Plan to establish permanent fund for PPP shelved

MANILA, Philippines - Plans to establish a permanent fund to finance public-private partnership (PPP) projects have been shelved with officials saying both the government and the private sector are well-positioned to provide necessary funding.

“It will no longer push through. There is really no need for the Fund anymore,” Finance Undersecretary Rosalia de Leon told The STAR in a phone interview.

She was referring to the proposed P200-billion Philippine Infrastructure Development Fund supposed to be raised through a bond offering of the state-run National Development Corp. (NDC).

Under the proposal, four government financial institutions (GFIs) namely the Development Bank of the Philippines, Land Bank of the Philippines, Government Service Insurance System (GSIS) and Social Security System would buy NDC bonds worth P50 billion each to create the fund.

The amount was envisioned to take care of the government’s counterpart funding on PPPs for acquiring right-of-way, conducting feasibility studies and other pre-development expenses.

An executive order was supposed to create and govern the Fund.

De Leon said there is enough liquidity in the financial system to support PPPs.

“Banks can provide the funding directly and the government had also inserted its PPP costs in the budget,” she explained.

Budget Secretary Florencio Abad and BSP Deputy Governor Diwa Guinigundo concurred.

“We have provided ample funding in the 2013 budget for feasibility studies, right-of-way acquisitions and needed counterpart with the PPP Center and other implementing agencies,” he explained.

Under the proposed P2.006-trillion outlay, P9 billion was allocated under the Department of Public Works and Highways for right-of-way and other PPP requirements. This is aside from PPP funding under each implementing agencies’ budget.

For his part, Guinigundo said “banks have sufficient funds for infrastructure needs.” Latest BSP data showed bank resources rose 4.08 percent to P7.462 trillion as of the first quarter.

Given the shelving of infrastructure fund, GSIS general manager Robert Vergara told reporters the state pension fund will find other avenues for investment.