THE GOVERNMENT has issued guidelines for the
use of the P3-billion public-private partnership strategic support fund
(PPPSSF) under the 2012 national budget for the modernization of
hospitals under the Department of Health (DoH).
Joint Circular 2013-1 of the DoH,
Department of Finance (DoF), Department of Budget and Management (DBM),
and the National Economic and Development Authority (NEDA), dated Sept.
16 and published in a newspaper Friday, outlines the procedural and
reporting requirements for the use of the PPPSSF.
According to the circular, the fund shall be used exclusively for 26
regional hospitals authorized to avail from the PPPSSF for the
modernization and upgrading of their respective facilities, in support
of the DoH’s Universal Health Care or Kalusugan Pangkalahatan (KP)
program.
The fund shall be released only for these activities:
• right of way acquisition and related costs (including resettlement)
• government counterpart to be used for the construction and other
related costs for potential and actual PPP projects identified by the
implementing agency, provided these do not exceed 50% of the project
cost
• cost of designing, building, and otherwise delivering any part of a
project which government decides to retain responsibility for. This
includes public infrastructure such as rural and access roads,
utilities, and other support facilities required for a PPP project to be
viable.
Subject to the approval of the DBM, the fund may also be used for:
• feasibility studies, business case development, pre investment studies
and other activities required to determine the feasibility and
viability of potential PPP projects;
• preparation of various project documents as required for approval by the NEDA and other approving bodies for PPP projects; and
• hiring of consultants and advisors to assist the department in various
aspects of the project preparation, tendering, and execution process,
including for the preparation of feasibility studies, transaction
documents and marketing materials.
The circular notes that the PPPSSF cannot be used for expenses related
to unsolicited project proposals, meaning those proposed by the private
sector without a request for proposals from the government.
Nor can the fund be used for credits and loans to the PPP private
partners or for guarantees provided by the government to the lenders of
any private entity for any PPP project.
It also cannot be used to augment or support regular programs of the DoH.
To facilitate release of the allotted PPPSSF, the list of hospitals to
be funded must be broken down by infrastructure, equipment, and
feasibility study, and must include the work program of the project.
The fund will be released by tranche or phase. -- B.F.V. Roc
source: Businessworld
Sunday, September 29, 2013
Tuesday, September 24, 2013
Solon wants Cebu LRT among PPPs
HOUSE Assistant Majority Leader and Cebu
City Representative Gerald Anthony Gullas, Jr. is batting for the
inclusion of the proposed Cebu Light Rail Transit (LRT) System in the
national government’s list of high-priority public-private partnership
(PPP) projects.
“We are hopeful that the proposed Cebu LRT network will eventually be included in the lineup of urgent PPP ventures,” Mr. Gullas was quoted saying in a statement released yesterday.
Mr. Gullas filed House Bill (HB) 1338, a proposed law to establish and fund the Cebu LRT in Metro Cebu.
According to the statement, the LRT line would run between the cities of Talisay and Mandaue. New railways would also connect Talisay to Dalaguete town in the south and Mandaue to Sogod town in the north.
“An LRT line is the only way Metro Cebu can cope with future demand for a fast, safe and reliable public transport system,” the statement read.
The release cited a study by the Japan International Cooperation Agency, which reported that Metro Cebu’s population alone is expected to double from 2.5 million to five million by 2050.
“Owing to rapid population growth, we will find it increasingly difficult to move people around a highly congested Metro Cebu in the years ahead,” Mr. Gullas said in the statement.
He also said that since most of the roads in Cebu can no longer be widened, “the options left are for us to either build new road tunnels underground, or to put up an overhead LRT line.”
Joselito Herrera, Mr. Gullas’s public relations consultant, explained in an e-mail: “Years ago, the DoTC forged a $1-billion build-operate-transfer agreement with the AMA Group Holdings Corp. to build a 71-kilometer, three-phased LRT project in Metro Cebu.”
“As planned then, the project would run through Metro Cebu from the Municipality of Carcar (now a city) in the south to Danao City in the north. However, the project was eventually dropped after the DoTC found it difficult to get lower offers from other private entities,” Mr. Herrera said.
