This is one of those series by this columnist that delves deeper on the intricacies of public-private partnerships. The past series are on PPP Conversations, Dissecting PPP Contracts and Ps in PPPs. This first of the new series explains the title, “why it depends?”—why there are different answers to a PPP question?
There are varied reasons and bases why and when to adopt PPP or procurement; hybrid or whole-life PPP; build-operate-transfer law, joint-venture guidelines or agency-specific regulations; solicited or unsolicited; 12-percent rate of return or higher, or even a different tariff mechanism.
Or, when it is the national government agency (NGA), government corporation or local government unit (LGU) involved; or the case of approval or nonintervention by the National Economic and Development Authority.
Then there’s the right to match, outbid or the chance to submit a better offer; or foreign investment is allowed or qualified; and debt-equity ratio can be 75-25 or 50-50; among other answers.
Before we qualify the answers, we must first tackle the reasons we need to qualify and distinguish them. Knowing the why leads us to an understanding of the foundation and realities of Philippine PPPs.
(1) There is no single PPP law in the Philippines. Contrary to what some may argue, there is no single law on PPP that governs all possible modalities between the government and private sector proponents (PSPs). We have a number of laws, regulations, guidelines and policies that deal with some 30 contractual arrangements. And 24 were in the old list of this columnist.
(2) Decentralization. Different NGAs, government-owned and -controlled corporations, government instrumentalities, government financial institutions, state universities and colleges, and LGUs may adopt their own PPP policies. Pursuant to their respective mandates and authorities, they can do this whether they are expressly allowed or not prohibited from doing so for as long as no law is violated. Centralists frown upon this concept.
(3) Project conditions. Another variable that needed to be factored in choice-making is the project condition. The location, and the financial, environmental and technical aspects shape the questions PPP stakeholders ask, and these limit the available options.
(4) Political and social realities. Of course, PPPs do not exist in a vacuum. Choices and decisions, and answers are molded depending on acceptability, leadership style, risk appetite, successor or protester’s risk, accountabilities, innovation, proximity from elections, influence, democratic space, rule of law, dispute resolution mechanisms, etc.
(5) Differing opinions. Opinions and positions may also be contextual and personal. Points of view may depend on whether one: (a) has a liberal or restrictive view toward PPP; (b) belongs to the government or private sector; (c) if in government, is part of an implementing, audit or a regulatory agency; (d) is the signatory to a contract, a recommendatory authority or only a consultant; (e) is a/an lawyer, economist, environmentalist, oppositionist, academic, practitioner; (f) is a career or elective official; among other perspectives.
PPP is therefore not a one-size-fits-all proposition. There is discretion and subjectivity at the policy and project levels. There are, however, constants. For one, the selection of the PSP must adhere to requirements of PACT—Public advantage, Accountability, Competition and Transparency.
Time to ask the questions and learn from the answers.