public private partnerships for lgus ... –private partnerships for lgus slides: courtesy of the...
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PUBLIC – PRIVATE PARTNERSHIPS FOR LGUS
Slides: Courtesy of the PPP Center of the Philippines
The PPP Concept
Legal Framework for LGU-PPP Projects
The BOT Option
Selected LGU PPP Projects
The PPP Center
Presentation Outline
Contractual arrangements between public and private entities to provide public infrastructure and/or public services
PUBLIC-PRIVATE PARTNERSHIPS
ELIGIBLE PROJECTS
Power Plants
Highways/Roads
Railroads & Railways
Ports
Airports
Transport Systems
Telecommunications
ICT Systems/Facilities
Canals, Dams, Irrigation,
Water Supply
Land Reclamation
Sewerage, Drainage, Dredging, Solid Waste Management
Tourism, Education
Health Facilities
Industrial & Tourism Estates
Markets, Warehouses, Slaughterhouses
Housing, Government Buildings
Other Infrastructure/ Development Projects/Systems
FINANCIAL (Monetary) • Transfers LGUs burden of raising funds to the private
sector partner(s)• Allows allocation of LGU funds for other urgent uses
• Additional sources of revenues for LGU, depending on the contractual arrangement
EFFICIENCY GAINS (Non-monetary)• Efficient provision infrastructure/services• Superior technology and expertise• Technology transfer and training
ADVANTAGES OF PPPs
1987 Philippine Constitution• The State recognizes the indispensable role of the
private sector, encourages private enterprise, and provides incentives to needed investments.
RA 7160 (The Local Government Code)• Section 302 empowers the LGU to enter into BOT
infrastructure contracts with the private sector through the BOT Law
• Section 17 allows LGUs to enter JV arrangements and other contractual arrangements for the provision of basic services and facilities
RA 7718 : The Amended BOT Law and its Implementing Rules and Regulations• Provides the basic framework for BOT/PPP and outlines
the government approval process
LGU-PPP PROJECTS LEGAL FRAMEWORK
GOVERNANCE STUCTURE FOR LGU PPPs
• Per DILG MC 2011-16 and Proposed Amendment
PPP Sub-Committee
• Per Proposed Amendment to DILG MC 2011-16
PPP Implementing Office
• Per Amended BOT Law and IRR
PPP Pre-Qualification, Bids & Awards Committee
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Several variants (arrangements) allowed
Covers most infrastructure and development sectors/services needed by local governments
Provides for reasonable rates of return for private partners
Institutionalized some form of government support
Has defined step-by-step policy/processes of PPP/BOT development, approvals and procurement
BOT/PPP LAW HIGHLIGHTS
SERVICE CONTRACTGovernment procures the services of a
private entity to carry out one or more specified task/s or service/s for a fixed period, typically 1-3 years for a fixed cost; government control remains
MANAGEMENT CONTRACTGovernment hires private entity for the
daily operation and management of a particular task or service; government ultimately remains responsible for service provision
LEASE CONTRACT Private partner is responsible for service
provision in its entirety, and bears financial risk of Operation and Maintenance (O&M); government retains ownership of the facility/ infrastructure
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TYPES OF PPP CONTRACTS
9
CONCESSIONPrivate partner is responsible for capital
investment and full delivery of services, including O&M, collection, construction/ rehabilitation of the infrastructure facility or system; government retains ownership of the public assets during the concession period
JOINT VENTURE Government and private partner pool
resources (money/ capital, services, assets) to pursue a specific infrastructure facility or project; government and private partner share in the profits, losses, and risks of the project
BOT (and its variants) Private partner finances, constructs, and,
in some cases, operates and maintains a facility or project. Private partner is allowed to charge user fees to recover its investment. Government and private partner share project risks.
Build-Operate-Transfer
Build and Transfer
Build-Own-and-Operate
Build-Lease-and-Transfer
Build-Transfer-and-Operate
Contract-Add-and-Operate
Develop-Operate-and-Transfer
Rehabilitate-Own-and-Transfer
Rehabilitate-Own-and-Operate
Other variations as may be approved by the President of the Philippines
VARIANTS AUTHORIZED
Types of Contracts
Asset Owner-
ship
Capital Investment
Commercial Risk
O&MDuration
(Yrs)
Service Contract Public Public PublicPrivate &
Public1-2
Management Contract
Public Public Public Private 3-5
Lease Public Public Shared Private 8-15
Concession Public Private Private Private 25-30
BOT and Variants Private &
PublicPrivate Private Private >30
ALLOCATION OF ROLES AND RESPONSIBILITIES
PROJECT
COMPANY
Concession Agreement
Loan Covenants
Operating and Maintenance
Agreement
Fixed-price, Date-certain, Lump-sum, Turnkey
Contract
Shareholders’ Agreement
Government AgencyLenders
OperatorConstruction Consortia
Investors
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CONTRACTUAL ARRANGEMENTS
Private partners repaid through:• Tolls, fees, rentals and other charges from users of
facility for a fixed term not to exceed 50 years• Share in revenues of the project, depending on the
contractual arrangements• Other non-monetary payments
REPAYMENT SCHEMES
Cost Sharing• Projects with difficulty sourcing funds may be partially
financed from direct government appropriations (GAA) and/or Official Development Assistance (ODA)
• Financing from General Appropriations or Official Development Assistance (GAA) not to exceed 50% of project cost
Other Government Undertakings • Include credit enhancements such as take or pay
arrangements, currency convertibility, etc.