Asked for comment, Alma Mae A. Agne of the PPP Center’s knowledge management division said in a separate e-mail: “The only light rail project being undertaken by the government is the LRT Line-1 Cavite Extension. What we currently have in the pipeline are priority projects that have been identified by our implementing agencies, in this case the DoTC.”
“They might have something in mind for Cebu, but at this point they have not indicated what exactly these PPP projects are. What is clear for now is the ongoing Mactan-Cebu International Airport project,” Ms. Agne said, referring to the P17.5-billion PPP for the airport’s rehabilitation and expansion.
“As to the House bill filed at the lower House for a Cebu Light Rail Transport System, we will coordinate with our colleagues here at the PPP Center and find out more details about it,” she said. -- I.C.C. Delavin
source: Businessworld
“We are hopeful that the proposed Cebu LRT network will eventually be included in the lineup of urgent PPP ventures,” Mr. Gullas was quoted saying in a statement released yesterday.
Mr. Gullas filed House Bill (HB) 1338, a proposed law to establish and fund the Cebu LRT in Metro Cebu.
According to the statement, the LRT line would run between the cities of Talisay and Mandaue. New railways would also connect Talisay to Dalaguete town in the south and Mandaue to Sogod town in the north.
“An LRT line is the only way Metro Cebu can cope with future demand for a fast, safe and reliable public transport system,” the statement read.
The release cited a study by the Japan International Cooperation Agency, which reported that Metro Cebu’s population alone is expected to double from 2.5 million to five million by 2050.
“Owing to rapid population growth, we will find it increasingly difficult to move people around a highly congested Metro Cebu in the years ahead,” Mr. Gullas said in the statement.
He also said that since most of the roads in Cebu can no longer be widened, “the options left are for us to either build new road tunnels underground, or to put up an overhead LRT line.”
Joselito Herrera, Mr. Gullas’s public relations consultant, explained in an e-mail: “Years ago, the DoTC forged a $1-billion build-operate-transfer agreement with the AMA Group Holdings Corp. to build a 71-kilometer, three-phased LRT project in Metro Cebu.”
“As planned then, the project would run through Metro Cebu from the Municipality of Carcar (now a city) in the south to Danao City in the north. However, the project was eventually dropped after the DoTC found it difficult to get lower offers from other private entities,” Mr. Herrera said.
Asked for comment, Alma Mae A. Agne of the PPP Center’s knowledge management division said in a separate e-mail: “The only light rail project being undertaken by the government is the LRT Line-1 Cavite Extension. What we currently have in the pipeline are priority projects that have been identified by our implementing agencies, in this case the DoTC.”
“They might have something in mind for Cebu, but at this point they have not indicated what exactly these PPP projects are. What is clear for now is the ongoing Mactan-Cebu International Airport project,” Ms. Agne said, referring to the P17.5-billion PPP for the airport’s rehabilitation and expansion.
“As to the House bill filed at the lower House for a Cebu Light Rail Transport System, we will coordinate with our colleagues here at the PPP Center and find out more details about it,” she said. -- I.C.C. Delavin
source: Businessworld
Dredging via PPP
We recently wrote about the need to dredge rivers and
waterways—considering the worsening flooding problem occurring in Metro
Manila and other parts of the country.
It appears there is no question that rivers and waterways will have to be dredged. The most recent episode of monsoon rains that caused the monstrous traffic jams in the metropolis last week has dramatically shown that need.
On the other hand, it appears that the government won’t be shelling out money to fund dredging projects in the short term. Ghost dredging projects have been identified as one of the favorite schemes of pork barrel scammers. More, a good number of politicians are embroiled in pork barrel-funded dredging projects that are now being questioned.
There have been suggestions for the government to explore how the public-private partnership can be made to work to address this concern. The proposal is for the government to invite private investors and ask them to put their money into river dredging projects. The government provides the incentives, defines the work quality standards, and sets up the measures to make sure the river dredging will not cause any harm to the environment.
One possible incentive would be to allow the private investors to recover all minerals and other deposits of value that they can find from among the silt and waste produced by the dredging.
