* This is my article in BusinessWorld last November 08, 2018.
Integrated Public-Private Partnership (PPP) means the
construction then operation and maintenance (O&M) phases will be done by a
single entity while Hybrid PPP means the construction is done by one entity,
the O&M to be done by another entity. Funding of the former therefore will
be fully shouldered by that entity while in Hybrid PPP, construction cost to be
funded via ODA/foreign loan or Philippine government budget appropriation,
O&M by a local private firm.
So if one will build a dam near Metro Manila, a Hybrid
PPP route means taxpayers from Northern and Southern Luzon, Visayas and
Mindanao will contribute to pay for that loan. In an integrated PPP, only the
users and consumers of the water from that dam will pay, the users-pay
principle works.
The Metropolitan Manila Waterworks System (MWSS) is
pushing an important project, the proposed New Centennial Water Source Project
(NCWSP). It will involve the construction of a dam at the Kaliwa River (Laiban
Dam), and a smaller dam (Kaliwa Dam) downstream to maximize the water supply,
give additional 600 million liters per day (MLD) to augment the 4,000 MLD from
Angat Dam in Bulacan which provides potable drinking water. This is important
not only because of rising water demand but also for backup, in case the old
Angat Dam will be damaged by a strong earthquake.
A Japanese firm, Global Utility Development Corp. (GUDC),
signed an MOU with MWSS in 2008 for an Unsolicited Proposal on Kaliwa Intake
Dam Project, BOT scheme. The proposal was completed in November 2009.
Somehow plans have changed, MWSS has amended bid
contracts, the integrated PPP later became hybrid PPP. I checked old
BusinessWorld reports on the subject, I found these four stories.
1. San Miguel mulls legal steps as Kaliwa dam project to
be funded by China ODA (Oct. 3, 2017).
2. MWSS expects three Chinese firms to buy Kaliwa dam
project bid documents (Feb. 16, 2018).
3. China-funded Kaliwa dam, LGU surveillance projects
seen making progress (July 19, 2018).
4. Manila Water flags risk of water shortage between 2021
and 2023 (Aug. 30, 2018).
So the original proponent GUDC, then San Miguel, Datem,
other bidders were somehow lost in the process when the Duterte administration
came.
Then GUDC was given consideration because its proposal is
about 30% cheaper than the China-funded one. From various sources, I gathered
these info and summarized them in this table.
So there. Not only that the cost is higher under China
contractors because of its oversized design and other factors, the rest of
Philippine taxpayers will be involved in paying this higher cost. This is
anomalous because the users-pay principle under integrated PPP works just fine.
The MWSS website said that “Project Cost P18.7 Billion,
to be funded from ODA from China. Loan Signing scheduled on the state visit of
China President Xi Jinping on Nov. 19-21, 2018.” Wow, formalizing the anomaly.
Incidentally, public vs. private funding of infrastructure
and other social services will be among the topics that will be covered by the
various panels in the Philippine Economic Society (PES) annual conference
today, Nov. 8, then the Federation of ASEAN Economic Associations (FAEA)
conference, Nov. 9-10, 2018. Both to be held at Novotel Hotel, Cubao, Quezon
City.
Economists have elaborate explanations on the beauty of
users-pay principle, far superior than all taxpayers-pay policy under the
Hybrid PPP scheme. This administration is compromising current and future
taxpayers with this suspicious scheme, Kaliwa dam and other projects.
---------------
See also:
BWorld 142, PPP vs ODA, Part 3, August 08, 2017
BWorld 156, Integrated PPP vs hybrid PPP, October 04, 2017
BWorld 261, PPP, tunnels and mining, October 28, 2018
BWorld 263, Institutional decline and garbled competition regulations, October 31, 2018
BWorld 264, Energy by legislation promotes corruption, November 14, 2018
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