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Tue May 11 2021

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Philippines ramps up use of hybrid PPPs

1 Nov 17 The Philippines government is moving to a new ‘hybrid’ type of public-private partnerships to help speed the roll-out of major infrastructure projects.

New Clark City will be built under a hybrid PPP
New Clark City will be built under a hybrid PPP

Under the hybrid PPP approach, the government will build and finance the projects and then auction off the operation and maintenance aspects to the private sector.

The modified strategy will be used for the country’s ‘Build, Build, Build’ programme to avoid the protracted negotiations and disputes that often delayed the implementation of previous PPP initiatives, said finance secretary Carlos Dominguez III.

Ground-breaking will take place next month on the New Clark City project, only 18 months after the government started planning the scheme.

He contrasted this with the example of the Cavite-Laguna Expressway (Calax), saying that it took 50 months to conceptualise the project and begin implementation. “And one of the reasons is the private sector had a squabble among themselves,” he said at a recent investment forum.

“We are not willing to wait for the private sector to settle their differences,” he added. “While private companies quarrel among themselves as to who will make the profit, the public suffers from lack of infrastructure. The Duterte administration is willing to take the construction risks and spend budgeted funds to start projects early.

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Under the “Build, Build, Build” program, the government plans to either implement or begin the project preparations for 75 'big-ticket' projects to realise the ‘golden age of infrastructure’ envisioned by the administration of president Rodrigo Duterte.

Dominguez said that had the New Clark City project gone through the traditional PPP scheme, “the [private sector] lawyers would still have been figuring the liabilities” and other details of the project at this time.

Dominguez has said that the hybrid PPP mode does not totally shut out private contractors from taking part in implementation as unsolicited proposals are still welcome from the private sector.

He has also said that it is cheaper in the long run for the government to undertake the construction of PPP projects as the state can borrow at lower rates, while later harnessing the private sector’s expertise in managing, operating and maintaining the projects.

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