The proposed scheme has received good feedback and comments to the effect that it is probably feasible and worth giving a try. After all, some point out, river dredging is actually a form of “mining”. In some countries, the method uses hydraulic suction hoses mounted on a boat. As the boat moves through the waterway, it suctions off the silt and mud and transfers them to the river bank.
As the silt and mud go through a pipe, the minerals of value are separated. In the proposed scheme, the private investors keep the minerals they recover as the source of their revenue and return on investment.
The view is that the more minerals of value the private investors recover, the more they will keep on dredging.
In the process, more silt and mud will be removed from the rivers and waterways, making the flow of water through them easier. As these waterways become deeper due to the continuing dredging by private investors, the more volume of water they can carry. This way, gushing waters triggered by heavy monsoon rains will not flow over to the communities lying alongside the waterways.
Concerns have been raised in these countries about the management of the silt and waste removed form the rivers and waterways. Based on their experience, governments may have to set up an efficient monitoring system to ensure that private investors engaged in this activity dispose of the waste and silt properly.
What is important is that governments are able to address the need to dredge rivers and waterways without spending public funds.
With strict quality standards and monitoring systems, this looks like a good strategy to implement.
Given the wealth of the country’s natural resources, it is believed that investors will find river-dredging projects full of opportunities. Access to the minerals mixed with the silt and waste is something investors may find worth looking at.
Some say this idea may not appeal to the government. It might want to keep spending public funds for dredging. However, it may have to wait for a long time and for the public anger against pork barrel abuse and misuse before the government can spend another centavo on dredging.
Given the mood of the times, the government may have to take a second look at the possibility of luring private investors into putting their money in river dredging ventures.
Investors are always on the hunt for investment opportunities that promise a good return. River dredging just might be one such opportunity.
The government has to realize that the many who live in flood-prone communities cannot wait until our leaders have sorted out and fixed the pork barrel mess. Every time rivers and waterways overflow and damage their homes and communities, they are reminded of the inaction of the government on the flooding problem.
The solution just might be in the hands of private investors who can see the wealth of opportunities buried underneath the waste and silt in our rivers and waterways.
source: Manila Standard Column of Alvin Capino
It appears there is no question that rivers and waterways will have to be dredged. The most recent episode of monsoon rains that caused the monstrous traffic jams in the metropolis last week has dramatically shown that need.
On the other hand, it appears that the government won’t be shelling out money to fund dredging projects in the short term. Ghost dredging projects have been identified as one of the favorite schemes of pork barrel scammers. More, a good number of politicians are embroiled in pork barrel-funded dredging projects that are now being questioned.
There have been suggestions for the government to explore how the public-private partnership can be made to work to address this concern. The proposal is for the government to invite private investors and ask them to put their money into river dredging projects. The government provides the incentives, defines the work quality standards, and sets up the measures to make sure the river dredging will not cause any harm to the environment.
One possible incentive would be to allow the private investors to recover all minerals and other deposits of value that they can find from among the silt and waste produced by the dredging.
The proposed scheme has received good feedback and comments to the effect that it is probably feasible and worth giving a try. After all, some point out, river dredging is actually a form of “mining”. In some countries, the method uses hydraulic suction hoses mounted on a boat. As the boat moves through the waterway, it suctions off the silt and mud and transfers them to the river bank.
As the silt and mud go through a pipe, the minerals of value are separated. In the proposed scheme, the private investors keep the minerals they recover as the source of their revenue and return on investment.
The view is that the more minerals of value the private investors recover, the more they will keep on dredging.
In the process, more silt and mud will be removed from the rivers and waterways, making the flow of water through them easier. As these waterways become deeper due to the continuing dredging by private investors, the more volume of water they can carry. This way, gushing waters triggered by heavy monsoon rains will not flow over to the communities lying alongside the waterways.
Concerns have been raised in these countries about the management of the silt and waste removed form the rivers and waterways. Based on their experience, governments may have to set up an efficient monitoring system to ensure that private investors engaged in this activity dispose of the waste and silt properly.
