PPP and the USA

FOR the first time in our recollection, the United States has somewhat officially entered the discussion on the perceived failures of and potential improvements to the administration’s Public- Private Partnership (PPP) Program.

As reported in the BusinessMirror, “’The government needs to structure the country’s key public-private partnership (PPP) deals better to get the interest of American companies,’ Principal Deputy Assistant Secretary Kurt Tong of the US Department of State Bureau of Economic and Business Affairs said.”

Tong went on to say that the “PPP deals” need to be viable on the revenue side of the private investor. The implication of that sentiment is that the projects are not financially viable. That is disturbing. It would appear that the US government through Tong’s office has examined some of the projects in detail and came away with the analysis that the private sector, at least US companies, could not make money should it participate in these deals.

This past October, a roadshow was conducted by the PPP office in the US to present to potential investors 50 PPP projects worth $20.82 billion. That is a substantial amount of investment the Philippines could use for its infrastructure improvement.

But in the words of Tong, the projects need to be “practical,” a word that we do not understand the meaning of in this context. However he also said the rules and plans need to be clearer. That we can agree with.

US companies have extensive global experience in the kinds of PPP projects that are on the books. These include energy, aviation infrastructure, port management and equipment supply. Tong particularly emphasized projects related to energy as the Philippines particularly emphasized the Batangas-Manila Natural Gas Pipeline.

Certainly Tong is not speaking for the US private sector’s intentions, but the thrust of his comments should be listened to by the Philippine government.

It is not that the US is telling us something that we do not already know. Local companies have been frustrated at too many turns in the process for the government not to realize that there is a problem. To date only eight PPP projects worth $2.83 billion have been awarded and that shows the failure of the PPP process even as the idea was originally met with both great enthusiasm and great anticipation.

Tong suggested that the Philippines tap the resources of the US government’s Trade and Development Agency, which can extend grants to help design projects either for public or private financing. In addition, the US Overseas Private Investment Corp. can help mitigate some of the financial risks for US firms engaged in overseas projects.

We should explore this opportunity in greater detail as the clock never stops running and we need both the investment and the projects.

source:  Business Mirror