November 24, 2013

Government sweeteners to speed up PPP projects

The Philippine Daily Inquirer today reported that Government has approved key revisions to bid terms for major projects under the Public-Private Partnership (PPP) program. This paved the way for their approval for auction and implementation.

Among the changes are a longer concession period from 20 to 25 years and government’s assumption of real property tax liabilities for the LRT and airport projects, the transfer of operations and maintenance of the aprons to the concessionaire of the airport, flexibility on implementation of augmentation capacity, and longer period under which the establishment of competing airports will be prohibited. As such, the auction of the Mactan international airport expansion and modernization project will proceed on 28 November. Government’s assumption of real property tax liabilities should also clear the LRT and MRT projects for auction.

Our take: This is a major development and should make the PPP projects more attractive to bidders. We believe that the successful auction and implementation of even just a few of the PPP projects should provide additional economic growth impetus. More importantly, it should provide a boost to sagging investor sentiment amid conflicting signals and investment policies of the government as well as concerns arising from the destruction brought about by the super typhoon. – WealthSec