PPP Projects in Davao City won’t benefit the public — Bayan

By INA ALLECO R. SILVERIO
Bulatlat.com

MANILA — The Bagong Alyansang Makabayan (BAYAN) in Southern Mindanao Region is not sending off fireworks anytime soon to welcome the advent of public-private partnership schemes in Davao City.

On August 24, the City Council of Davao approved an ordinance allowing PPP projects and programs between the city and the private sector. In a statement, Councilor Jimmy Dureza who chairs the committee on trade and industry and one of the main proponents of the ordinance said the PPP ordinance will benefit the city and the public.

Councilors like Dureza lobbied for the enactment of a PPP ordinance on the prodding of the Davao City Chamber of Commerce and Industries, Inc. (DCCCII) and of Malacañang itself.

The ordinance stipulates that the city is open to PPP projects, which “include but may not be limited to the following: power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and railways, transport systems, land reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses, bulk grains handling facility or logistic support system, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, dredging, among others.”

Bayan-SMR has been campaigning against the ordinance, saying that PPP schemes in Davao City will be inimical to the public interest.Two councilors voted against the ordinance: Councilors Berino Mambo-o and Leah Librado-Yap.

“PPP, a centerpiece economic program of the Aquino regime, is a Trojan horse of privatization, which is the same economic policy along with liberalization and deregulation pursued by the much-hated Arroyo regime that contributed to the government’s rising debt woes and the people’s economic hardships,” said Bayan-SMR spokeswoman Sheena Duazo. “Private investors in PPP projects do not bring much investment as often hyped by the government. These projects rely on foreign loans, frequently with government guarantees or assuring creditors that, in case of loan setbacks, both local and national governments and their agencies will assume responsibility for the repayment of loans which the private investors incurred.”

Duazo cited the high operation and maintenance costs of Metro Rail Transit (MRT), a 25-year Build-Lease-Transfer (BLT) contract between the government and Japanese-Filipino firm Metro Rail Transit Corp. (MRTC), which the government agreed to guarantee payments for the $426-million debt incurred by MRTC in building the infrastructure and a 15 percent return on investment (ROI) per year.

“This is one of the sweet deals that resulted to fare rate hikes, more public debts and more corruption. It costs taxpayers more because private firms that win contracts have to borrow money at a higher interest rate and it deprives them of the needed basic services as well,” Duazo pointed out.

Duazo also warned that the enactment of PPP ordinance will legitimize privatization through PPP and will likely make the city government wallow more in debts.

“The Davao City government has a remaining debt of P2,333,171,937.74 ($55.5 million) based on Mayor Sara Duterte’s estimates, while it paid a total of P461,252,589.87 ($10.98 million) in 2011 and P145,806, 740.00 ($3.47 million) in the first four months of 2012 as certified by Land Bank of the Philippines (LBP). This explains the local government’s insufficient budget allocations for a housing program and health services due to loan problems and national government’s abandonment of its responsibility to deliver basic services to its constituency,” she said.

Duazo noted that the Aquino regime has proposed to amend the implementing rules and regulations of Republic Act 7718 or the Amended Build-Operate-Transfer (BOT) Law to require government guarantees on PPP projects, including unsolicited proposals such as surface water development projects and schemes for privatization of water and public hospitals through corporatization.

“Bayan, its allied organizations and other anti-privatization groups are now conducting information, education and communication campaigns to raise public awareness on the threats of privatization and to motivate the people to take actions,” she said.

BDO, PCSO to enter PPP fray

As local government units like Davao prepare their own PPP schemes, business entities and even government agencies are also doing the same.

In a recent report in the Manila Times, it was announced that the Banco de Oro (BDO) Unibank owned by business tycoon Henry Sy will raise $2 billion to invest in PPP projects. The bank’s investment arm BDO Capital and Investment Corp. in the meantime is said to be in the process of closing a $1 billion- agreement on financing in the power sector.

BDO announced that it will get into the foreign debt market to raise $2 billion Euro Medium Term Notes as part of its moves to improve the bank’s ability to access longer-term funding for relending to projects like infrastructure under the government’s PPP program. A Euro Medium Term Note is a debt instrument sold outside the US and Canada.

In the meantime, there are rumors that the Philippine Charity Sweepstakes Office (PCSO), since 2011, has been considering proposals and concepts for PPP projects that are supposedly related to the provision of medical assistance to the poor.

In a column in Businessmirror, it was said that while the PCSO does not require the construction of infrastructure, the agency can participate in PPP schemes by entering into partnerships with nongovernment organizations and other private-sector groups for service delivery, supply of high-quality essential medicines, provision of medical treatments such as dialysis, and other requirements.

“The PCSO will also study how resources can be converged through entering into PPPs in the areas of health-worker and social-worker training and the holding of medical missions and health-information seminars in poor communities all over the country, with the goal of delivering positive health outcomes,” the report said.

More Aquino PPP projects in the pipeline

The Aquino administration’s Public Private Partnership Center (PPPC) has already released a PPP Manual for local government units, “a detailed how-to guide for undertaking well structured PPP projects,” the agency said.

Workshops on the PPP Manual are continuously being conducted by the PPP Center to LGUs.

In 2011, the Aquino government’s biggest project roll out was the Daang-Hari-SLEX Connector Project under the Department of Public Works and Highways, and it was was awarded to Ayala Corp.

In 2012, the government’s implementing agencies identified and selected 21 projects for PPP implementation, 8 of which are scheduled to be finished by the end of the year. The first one was was the Department of Education’s PPPs for School buildings Infrastructure Project or PSIP. The project aims to build 9,000 classrooms in Regions I, III and IV-B, helping cut down the backlog on school buildings for public schools.

In May, the National Economic Development Agency (NEDA) was set to approve three projects, the Vaccine Self-Sufficiency Project, the Modernization of the Philippine Orthopedic Hospital, and the NAIAX elevated tollway.

Other projects in the Aquino government’s pipeline are the the CALA Expressway, Mactan Cebu Passenger Terminal Building and the Automatic Fare collection system.