The Philippine Public-Private-Partnership (PPP) Program

1. International Infrastructure Investment & Cooperation Forum China International Contractors Association (CHINCA) 25-29 May 20110 , Beijing, China The Philippine Public-Private-Partnership (PPP) Program COSETTE V. CANILAO Deputy Executive Director, Philippine PPP Center

2. Outline of Presentation • The Aquino Administration’s PPP Program • Private Sector Role in Phil Socio-Economic Development • The Expanding Scope of Private Sector Role • Legal Framework • Institutional and Regulatory Set-Up • The PPP Center and its Services • PPP Process • PPP Developments • Priority Projects for 2011 • Prospects for Chinese Partners • Summary

3. The Aquino Administration’s PPP Agenda • A Social Contract with the Filipino People • Commitment that all transactions are transparent & above board • Consultative view on private sector areas of concern, i.e. policy issues, market sounding, etc. • Protection of interest of the public as facility users and payers “We are working to develop profitable partnerships with private companies both domestic and international. We have the resources. We have the human capital. Filipino citizens, invigorated by a shared sense of professionalism, integrity, and quality, are working with their leaders to build policy formulations for growth…” Pres. Benigno S. Aquino, III

4. Private Sector Role in Economic Development • Indispensable role of the private sector recognized by the Philippine constitution – “private sector as partner in development” • Private sector participation most prominent in infrastructure and development projects traditionally provided by government • Policy environment supports private sector’s critical role • structural adjustments policies - privatization, deregulation and liberalization • market-based tariff setting; broad range of government support; various mechanisms for public-private partnerships • economic agenda to harness private sector financing and efficiency

5. Expanding Private Sector Role • “Three Waves” of Private Sector Participation 1986 - Disposition/Sale of Assets through the Asset Privatization Trust (APT) and the Committee on Privatization Late 80s to Early 90s – Energy Act (Power Purchase Agreements); 1990 Philippine BOT Law (RA 6957); 1994 Amended BOT Law (RA 7718) Present and Onwards – The Public-Private-Partnership (PPP) Phase • The PPP Phase • Expanded range of private sector engagements – Management Contracts, Lease, BOTs, JVs, Concessions, other variants • PPPs in traditional (transportation, water, etc) and non-traditional infrastructure (ICT, health, education, etc) sectors • Mixed financing structure; project bundling/unbundling, etc.

6. LEGAL FRAMEWORK • The Amended Build-Operate-Transfer (BOT) Law (RA 7718) • BOT Law’s Implementing Rules and Regulations (IRR) • 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) • The Local Government Code (RA 7160) • Procurement Reform Act (RA 9184)

7. INSTITUTIONAL SET-UP • Contracting Parties (enters into PPP/BOT Agreement) • Implementing Agencies (national agencies) • Government Corporations • Local Government Units (Province, City, Municipality) • Other National Agencies Concerned • Line Agencies/Departments (policymaking) • National Regulatory Bodies (Finance, Economic Planning, Environment, Securities and Exchange, Central Bank, etc.) • Sectoral Regulators (e.g. toll regulatory board) • Review and Approving Bodies • Inter-Agency Investment Coordination Committee • Local Government Councils • Coordinating and Monitoring Agency • The PPP Center

8. The PPP Center • Pres. Aquino signed Executive Order No. 8 (09 September 2010) • BOT Center renamed PPP Center and transferred attachment from DTI to NEDA • Expanded mandate • covers all arrangements under the BOT Law, Joint Venture arrangements, and other PPP arrangements • Promote the PPP Program • Facilitate development of PPP Projects • Advocate policy reforms • Monitor PPP implementation

9. PPP Process Responsible Party Process PPP Center Intervention Start • Fund pre-investment activities through the PDMF • Provide Training & Capacity Development • Provide technical assistance in the review of the Project’s financial and economic viabilities • Provide legal advice during formulation of the contract Project Preparation IAs/LGUs Project Submission to NEDA-ICC (Complete and qualified documentation) IAs/LGUs Project Review & Evaluation Assist IAs/LGUs in complying with requirements during the Project & Contract evaluation NEDA Secretariat/LGUs

