1. Philippines
  2. National PPP landscape

National PPP landscape

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  • Overview

    National PPP, Philippines

    Number of PPPs and Investment in PPPs

    • PPP Investment
      $ 13,286 M
    • Number of PPPs Reaching FC
      116
    • Value of PPPs Reaching FC
      $ 43,945 M

    Revenue Model and Government Support to PPPs

    • Number of PPPs with Govt. Support
      62
    • Number of User Charge PPPs
      33
    • Number of Govt. Pay PPPs
      43

    PPPs under Preparation and Procurement

    • Number of PPPs under Preparation
      37
    • Number of PPPs under Procurement
      3

    FC = financial close, Govt. = government, M = million.

    Sources: Public–Private Partnership Center. https://ppp.gov.ph/; World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots. Philippines. https://ppi.worldbank.org/en/snapshots/country/philippines (accessed 28 August 2020).

    The PPP-enabling framework in the Philippines includes the PPP law, along with related regulations, manuals, and policy guidelines. The Republic Act 7718 of 1994 (an amendment to Republic Act 6957 of 1990) provides the basic legal framework for PPPs. The new implementing rules and regulations for Republic Act 7718 were introduced in 2012. Several executive orders, including Executive Order 136 (2013) which reorganized the PPP Center and attached it to the National Economic and Development Authority (NEDA), have also been issued.1

    The PPP Center is the main agency facilitating and monitoring PPPs in the Philippines, assisting both national and local agencies in their project selection and evaluation methods, value-for-money analyses, financial viability, and financial structuring. The PPP Center also manages a revolving Project Development and Monitoring Facility (PDMF) for the preparation of a business case, feasibility studies, and tender documentation for PPP projects. Executive Order 136 also created the PPP Governing Board (PPPGB) and institutionalized the PDMF. Since 2015, the PPPGB has issued multiple PPP-specific policy circulars, further detailing processes and mechanisms (footnote 1).

    In February 2020, NEDA published the Revised List of Infrastructure Flagship Projects, indicating the projects to be implemented using PPP.

    • National Framework for Enabling PPPs

      Types of PPPs

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      Service Contracts

      Management Contracts

      Affermage or Lease Contracts

      Design-Bid-Build (DBB)

      Design-Build (DB)

      Build-Operate-Transfer (BOT)

      Design-Build-Finance-Operate-Transfer (DBFOT)

      Build-Own-Operate (BOO)

      Concessions

      Joint Venture

      Hybrid Contracts

      Others
      1. Build-Transfer-Operate (BTO)
      2. Build-Lease-Transfer (BLT)
      3. Rehabilitate-Own-Operate (ROO)
      4. Rehabilitate-Operate-Transfer (ROT)

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      National Framework for Enabling PPPs

      Types of PPPs

      In the Philippines, the two most commonly used forms of PPPs are availability- and concession-based PPPs.

      • Availability-based PPP

        In an availability-based PPP, the public authority contracts with a private sector entity to provide at a constant capacity to the implementing agency a public good, service or product for a given fee (capacity fee) and a separate charge for usage of the public good, product or service (usage fee). Fees or tariffs, regulated by a contract, provide for the recovery of debt service, fixed costs of operation, and a return on equity.1

      • Concession-based PPP

        In a concession-based PPP, the public authority grants a private sector entity the right to build, operate, and charge public users of the public good, infrastructure or service, with a fee or tariff which is regulated by public entities and by a concession contract. Tariffs are structured to provide for the recovery of debt service, fixed costs of operation, and a return on equity (footnote 1).

      The Philippine Build–Operate–Transfer (BOT) Law provides for nine specific types of PPP contractual arrangements or schemes that the public sector and private sector can enter into, to implement an infrastructure or development project.

      Scheme Definition Role of Private Proponent Role of Public Proponent

      Build–Operate–and–Transfer (BOT)

      A contractual arrangement whereby the project proponent undertakes the construction, including financing, of a given infrastructure facility, and the operation maintenance thereof. The project proponent operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investment, and operating and maintenance expenses in the project. The project proponent transfers the facility to the government agency or local government unit (LGU) concerned at the end of the fixed term which shall not exceed 50 years—provided, that in case of an infrastructure or development facility whose operation requires a public utility franchise, the proponent must be Filipino or, if a corporation, must be duly registered with the Securities and Exchange Commission and owned up to at least 60% by Filipinos.

