects for Approval (6) LRT Line 6 Project C5 Modern Bus Transit System Civil Registry System-IT Project Phase II Batangas-Manila Natural Gas Pipeline NAIA Development Project

Ortigas Taytay LRT Line 4 Project

www.trevi.com.ph

http://www.flickr.com/photos/nowell1011/6053113570/

http://www.untvweb.com/

Projects with F/S nearing completion (5) Manila Bay-Pasig River-Laguna Lake Ferry

System Project Clark International Airport Plaridel Bypass Road Project San Fernando Airport Project ITS-North Terminal Project

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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).

Seven (7) of the ten (10)

awarded projects were

supported by the PDMF

18

PPP Center awarded as

“Asia-Pacific Grantor of the

Year”

PPP CENTER recognized as

“Best Central Government

PPP Promoter”

1919

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%)

OVERALL SCORERank ScoreΔ

1 Australia 91.8

2 United Kingdom 88.1

3 Republic of Korea 78.8

4 Japan 75.8

5 India 70.3

6 India - Gujarat state 68.0

7 Philippines 64.6

8 People's Republic of China 55.9

9 Indonesia 53.5

10 Thailand 50.4

11 Pakistan - Sindh province 49.9

12 Bangladesh 49.3

13 Kazakhstan 41.4

14 Pakistan 41.0

15 Mongolia 39.7

16 Armenia 38.0

17 Papua New Guinea 33.5

18 Viet Nam 33.1

19 Kyrgyz Republic 29.5

20 Tajikistan 28.7

21 Georgia 26.2

Overall IndexRegulatory

Framework

Institutional

Framework

Operational

Maturity

Investment

Climate

Financial

Facilities

Sub-national

Adjustment

Score 64.6 68.8 66.7 54.5 75.3 63.9 50.0

Rank 7 4 4 9 7 8 6

“The Philippines moves up to join the developed group of countries… By finishing in seventh

position, it is among those which have improved the most.”-- Infrascope 2014 Study

21

Initiative Deliverables Timelines

PPP Knowledge

Management

Portal

Collaborate with Global Infrastructure Hub

to establish website housing the PPP

Knowledge Management Portal,

containing:

a. Best Practices on PPP;

b. PPP infrastructure projects undertaken

by APEC economies; and

c. Directory of private firms, managers,

consultants, and experts involved in

PPP projects

2015

Link the PPP Knowledge Portal with other

existing PPP portals

2015

Contract

Standardization

Collaborate with G20 Global Infrastructure

Hub in developing a compendium of

templates/standard PPP Terms and

Practices among APEC economies

2015

22

BACKGROUND

Serves as a central database for the PPP Program (e.g.

contracts, project documents, policies, issuances, references,

knowledge products, etc.)

Serve as primary source of reliable PPP information

Provides venues for information sharing, dialogue and

consultation with public/private/ local/national and

international PPP stakeholders

Helps provide fast and reliable systems to facilitate

timely/efficient report generation

Supports the full range of knowledge requirements of all its

internal and external users

23

KM Portal Information Systems

Developed Under Development

PPP Center Website

Virtual Data Room Web-based facility for

information dissemination

during bidding process

Intended Users:

Prospective investor,

Implementing Agencies’

Project Officers, and PPP

Center’s Project Officers

Will utilize Secure Socket

Layer (SSL) Certificate

from trusted Certificate

Authority (CA)

Project Information and

Management System

Consultants Management

System

Document Management

and Tracking System

E-Library

Intranet

Repository of PPP-related information:

Policies;

legal and regulatory framework;

tender process; sample contracts;

PPP best practices;

list of private firms, consultants, and experts

involved in PPP projects; and

list of PPP projects undertaken by APEC economies.