What is important is that governments are able to address the need to dredge rivers and waterways without spending public funds.
With strict quality standards and monitoring systems, this looks like a good strategy to implement.
Given the wealth of the country’s natural resources, it is believed that investors will find river-dredging projects full of opportunities. Access to the minerals mixed with the silt and waste is something investors may find worth looking at.
Some say this idea may not appeal to the government. It might want to keep spending public funds for dredging. However, it may have to wait for a long time and for the public anger against pork barrel abuse and misuse before the government can spend another centavo on dredging.
Given the mood of the times, the government may have to take a second look at the possibility of luring private investors into putting their money in river dredging ventures.
Investors are always on the hunt for investment opportunities that promise a good return. River dredging just might be one such opportunity.
The government has to realize that the many who live in flood-prone communities cannot wait until our leaders have sorted out and fixed the pork barrel mess. Every time rivers and waterways overflow and damage their homes and communities, they are reminded of the inaction of the government on the flooding problem.
The solution just might be in the hands of private investors who can see the wealth of opportunities buried underneath the waste and silt in our rivers and waterways.
source: Manila Standard Column of Alvin Capino
Monday, September 23, 2013
New PPP players sought by gov’t
THE GOVERNMENT is looking to entice a new
group of players -- insurers -- to join its vaunted public-private
partnership (PPP) program.
“We have to develop infrastructure as an asset class that market players can invest in,” Finance Secretary Cesar V. Purisima said following last week’s government briefing on the economy.
“This is why we have been working to boost the capitalization of insurance companies, because their money is the better match for infrastructure projects,” Mr. Purisima added.
While the insurance sector has held key roles in funding infrastructure development in other countries, here it is still not the first choice among project proponents. Those who may be interested, meanwhile, have no formal system to find partners.
Industry officials noted that they need investments to park the premiums they collect.
Rizalina G. Mantaring, president and chief executive of Sun Life of Canada (Philippines), Inc., estimated that the average liability duration of insurers is 19 years. The average duration of assets like stocks and bonds, however, is only 10 years.
Big-ticket infrastructure projects like toll roads, railways and airports, in contrast, are constructed, developed and operated over much longer terms.
The Organization for Economic Cooperation and Development calls insurance money “patient capital”. It warned in a June 2013 paper that the financial system was running short of such in the wake of the 2008 global crisis.
Michael T. Rodriguez, Macquarie Infrastructure and Real Assets managing director, painted a different problem in the Philippines. “There is so much wealth in the economy right now, but there is nowhere to put it. That is why the money keeps going to the short-term market which is more volatile,” he said.
Sun Life, the country’s largest insurer, amassed P20.06 billion in premium income in 2012 alone. “We are actively looking at PPP projects right now, since they can offer the better yield and duration for us,” Ms. Mantaring said.
“In Canada, Sun Life is the biggest individual investor in infrastructure programs.”
Despite the money on offer, Ms. Mantaring said Sun Life was having difficulty attracting proponents of infrastructure projects.
“Banks are thought of more naturally when people think of loans or funding,” she noted.
Some project proponents also look to the debt markets but the long-term bonds they issue typically have a tenor of 10 to 15 years since investors don’t have the appetite for anything longer. Insurers can lock up funds for 20, even 25 years, she said.
Mr. Purisima said one way of bringing insurers into the PPP program was to issue infrastructure-linked bonds, which are currently being considered by the government.
PPP Center Executive Director Cosette V. Canilao said that over the next two to three years, the government could issue the long-term bonds and allow insurers purchase the bulk. The proceeds will be used to finance projects.
Ms. Canilao also urged investment banks to arrange infrastructure project bonds.
“Local banks will commonly lend for 12-15 years, so there will be refinancing risks for the project proponents. Investment banks should tap insurers to make sure there are no refinancing risks. On the fifth or seventh year of a project when cash flows stabilize, they can issue project bonds,” she said.
Antonio G. de Rosas, president and chief executive of Pru Life UK -- the country’s second-largest insurer with P15.59 billion in premium income last year -- said investment banks could arrange and underwrite the bonds and then invite insurers to the primary offer.