      The BOT may also include a supply-and-operate modality, which is a contractual arrangement whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest of the government so requires, operates the facility providing in the process technology transfer and training to Filipino nationals.
      • Undertakes financing, construction, operation, and maintenance of facility for a fixed term
      • Collects tolls, fees, and other charges to recover investment plus profit
      • Transfer ownership of facility after the BOT term to government entity
      • May assign operation and maintenance to a facility operator
      • Provides concession and regulates activities of the BOT contractor
      • Acquires ownership of facility at the end of the BOT term
      • May opt to share in the profits of the BOT proponent

      Build–and–Transfer

      A contractual arrangement whereby the project proponent undertakes the financing and construction of a given infrastructure or development facility and after its completion turns it over to the government agency or LGU concerned, which shall pay the proponent on an agreed schedule its total investments expended on the project, plus a reasonable rate of return thereon. This arrangement may be employed in the construction of any infrastructure or development project, including critical facilities which, for security or strategic reasons, must be operated directly by the government.
      • Finances and constructs infrastructure or development facility
      • Turns over ownership of facility to government after project completion
      • Acquires ownership of facility after construction
      • Compensates project proponent at agreed amortization schedule

      Build–Own–and–Operate (BOO)

      A contractual arrangement whereby a project proponent is authorized to finance, construct, own, operate and maintain an infrastructure or development facility from which the proponent is allowed to recover its total investment, and operating and maintenance costs plus a reasonable return thereon by collecting tolls, fees, rentals, or other charges from facility users. Provided, that all such projects, upon recommendation of the Investment Coordination Committee (ICC) of the National Economic and Development Authority (NEDA), shall be approved by the President of the Philippines. Under this project, the proponent which owns the assets of the facility may assign its operation and maintenance to a facility operator.
      • Finances, constructs, owns, operates, and maintains facility in perpetuity
      • Collects tolls, fees, rentals, and other charges to recover investments and profits
      • May assign operation and maintenance to a facility operator
      • Provides authorization and assistance in securing approval of the BOO contract
      • Can opt to buy the output/ service provided by the BOO operator

      Build–Lease–and–Transfer

      A contractual arrangement whereby a project proponent is authorized to finance and construct an infrastructure or development facility and upon its completion turns it over to the government agency or LGU concerned on a lease arrangement for a fixed period, after which ownership of the facility is automatically transferred to the government agency or LGU concerned.
      • Finances and constructs facility
      • Turns over project to government after completion under lease arrangement
      • Turns over ownership of facility to government after lease period
      • Compensates proponent for lease of facility at agreed term and schedule
      • Acquires ownership of facility after lease period

      Build–Transfer–and–Operate

      A contractual arrangement whereby the public sector contracts out the building of an infrastructure facility to a private entity such that the contractor builds the facility on a turnkey basis, assuming cost overrun, delay, and specified performance risks.

      Once the facility is commissioned satisfactorily, title is transferred to the implementing agency/LGU. The private entity, however, operates the facility on behalf of the implementing agency/LGU under an agreement.
      • Finances and constructs facility on a turnkey basis (assumes cost overrun, delay, specified performance risks)
      • Transfers title of facility to implementing agency after commissioning
      • Operates the facility for implementing agency under an agreement
      • May assign operation and maintenance to a facility operator
      • Assumes ownership of facility after commissioning
      • Allows private proponent to receive compensation for the proponent’s investment costs and reasonable return, and the operating charges

      Contract– Add–and–Operate

      A contractual arrangement whereby the project proponent adds to an existing infrastructure facility which it is renting from the government. It operates the expanded project over an agreed franchise period. There may, or may not be, a transfer arrangement in regard to the facility.
      • Adds to an existing facility which the proponent is renting and operates expanded project for an agreed franchise period
      • May assign operation and maintenance to a facility operator
      • Collects rental payment from private proponent under agreed terms and schedule
      • Re-acquires control over rented property/facility at the end of lease term normally including improvements thereon

      Develop–Operate–and–Transfer

      A contractual arrangement whereby favorable conditions external to a new infrastructure project which is to be built by a private project proponent are integrated into the arrangement by giving that entity the right to develop adjoining property, and thus, enjoy some of the benefits the investment creates such as higher property or rent values.
      • Has the right to develop adjoining property of an infrastructure to enjoy external benefits that the primary investment creates (such as higher property values or commercial development rights)
      • May assign operation and maintenance to a facility operator
      • May opt to share in the financial benefits of the investment
      • Re-acquires ownership of properties turned over to investor after concession period

      Rehabilitate–Operate–and–Transfer (ROT)

      A contractual arrangement whereby an existing facility is turned over to the private sector to refurbish, operate, and maintain for a franchise period, at the expiry of which the legal title to the facility is turned over to the government. The term is also used to describe the purchase of an existing facility from abroad, importing, refurbishing, erecting, and consuming it within the host country.
      • Takes over operation and maintenance of an existing facility for a franchise period, and/or imports existing facility for refurbishing, erecting, and maintaining it within the host country
      • Transfers ownership of a facility or equipment to government after franchise period
      • May assign operation and maintenance to a facility operator
      • Provides franchise to the ROT company
      • May opt to share in the profits of the ROT company
      • Re-acquires ownership of facility equipment after franchise period

      Rehabilitate–Own–and–Operate (ROO)

      A contractual arrangement whereby an existing facility is turned over to the private sector to refurbish and operate with no time limitation imposed on ownership. As long as the operator is not in violation of its franchise, it can continue to operate the facility in perpetuity.
      • Takes over an existing facility to refurbish and operate with no time limitation imposed on ownership
      • Can continue to operate the facility in perpetuity
      • May assign operation and maintenance to a facility operator
      • Turns over existing facility to the ROO proponent, with franchise to operate
      • May opt to share in the income of the ROO company

      Sources: PPP Center. 2015. PPP Contractual Arrangementshttps://ppp.gov.ph/wp-content/uploads/2015/01/List-of-PPP-Modality.pdf; COA. Service Concession Arrangements: Grantor. https://www.coa.gov.ph/phocadownload/userupload/ABC-Help/GAM_B/sc1.2.htm; Government of the Philippines. 2012. The Philippine Amended BOT Law Republic Act 7718 and its Revised Implementing Rules and Regulations. Manila. https://ppp.gov.ph/wp-content/uploads/2017/04/BOT-IRR-2012_2017-printing.pdf

      The above enumeration of contractual arrangements in the BOT Law is not exhaustive. Other forms of contractual arrangements may qualify as a PPP under the BOT Law, provided that such arrangement is approved by the President.