LGUs may provide tax incentives (RPT), exemptions, or reliefs, subject to the provisions of the LGC
GOVERNMENT SUPPORT
Project Cost Approving Body
Up to PhP 20 millionMunicipal Development Council
Above PhP 20 – 50 million Provincial Development Council
Up to PhP 50 million City Development Council
Above PhP 50 – 200 millionRegional Development Council
Above PhP 200 million NEDA – ICC
For all LGU projects, local sanggunian (local councils) approval is required before bidding and before contract award.
LGU BOT APPROVAL
Development
Approval
Competition
Cooperation
Mo
nit
ori
ng
an
d
Evalu
ati
on
Project
Identification
Project
PreparationContractual
Considerations
Contractual
Arrangement
NEDA ICC
NEDA BOARD
Tariff Setting Independent Regulator
Bidding/Solicitation of Comparative Proposals
Award/Construction/Development of Facility
Concession/Cooperation Facility Users/Public
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PPP PROCESS FRAMEWORK
Project
Preparation
Commencement of
Implementation
Project
Approval
Invitation to Bid
Preparation &
Submission of Bids
Evaluation of
Bids
Contract Award
6 months 1 .5 months 6 months 1 month
Commencement of
Bidding Process
TIMELINES FOR SOLICITED PROJECTS UNDER THE REVISED IRR
OF R.A. No. 6957, As Amended by R.A. No. 7718 (BOT LAW)**
*6 months standard project preparation time frame may vary depending on project complexity
* * Plus estimates
5 cd
Submission of
Unsolicited Proposal
Commencement of
Implementation
Evaluation/
Approval of
Proposal
Negotiation Period and
Approval/Review of the
Contract
Evaluation of
Comparative
Proposals
Contract Award
30 calendar days *
5.5 months ** 90 calendar
days
20 calendar
days
Invitation for
Comparative
Proposals
TIMELINES FOR UNSOLICITED PROJECTS UNDER THE REVISED IRR
OF R.A. No. 6957, As Amended by R.A. No. 7718 (BOT LAW)***
* After acknowledging receipt of proposal, agency/LGU shall advise the proponent for the proposal’s completeness within 30 calendar days
* * Evaluation of proposal by the Agency/LGU and ICC
* * * Plus estimates
5 calendar
days
60 working
days
Commencement of
Bidding Process
SELECTEDLGU BOT PROJECTS
20
Project Title Sector IA / LGU
Estimated
Cost
(in US$
M)
Scheme Mode Status
1 Talisay City Hall Property Devt Talisay City Gov't. 4.00 BT Unsolicited Concluded
2Malabon Digital Infrastructure
Project
Information
TechnologyMalabon City Gov't 0.46 BTO Unsolicited Concluded
3 Pampanga GIS CenterInformation
TechnologyPampanga Prov'l. Gov't. 0.96 BTO Unsolicited Concluded
4 Bohol Provincial Electric System Power Bohol /Prov'l Gov't. 5.00 JV Unsolicited Operational
5 Koronadal City IT ProjectInformation
TechnologyKoronadal City Gov't. 0.50 BOT Solicited Operational
6 Bohol Water Supply System Water Bohol Prov'l. Gov't. 14.40 JV Solicited Operational
7 Mandaluyong Marketplace Property Devt Mandaluyong City Gov't. 23.00 DOT/BT Solicited Operational
8 Dapitan Public Market Property Devt Quezon City Gov't. 1.30 BOT Unsolicited Operational
9 Carmen Public Market Property Devt Cagayan de Oro City Gov't. 2.36 BOT Solicited Operational
10 Cogon Public Market Property Devt Cagayan de Oro City Gov't. 4.00BT /
BOTSolicited Operational
11 Slaughter House Property Devt Cagayan de Oro City Gov't. 3.00 BOT Solicited Operational
12 Bocaue Public Market Property DevtBocaue, Bulacan/ Mun.
Gov't.1.20 BOT Solicited Operational
Operational and Concluded projects:
LIST OF LGU PPP PROJECTS
THE PPP CENTER OF THE PHILIPPINES
Executive Order No. 8 (09 September 2010)• BOT Center renamed PPP Center and transferred
attachment from DTI to NEDA• Expanded PPP Program Mandate
covers all arrangements under the BOT Law, Joint Venture arrangements and other PPP arrangements
• Promote the government’s PPP Program• Provide technical advisory services to
implementing agencies and local government units • Pursue PPP/BOT policy reforms• Monitor PPP implementation
MANDATE
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PPP CENTER INITIATIVES FOR LGU PPPs
Capacity Building Program for LGUs (2012-1013) in collaboration with the NEDA and DILG Regional Offices
DILG Memorandum Circular 2011-16 – Enjoining all LGUs to create a PPP Sub-Committee to facilitate a focused PPP project(s) development skills building for LGUs
PPP Manual for Local Government Units (2012)– VOLUME 1 – Understanding PPP Concepts and Framework
– VOLUME 2 – Developing PPP Projects (Steos, Processes, Requirements)
– VOLUME 3 – Utilizing LGU Templates (FS, Financal Model, Contract, Bid Docs)
Technical Assistance to Seleced LGUs
2013 LGU PPP Strategy
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The LGU PPP Manual is envisioned as a tool that should guide its users
in developing infrastructure projects using PPP processes.
VOLUME 1: Understanding PPP Concepts and Framework.
Overview of PPP concepts and framework in the context of local
development finance
VOLUME 2: Developing PPP Projects
for Local Government Units.
Comprehensive step-by-step process on PPP
project preparation and development
VOLUME 3: PPP Project Templates
and Bid Documents. Compilation of template
documents and sample projects on PPP at the local level
PPP KNOWLEDGE PRODUCTS
MARAMING SALAMAT PO!