Interconnectivity of KM Portals in the APEC region

Serve as platform for PPP information sharing

among APEC member countries

24

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Provide standard contract templates for APEC member

economies

Serve as a guidance document incorporating PPP best

practices (contract provisions to include, among others,

Material Adverse Government Action, Termination

Payment Regime, and Alternative Dispute Resolution

Provision)

Aims to streamline the drafting of PPP concession

agreements and thus reduce due diligence cost

Encourage private sector participation in PPP projects

through transparent and predictable contract terms

27

Third dialogue since the establishment of APIP in 2010

Held on 04 March 2015 at the Taal Vista Hotel in Tagaytay

City

Focus on ‘urban infrastructure development and

financing’, a key agenda item in Cebu Action Plan

Attended by around 60 representatives from PH government, multilateral development institutions, ABAC

members and APIP private sector panel members

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Aims to promote development of holistic policy planning

framework to provide guidance to APEC leaders on meeting

infrastructure challenges caused rapid urbanization

Joint initiative of Australia and China, proposed by the APEC Study

Centre and endorsed by the APEC Business Advisory Council

Areas of focus: (1) Design and Planning; (2) Infrastructure Project

and Development; and (3) Project Finance and Investment

Action plan and guidelines to be approved at second biennial

forum in 2016, and presented to APEC leaders and other

stakeholders later that year

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From 41.9 million Filipinos currently living in urban areas,

56.3% of the population will be living in urban areas by 2030,

increasing to 65.5% in 2050

Core urban issues: overcrowding and congestion, inefficient

urban transport, safer and affordable housing, natural

disaster risks and environmental degradation, and sanitation

Philippine Development Plan to address increasing urbanization by: improving connectivity and efficiency among urban centers,

regional growth hubs

improving wastewater and solid waste management

improving coordination and planning, and streamlining

government processes

Transport

The DOTC presented PPP project timelines and noted that four

(4) out of the nine (9) PPP projects awarded in present

administration are DOTC projects

The DOTC identified the following challenges: Policy – legal readiness and project implementation; institutionalizing

new organizational structure and building capacity

Resources – encouraging participation of local and international

firms and lenders to participate; timing of tenders

People – PPP acceptance of various agencies; risk aversion of

various stakeholders; political environment and transitioning of plans

and projects; ensuring inclusive growth

30

Urban Public Works

The DPWH identified three key urban public work issues: infrastructure development for growth;

governance for institutions and social welfare; and

green traffic and pollution management

With the increase in infrastructure budget, the DPWH plans to: institutionalize good governance and Anti-Corruption reforms;

upgrade quality and safety of roads and bridges with stronger

private sector participation;

provide better access to tourism destinations, ports, and food

production areas;

continue work on Master Plan for flood management in Metro

Manila and surrounding areas; and

develop Mindanao Logistics Network Program, and undertake

resilience and disaster risk management projects

31

Energy

The DOE outlined key energy plans and programs to climate-

proof energy infrastructure and facilities, develop indigenous

sources of energy and expand use of natural gas

To continue the long-term push for sustainable fuels, private

sector assistance is needed to implement measures for 10%

energy efficiency and 10% energy savings by 2030

32

33

The ADB noted that with the high GDP growth,

increased competitiveness, stable political

environment, improved corporate governance, sound

fiscal management, and credit rating upgrades, now is

a good time to attract investments to the Philippines

34

Integrated Planning

The panel noted it may be helpful to develop and publicly

launch overall integrated infrastructure Master Plan (i.e.,

Metro Manila 2015) As internal planning framework, the Master Plan could provide

basis for consistency of decision making across all levels of

government, articulate performance targets, and quantify risks

better

It would also allow private sector time to allocate resources and

provide confidence for long term planning

35

Integrated Planning & Connectivity for Greater Manila

Panel noted growth of PH will come from greater Manila

area. The challenge is ensuring overall planning coherence

and connectivity

While greater mobility is essential, new roads not necessarily

needed to improve access. New infrastructure should be

created selectively; with greater emphasis on managing

existing transport infrastructure systems

Pipeline of Short-Term & Long-Term Projects

The private sector needs a pipeline of both short and long-

term projects to be able to allocate resources and keep

their project teams together for future bids