Municipal, health projects have great PPP potential – ADB

MANILA, Philippines — Opportunities abound for the private sector in partnering with local governments in carrying out municipal and health projects which enjoy a huge demand, according to the Asian Development bank (ADB).

As the private sector is given less opportunity to participate in transportation projects which would be funded mostly by foreign borrowings and government appropriations, the ADB is urging businesses to consider using their capital and expertise in carrying out municipal projects such as water and wastewater services and solid waste disposal as well as health services.

“Possible areas are municipal projects and health projects. There is a lot of demand at the LGU (local government unit) level but there are challenges involving these,” said Alexander Jett, Public-Private Partnership (PPP) specialist of the ADB PPP Office during the launch of the Public-Private Partnership Monitor.

Among the challenges confronted by investors in these types of projects, he said, is the short term of office of local chief executives, which do not match the lifespan of the PPP projects.

“Mayors are elected every three years and PPPs have a lifespan of 25 to 30 years. So these (projects) need to survive (the turn of) administration. The political cycle is a bit short but the preparation is long,” he said.

Because of this, the preparation and implementation of these projects must be planned to survive several changes in leadership.

Jett recognized, however, that due to the relative smallness of such projects, it may be more difficult to attract investors.

“Another challenge is, these projects lack the sufficient size to attract the private sector,” he said. “But we are not giving up. We will see in the coming years how we can do these projects. We are actually engaged in technical assistance to help local government units”

In line with the PPP Center’s LGU Strategy, ADB’s Office for PPP has opened its $73 million Asia Pacific Project Preparation Facility (AP3F)—which receives funding from Japan, Canada and Australia—for utilization by Philippine LGUs for the conduct and financing of project preparation activities.

The facility can be tapped for assistance in obtaining transaction advisory services, PPP fund management, and project coordination and support.