PUBLIC PRIVATE ... PARTNERSHIP (PPP) !

WHAT, WHEN  ...  WHY  (WWW)  ?

One Malacañang aide accepts Noynoy Aquino’s slip in ratings. Low output in 11 months in office is how Presidential Communication Sec. Herminio Coloma sees it. The admin has been weakest in roads, bridges, seaports and airports, 

he told The STAR last week. “We still have lots to do in terms of infrastructure.”

They sure do. Aquino has put PPP — Public-Private Partnership — at the center of his economic chart. PPPs consist mostly of highways and transport facilities to be built by private firms under special tax breaks. First two, then four such projects were announced for bidding in 2010. Six more were lined up for the first quarter of 2011, totaling P113 billion. 

Not one has materialized. As his State of the Nation nears, Aquino is hard-pressed to report at least one running PPP. A “high official” was quoted Monday saying the first PPP bidding — for an P11-billion tollway to the Manila International Airport — finally would be held. That the source opted for anonymity dampened the story. The lack of any PPP till now points up related concerns where the admin faltered: jobs and small businesses. Just one port work can employ thousands, from road diggers to engineers, and spur trades like canteens and chandlers. No PPP means no economic activity.

Coloma beamed on where the admin has been strongest — “in creating a climate conducive to good governance.” This meant in part having the trade and local government departments get crucial licenses, and backing of governors and mayors for national projects. Was it in answer to recent polls in which investors decried worsening corruption in local levels? Allegedly town councils mulct a million pesos or two, just to pass resolutions letting infrastructure into their locales. “You come to help,” a tourism-hotelier laments, “yet you fall victim to extortion.”

Good governance included long reviews of awarded and projected contracts. The public works office saved P1.3 billion, since Aquino took over June 30, by re-bidding projects. “We expect P6 to P7 billion savings by end-2011 just by doing things better and correctly,” Aquino promised businessmen Thursday. Budget Sec. Florencio Abad also conserved last year P90 billion in maintenance-operating expenses. Still there are those who frown on savings, in the view that government’s duty is to spend. While Abad’s feat looked good to some, it meant to others P90 billion withheld in fees to professionals or purchases from small traders — economic perk-uppers all.

Contract reviews can spot graft and gaffes, notably in deals inked during the sleazy past regime. But rightly or not, delays can incite fears of project grabbing from old winners to new cronies, or fresh rounds of shakedowns. Even if only for prudence, interminable reviews paralyze infrastructure works. Three delays have been in the news of late:

• Manila International Airport-Terminal 3. Relations between the government and German state-owned Fraport irreparably are damaged. A Filipino-Korean consortium, involved in expanding the Clark Airport, is offering to run the mostly mothballed Manila facility. It will buy out Fraport to settle all civil cases, and initially pay the MIA Authority P2.5 billion. At once this could dissolve Fraport’s revived suit before the International Center for Settlement of Investment 

Disputes, Washington DC. The Philippines, which already spent P1.3 billion for legal defense in the first suit, would be relieved. Cracked ties with Germany and the European Community would be fixed. But the MIAA prefers a solicited bid, for which it must first spend millions of pesos for feasibility studies, and which Fraport surely will resist. Meanwhile, 

Terminal-3’s fired Japanese general contractor has been rehired for repairs — without bidding.

• Roll On-Roll Off ports. Boiling, Fraport-like, is government’s delay of the project long awarded to French state-owned 

Eiffel Construction Metalliques and partner Matière SAS. The Philippine Ports Authority already paid P1.5 billion in 2009, before claiming that the 72 modular steel ports that Eiffel-Matière was to build were too pricey. When the French proved otherwise (weaker concrete would cost P4.5 million more per port; Spain’s steel version is P47 million higher), the PPA imposed preposterous specs. It didn’t matter that the French ports can last 80 years, even if dismantled and transferred. 

The PPA simply insisted that this archipelago of 7,100 islands needs only two RORO ports for the moment, and these should be able to withstand 20-meter high waves that occur once every 10,000 years. Eiffel-Matière is mulling to sue the Philippines in Switzerland and in ICSID-Washington, as its contract grants.

• Subic-Clark-Tarlac Expressway privatization. Metro Pacific Group won the 25-year management-operation bidding last November. When the deal was to be signed days later the BCDA board, holdovers from the past regime, suddenly imposed new financial provisos. Metro Pacific boss Manuel Pangilinan denounced the odd twist as a black mark on all 

PPPs.

After all the delays and false starts, the Aquino admin presumably has studied well the initial batch of PPPs. Not only giants Metro Pacific, San Miguel Corp., and Ayala Corp. wish to bid, but also Australian and Chinese firms. Up for grabs, among others, are the Metro Rail Transit privatization; Light Rail Transit-1 south extension and LRT-2 east annex; Cavite-Laguna expressway; new airports in Legaspi-Daraga and Bohol, and expansions in Laguindingan and Puerto Princesa; and the North and South Luzon Expressway connection. All the projects need at this point, says the inter-agency PPP Center, is approval by the National Economic and Development Authority, headed by the President himself. By now reviewers should have spotted any flaws, to be able to say, “All clear.”

GARANTIE DES INVESTISSEMENTS ?

Following his announcement on Friday that Malacañang has cancelled three foreign-funded projects in the country, President Benigno Aquino III on Tuesday assured foreign investors that the Philippines will continue doing business with them as long as the projects are beneficial to Filipinos and the contracts are not anomalous.

The President was trying to assuage the fear of members of the European Chamber of Commerce of the Philippines (ECCP) that investing in the country and dealing with government remains unstable because successive administrations may rescind contracts with foreign investors.

On Friday, Aquino disclosed he had a lake-dredging project funded by Belgians cancelled. Two other foreign-funded contracts — one with a French contractor, the other with a Chinese railroad contractor — were cancelled by the Aquino administration, citing the contracts needed refinements.

The P18.7-billion Laguna Lake dredging project will not benefit the lake itself in terms of better water quality and holding capacity, considering that 12 million cubic meters of sludge to be dredged will be dumped in the same lake, according to the President.

In an interview with GMA News Online, presidential spokesperson Edwin Lacierda identified the Belgian firm handling the Laguna Lake project as Baggerwerken Decloedt en Zoon.

If ECCP members knew those details, they would probably ask for a review of the project, Aquino said.

Contracts with French, Chinese firms

Also on Friday, the President said he ordered government to restudy a rail line project funded by the Chinese, and renegotiate the contract to a port project funded by the French.

The contracts to those projects need to be improved, Aquino said.

The French company, Eiffel-Matiere SAS was supposed to fund a roll-on, roll-off port project for the Philippine government, Lacierda said.

On the other hand, China National Machineries and Equipment Group was supposed to fund and undertake the NorthRail project, he added.

“We think, and we believe, that the projects that we will be approving will stand whatever scrutiny. Now if a project is called into question, so long as it’s valid, it should be able to withstand scrutiny and therefore will continue, the President said.

“If, however, it is based on very faulty and false premises, then obviously even the tiniest scrutiny will not allow it to pass," he added.

Foreign investors holding back

Some foreign investors are now holding back when it comes to investing in the Philippines in the absence of guarantees that their investments and projects will be able to progress through time unhampered, ECCP president Hubert d’Aboville said on Tuesday.

Investors want Aquino and his Cabinet secretaries to make a commitment their investments will be intact for 30 years, D’Aboville said.

"Perhaps I will ask the Secretary of Foreign Affairs to contact them and to assure them that where there are projects that are reasonable, that are sound, that have economic benefit, and of value to our people, they will continue," Aquino said, in response to the concerns of the ECCP