10. PPP Process Responsible Party Process PPP Center Intervention • LGU/ICC Approval • ICC Technical Board • ICC Cabinet Committee • NEDA Board Investment Coordination Committee (ICC) NEDA Board Assist in the preparation of bid Documents Preparation of Request for Proposals (RFP) IAs / LGUs Invitation & Pre-qualification • Per BOT Law IRR, non-voting observer of PBAC for national projects • Provide advice during procurement process Preparation and Submission of Bids Private Sector Evaluation of Bids IAs / LGUs Assist in the evaluation of bids Award & commencement of Implementation IAs / LGUs Monitor implementation

11. PPP Program Updates • 2011 PPP Projects in the Roll-Out launched in November 2010 and February 2011 • First five (5) projects to be bid in the first half of the year • Next five (5) projects to be bid in the second half of the year • Projects in the roll-out are mostly transportation projects • Amendment of the BOT Law and its IRR under way • Public hearing ongoing • Collaborative efforts with government PPP stakeholders initiated

12. PPP Program Updates • Capacity development for government PPP stakeholders • To ensure reliable Pre-FS/FS output • To equip efficient evaluation and approval of projects • Project Development and Monitoring Facility beefed up • To help finance Pre-FS/FS • To ensure high success rate

13. 2011 PPP Projects • DaangHari – SLEX Link Project • Implementing Agency: DPWH • Estimated Project Cost: US$ 35.5M • Proposed Scheme: Solicited BTO • Expected Bidding Bid Date: First half of the year • NAIA Expressway Phase 2 Project • Implementing Agency: DPWH • Estimated Project Cost: US$ 235.33 • Proposed Scheme: Solicited BTO • Expected Bid Date: First half of the year

14. 2011 PPP Projects • NLEX-SLEX Connector Project • Implementing Agency: DPWH • Estimated Project Cost: US$ 477.77M • Proposed Scheme: Unsolicited PPP • Expected Bidding Bid Date: First half of the year • CALA-Manila Side Expressway Project • Implementing Agency: DPWH • Estimated Project Cost: US$ 233.33M • Proposed Scheme: Solicited PPP • Expected Bid Date: Second half of the year

15. 2011 PPP Projects • Puerto Princesa Airport Development Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 97.78M • Proposed Scheme: Solicited PPP • Expected Bidding Bid Date: Second half of the year • New Legaspi Airport Development Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 71.11M • Proposed Scheme: Solicited PPP • Expected Bid Date: Second half of the year

16. 2011 PPP Projects • New Bohol Airport Development Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 168.89M • Proposed Scheme: Solicited PPP • Expected Bidding Bid Date: Second half of the year • O&M Privatization of Laguindingan Airport Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 33.33M • Proposed Scheme: Solicited PPP • Expected Bid Date: Second half of the year

17. 2011 PPP Projects • LRT Line 2 East Extension Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 251.11M • Proposed Scheme: Solicited PPP • Expected Bidding Bid Date: Second half of the year • LRT Line 1 South Extension Project • Implementing Agency: DOTC • Estimated Project Cost: US$ 1,555.55M • Proposed Scheme: Solicited PPP • Expected Bid Date: Second half of the year

18. Prospects for Chinese Investors • Participation as project partners of Philippine PPP Projects in the following areas • Engineering, Design and Construction • Financing (equity shareholder, lender, insurer, etc) • Operation and Maintenance

19. Features of the Philippine PPP Program • There is an established national policy on PPPs (BOT Law) • PPPs are allowed in practically all development sectors • PPP legal framework allows creativity in PPP financing and contractual arrangements (several PPP variants) • PPP legal framework allows procurement options (solicited and unsolicited modes) • Institutions (Implementing Agencies and Local Government Units) have distinct legal mandates to enter into PPPs • Government support is allowed in critical projects not viable through full private sector financing • There is a dedicated PPP Program coordinating agency (PPP Center) formally integrated into the government machinery

20. Information on Philippine PPPs www.ppp.gov.ph • Overview of the PPP Program • Legal Framework • PPP Projects for 2011 Rollout • Other PPP Projects • PPP Process Flow • PPP Brochure • PPP Sample Contracts • PPP Presentations and Speeches • Frequently Asked Questions

21. THANK YOU! Public-Private Partnership (PPP) Center National Economic and Development Authority 4/F GA Yupangco Bldg. 339 Sen.Gil J. Puyat Ave. 1200 Makati City, Philippines Tel. No: (+63 2) 897-6826 Fax No: (+63 2) 899-8821 www.ppp.gov.ph