DOF spearheads efforts in advancing high-quality and cost-effective infrastructure in PH through PPPs

Through the leadership of Finance Secretary Benjamin E. Diokno, the Department of Finance (DOF)’s Privatization and Corporate Affairs Group (PCAG) has spearheaded efforts to improve the Philippines’ public-private partnership (PPP) policy environment to pave the way for high-quality and cost-effective infrastructure.

Within President Ferdinand R. Marcos, Jr.’s first 100 days in office, the PCAG, led by Undersecretary Catherine L. Fong, took the lead in amending the Build-Operate-Transfer Law’s (BOT) implementing rules and regulations (IRR).

The revised IRR of the BOT Law, which took effect on October 12, 2022, sought to address stakeholders’ concerns about the financial viability and bankability of PPP projects and about potential delays due to extra steps, rigid processes, or ambiguous provisions.

“The revised BOT Law IRR was a necessary step to allow us to better leverage PPPs in boosting the competitiveness of domestic industries and attracting a diverse range of investment opportunities,” Secretary Diokno said.

To further enhance private sector participation, the PCAG also spearheaded pushing for the approval of the PPP code, which codifies all PPP laws, rules, and regulations to establish a stable and predictable PPP policy framework in the country.

On September 27, 2023, the PPP Code of the Philippines was ratified by the Senate and House of Representatives in the Bicameral Conference Committee Report on the Disagreeing Provisions of Senate Bill No. 2233 and House Bill No. 6527.

The passage of the PPP Code is expected to directly support the Marcos, Jr. administration’s objective of closing the infrastructure funding gap to bolster economic development and sustain recovery.

In December 2022, the PCAG also played a crucial role in revising the Investment Coordination Committee (ICC) Guidelines by introducing an updated checklist that streamlines the submission, evaluation, and approval of PPP projects.

The PCAG’s Privatization Group is responsible for evaluating solicited and unsolicited PPP proposals, which undergo a rigorous screening process before they are submitted to the ICC.

The ICC evaluates the fiscal and monetary impacts of significant government projects on the Philippine economy before recommending such to the National Economic and Development Authority (NEDA) Board.

The NEDA Board comprises the President as Chairperson, the NEDA Secretary as Vice Chair, and the Executive Secretary, Finance Secretary, and Budget Secretary as members.

Under the Marcos, Jr. administration, the NEDA Board regularly holds monthly meetings to ensure speedy approval of projects.

To date, PCAG has significantly contributed to the swift NEDA Board approval of three solicited PPPs worth about PHP 177.04 billion as well as two unsolicited PPPs with an estimated sum of PHP 46.20 billion.

Among the approved solicited PPP projects is the Rehabilitation and Operation of the Ninoy Aquino International Airport (NAIA), which was evaluated within a record-breaking six weeks––the fastest approved PPP proposal in Philippine history.

With an estimated total project cost of PHP 170.60 billion, the NAIA project is expected to increase airport capacity from 35 million passengers per annum to 62, increase air traffic movements per hour from 40 to 48, improve service by applying internationally benchmarked Minimum Performance Standards and Specifications, and utilize private sector expertise for modernization and capacity expansion.

The University of the Philippines (UP)-Philippine General Hospital (PGH) Cancer Center Project, which has an estimated project cost of PHP 6.05 billion, will offer high-quality care to thousands of people with cancer of all types and stages, as well as to their families who are sometimes unable to afford costly treatments because of their socioeconomic circumstances.

The Dialysis Center for the Renal Center Facility of the Baguio City General Hospital and Medical Center (BGHMC) Project entails the financing, designing, and retrofitting of an existing building in the BGHMC Compound into a renal center facility.

With an estimated project cost of PHP 392.28 million, the project will increase the bed capacity of BGHMC from 500 to 800 while upgrading its existing service facilities and professional health care services.

Meanwhile, among the unsolicited PPPs approved by the NEDA Board include the PHP 29.30 billion Laguindingan International Airport, which is expected to improve the airport’s capabilities by ensuring it can meet the growing demands of the region over the years.

The project aims to integrate sustainability into airport operations and use digital technologies to enhance the passenger experience and improve system efficiency.

On the other hand, the PHP 16.90 billion New Bohol International Airport Project entails upgrading existing facilities, capacity augmentation, installation of required equipment, enhancement of airside facilities, and comprehensive operations and maintenance (O&M) services.

“Investments in infrastructure are at the center of the Marcos, Jr. administration’s growth strategy. Therefore, we must continuously enhance our policy environment, making it conducive to private sector participation. As laid out in our Medium-Term Fiscal Framework [MTFF], this administration will maintain infrastructure spending at 5 to 6 percent of GDP to accelerate economic growth,” Secretary Diokno said.