Aquino says gov't to guarantee PPP projects


Posted at Nov 18 2010 12:14 PM | Updated as of Nov 18 2010 11:22 PM

MANILA, Philippines - The national government has offered to guarantee infrastructure projects under the public-private partnership (PPP) scheme to minimize the risks of investors.

In his speech during the PPP Conference in Pasay City on Thursday, President Aquino committed to compensate contractors in case regulatory agencies prevent them from collecting agreed fees.

"If private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole," he explained.

"The government will compensate the private concessionaire for the difference between what the tariff should have been under the formula, and the tariff which it is actually able to collect."

But Aquino pointed out that government guarantee will only be limited to regulatory risk, and will not cover commercial or market risk, which should be borne by investors.

In the case of the South Luzon Expressway, its Malaysian operator has not been able to push through with a scheduled toll rate hike meant to cover rehabilitation costs due to opposition from consumer advocates, the delay in approval of the Toll Regulatory Board, and a previous restraining order from the Supreme Court.

Meanwhile, the government has listed 10 projects under the PPP program, 3 of which are expected to start construction by 2011.

The listed projects include:

- Metro Rail Transit (MRT)-Light Rail Transit expansion, to cost P70 billion
- MRT Line 2 extension, P11.29 billion
- new Bohol airport, P7.54 billion
- Puerto Princesa Airport, P4.36 billion
- North Luzon Expressway- South Luzon Expressway link, P21 billion
- Cavite-Laguna Expressway-Manila side section, P10.5 billion
- Daraga International Airport, P3.07 billion

Economic managers in Thursday's PPP conference will discuss new government efforts to improve project development, review and approval, financing and risk allocation in project structuring, execution and monitoring.