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DOTr scraps PPP mode for 5 regional airports project

The Department of Transportation (DOTr) has decided to terminate the five regional airports project as a public-private partnership (PPP) venture, the PPP Center said Tuesday.

"We received confirmation that the procurement of the much-anticipated Regional Airport PPP Projects – development, operations and maintenance of New Bohol (Panglao), Davao, Iloilo, Laguindingan and Bacolod Airports – has been terminated," the PPP Center said.

The DOTr and the Civil Aviation Authority of the Philippines (CAAP) decided that the projects would be implemented via other modes, the PPP Center noted.

"Given the significant changes in the factors being considered in determining the most appropriate procurement mode for the projects, the government has determined that ODA or GAA funding is the more suitable option, and the change in the procurement mode will not necessarily delay the implementation of the projects," the DOTr said in a separate statement.

In a text message to reporters, Transportation Secretary Arthur Tugade explained that going with GAA funding will make the projects cheaper as costs will be lower.

"...thus more beneficial to the public, project completion is more efficient and faster, and help avoid legal surprises that may cause regrettable delays," Tugade noted.

"This decision was brought about through collegial discussions, including the economic clusters and congressional leaders," the Cabinet official added.

Official development assistance (ODA) consists of loans or grants from foreign countries, while the General Appropriations Act (GAA) is the yearly national budget allocation approved by the Congress.

Originally, five companies pre-qualified for the airports project as a bundled PPP, but the National Economic and Development Authority (NEDA), deemed it best to unbundle the airport project and forged new terms and conditions late last year with the bidding process changed to a two-stage, two-envelope system under the Build-Operate-Transfer (BOT) law.

"The Regional Airport PPP Projects were originally approved under a bundled PPP structure by the Investment Coordination Committee (ICC) and the NEDA Board," the it said.

"With the approval, a transparent and credible PPP procurement process commenced following the Build-Operate-Transfer (BOT) Law and its implementing rules and regulations," it added.

Metro Pacific Investments Corp. (MPIC), one of the companies that pre-qualified for the bundled PPP, said it wants to know now what will happen or how the government will proceed with the individual projects.

"We await developments with interest. The private sector has a great track record of rapid execution, for example look at the LRT-1. We are ready and keen to help," MPIC Chief Finance Officer David Nicol said in a text message.

The PPP projects generated strong interest from the private sector, as evidenced by the active participation of highly qualified local and international players.

In November 2016, the NEDA Board unbundled the airports project.

"This meant an adjustment in the procurement processes’ milestones such as the pre-qualification and bid submission dates targeted in June and December 2017, respectively," the PPP Center noted.

"While the PPP Center believes in the credibility of these airport projects structured as PPP, and gratefully acknowledges the solid interest of the private sector, we respect DOTr’s and CAAP’s authority and their decision to terminate the projects," it added.

The PPP Center said it remains ready and committed to support government agencies in their infrastructure and development projects. The critical foundations of the PPP Program have been laid down, and the institutions, both in the public and private sectors, are ready to deliver.

"The effectiveness of the PPP program is shown by the awarded PPP projects that are now benefiting countless Filipinos – the Mactan Cebu International Airport Passenger Terminal Building, NAIA Expressway, PPP for School Infrastructure Project and the Automated Fare Collection System or Beep Card, to name a few," it said.

"It is clear that PPPs remain a viable option in the procurement of infrastructure projects, especially those that require an integrated approach (i.e. design-build-operate-maintain) in order to save on procurement timing, reduce interface risks, and avail of private sector’s technology and efficiency," it added. — VDS/BM, GMA News