Public Private Partnership in

the Philippines
Some Q and A
What is Public-Private
Partnership (PPP)
PPP can be broadly defined as
contractual agreement between
the Government and a private firm
to:
• Finance
• Design
• Implement and
• Operate
Infrastructure facilities and
services that were traditionally
provided by the public sector.
Public + Private
= Infrastructure facilities
and services
 What is unique with PPP
• Balancing act: Embodies optimal risk
allocation between the parties –
minimizing cost while realizing project
developmental objectives.
• Needs to structure a project in such a way
that the private sector gets a reasonable
rate of return on its investment
 Elements of PPP
• A contractual agreement between the
public sector and the private sector
• Strategic mode of procurement
• Shared risks and resources
• Value for Money
• Outcome orientation
• Acceleration of infrastructure provision
and faster implementation
The Philippines is
one of the first
Asian country to
implement PPP
July 1990 – Republic Act No. 6957, also called the
BOT Law. It presented two project schemes:
build-operate-and-transfer (BOT) and build-and-
transfer (BT).
1994 – Amends Republic Act. No. 6957
to allow more contractual agreements
 9 Contractual agreements under
the BOT Law as amended
• Build-operate-and-transfer (BOT)
• Build-and-transfer (BT)
• Build-lease-and-transfer (BLT)
• Build-own-and-operate (BOO)
• Build-transfer-and-operate (BTO)
• Contract-add-and-operate (CAO)
• Develop-operate-and-transfer (DOT)
• Rehabilitate-operate-and-transfer (ROT)
• Rehabilitate-own-and-operate (ROO)
2010 – President Aquino reorganizes the BOT
Center and renames it as the Public-Private
Partnership of the Philippines and transfers it from
the Department of Trade and Industry to the
National Economic Development Authority
What has been
accomplished?
 The story so far
• 34 completed PPP projects with a
total cost of P3.9B
• 38 operational projects with a total
cost of P16.6B
• 28 just awarded projects for around
P10B.
 The story so far
• 34 completed PPP projects with a total
cost of P3.9B
• 38 operational projects with a total cost of
P16.6B
• 28 just awarded projects for around P10B.
What about issues and
problems?
• Complicated process, delay in
government review and approval,
• Bidding failure, no bidders
• Issue on direct guarantees and
sharing of risks
• How to strike a balance between
commercial viability and public
interest
• Improving the quality
of project pipelines with sufficient
project preparation,
including economic, financial,
technical and environmental
feasibility studies, is critical to
clearing the way for private sector
participation. Limited flow of
bankable projects because of
underinvestment in project
preparation represents a major
obstacle to public-private
partnerships for infrastructure.
Innovative approach to bridge
the viability gap
What is blended finance?
Blended finance is combining the
public sector’s social return
objectives and private sector’s
financial return objectives
through risk mitigation by the
public sector in a manner that
induces the private sector to
participate.
 Notes on blended finance
• Blended finance is defined as the complementary use of grants (or
grant-equivalent instruments) and non-grant financing from private
and/or public sources to provide financing on terms that would make
projects financially viable and/or financially sustainable.
• Given that certain infrastructure investments may not be
commercially viable, innovative instruments have been sought to
close this ‘viability gap’ and make a larger number of projects
bankable.
• By blending grants with loans, this innovative approach to
development finance aims to achieve a number of objectives – from
increasing the volume of development finance in a context of
constrained resources, to increasing the viability of investments, to
enhancing the overall effectiveness of aid.
Hope in blended finance