Until then, insurers are working by themselves to meet project proponents and offer their funding. “Here there appears to be no interest” in bringing the two parties together, Ms. Mantaring said.
“Perhaps the government can help by more actively working with insurance companies when projects are bid out to put them together with interested bidders,” she added.
Ms. Canilao offered: “We have held infrastructure summits. We are also thinking of holding some sort of networking and business-matching event. We will keep in mind the Insurance Commission and insurers.”
Mr. de Rosas was more optimistic, saying: “As more and more projects are approved, credit arrangers will get around to requesting funding requirements not only from banks but also from insurance companies.”
source: Businessworld
“We have to develop infrastructure as an asset class that market players can invest in,” Finance Secretary Cesar V. Purisima said following last week’s government briefing on the economy.
“This is why we have been working to boost the capitalization of insurance companies, because their money is the better match for infrastructure projects,” Mr. Purisima added.
While the insurance sector has held key roles in funding infrastructure development in other countries, here it is still not the first choice among project proponents. Those who may be interested, meanwhile, have no formal system to find partners.
Industry officials noted that they need investments to park the premiums they collect.
Rizalina G. Mantaring, president and chief executive of Sun Life of Canada (Philippines), Inc., estimated that the average liability duration of insurers is 19 years. The average duration of assets like stocks and bonds, however, is only 10 years.
Big-ticket infrastructure projects like toll roads, railways and airports, in contrast, are constructed, developed and operated over much longer terms.
The Organization for Economic Cooperation and Development calls insurance money “patient capital”. It warned in a June 2013 paper that the financial system was running short of such in the wake of the 2008 global crisis.
Michael T. Rodriguez, Macquarie Infrastructure and Real Assets managing director, painted a different problem in the Philippines. “There is so much wealth in the economy right now, but there is nowhere to put it. That is why the money keeps going to the short-term market which is more volatile,” he said.
Sun Life, the country’s largest insurer, amassed P20.06 billion in premium income in 2012 alone. “We are actively looking at PPP projects right now, since they can offer the better yield and duration for us,” Ms. Mantaring said.
“In Canada, Sun Life is the biggest individual investor in infrastructure programs.”
Despite the money on offer, Ms. Mantaring said Sun Life was having difficulty attracting proponents of infrastructure projects.
“Banks are thought of more naturally when people think of loans or funding,” she noted.
Some project proponents also look to the debt markets but the long-term bonds they issue typically have a tenor of 10 to 15 years since investors don’t have the appetite for anything longer. Insurers can lock up funds for 20, even 25 years, she said.
Mr. Purisima said one way of bringing insurers into the PPP program was to issue infrastructure-linked bonds, which are currently being considered by the government.
PPP Center Executive Director Cosette V. Canilao said that over the next two to three years, the government could issue the long-term bonds and allow insurers purchase the bulk. The proceeds will be used to finance projects.
Ms. Canilao also urged investment banks to arrange infrastructure project bonds.
“Local banks will commonly lend for 12-15 years, so there will be refinancing risks for the project proponents. Investment banks should tap insurers to make sure there are no refinancing risks. On the fifth or seventh year of a project when cash flows stabilize, they can issue project bonds,” she said.
Antonio G. de Rosas, president and chief executive of Pru Life UK -- the country’s second-largest insurer with P15.59 billion in premium income last year -- said investment banks could arrange and underwrite the bonds and then invite insurers to the primary offer.
Until then, insurers are working by themselves to meet project proponents and offer their funding. “Here there appears to be no interest” in bringing the two parties together, Ms. Mantaring said.
“Perhaps the government can help by more actively working with insurance companies when projects are bid out to put them together with interested bidders,” she added.
Ms. Canilao offered: “We have held infrastructure summits. We are also thinking of holding some sort of networking and business-matching event. We will keep in mind the Insurance Commission and insurers.”
Mr. de Rosas was more optimistic, saying: “As more and more projects are approved, credit arrangers will get around to requesting funding requirements not only from banks but also from insurance companies.”
source: Businessworld
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