    • National Framework for Enabling PPPs

      Eligible Sectors for PPPs

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      Transportation Infrastructure

      Road Infrastructure

      Highways, including expressways, roads, bridges, interchanges, tunnels, and related facilities

      Rail and Mass Transit Infrastructure

      Railways or rail-based projects that may or may not be packaged with commercial development opportunities, Non-rail-based mass transit facilities

      Waterways Infrastructure

      Navigable inland waterways and related facilities

      Seaport Infrastructure

      Port infrastructures like piers, wharves, quays, storage, handling, ferry services, dredging, and related facilities

      Airport Infrastructure

      Airports, air navigation, and related facilities

      Logistics Infrastructure

      Warehouses, storage and processing facilities

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      Water, Wastewater, and Solid Waste Management Infrastructure

      Water Resources and Irrigation Infrastructure

      Irrigation and related facilities

      Water Supply Infrastructure

      Water supply system and related facilities

      Wastewater Infrastructure

      Sewerage system, wastewater treatment plants, drainage, and related facilities

      Solid Waste Management Infrastructure

      Waste collection equipment, waste transportation vehicles and equipment, waste treatment plants, landfill site infrastructure, and related facilities

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      ICT Infrastructure

      Telecommunication Infrastructure

      Telecommunication systems, backbone network, terrestrial and satellite facilities, and related service facilities

      IT and Informatics Infrastructure

      Information Technology (IT) and Database Infrastructure, including modernization of IT, geospatial resource mapping and cadastral survey for resource accounting and planning

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      Energy and Electricity Infrastructure

      Power Generation

      Power generation facilities

      Power Transmission and Sub-Transmission

      Power transmission, and sub-transmission facilities

      Power Distribution

      Power distribution facilities

      Energy Conservation Infrastructure

      NA

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      Other Infrastructure

      Zone Infrastructure

      Industrial infrastructure

      Tourism Infrastructure

      Tourism estates or townships, including ecotourism projects such as terrestrial and coastal/marine nature parks, among others and related infrastructure facilities and utilities

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      National Framework for Enabling PPPs

      Eligible Sectors for PPPs

      The revised implementing rules and regulations (IRR) of the Build–Operate–Transfer (BOT) Law enumerates the list of sectors in which infrastructure and development projects could be undertaken under any of the recognized and valid BOT contractual arrangements (PPP modalities).1

      • 1The oil and gas sector is not expressly included in the enumeration in the BOT Law. Nevertheless, the BOT Law provides that other infrastructure and development projects may also be proposed if authorized by the appropriate agency.
      Sectors Subsectors Asset/Facility Type
      Transportation infrastructure Road infrastructure Highways, including expressways, roads, bridges, interchanges, tunnels, and related facilities
      Rail and mass transit infrastructure Railways or rail-based projects that may or may not be packaged with commercial development opportunities, non-rail-based mass transit facilities
      Waterways infrastructure Navigable inland waterways and related facilities
      Seaport infrastructure Port infrastructures like piers, wharves, quays, storage, handling, ferry services, dredging, and related facilities
      Airport infrastructure Airports, air navigation, and related facilities
      Logistics infrastructure Warehouses, storage and processing facilities
      Water, wastewater, and solid waste management infrastructure Water resources and irrigation infrastructure Irrigation and related facilities
      Water supply infrastructure Water supply system and related facilities
      Wastewater infrastructure Sewerage system, wastewater treatment plants, drainage, and related facilities
      Solid waste management infrastructure Waste collection equipment, waste transportation vehicles and equipment, waste treatment plants, landfill site infrastructure, and related facilities
      ICT infrastructure Telecommunication infrastructure Telecommunication systems, backbone network, terrestrial and satellite facilities, and related service facilities
      IT and informatics infrastructure Information technology (IT) and database infrastructure, including modernization of IT, geospatial resource mapping, and cadastral survey for resource accounting and planning
      Energy and electricity infrastructure Power generation Power generation facilities
      Power transmission and sub-transmission Power transmission, and sub-transmission facilities
      Power distribution Power distribution facilities
      Energy conservation infrastructure NA
      Social infrastructure Education infrastructure Education infrastructure facilities
      Health infrastructure Health-care infrastructure facilities
      Public housing Affordable and other public housing infrastructure
      Government buildings Land reclamation, dredging, government buildings, public markets, slaughterhouses, and other related development facilities
      Other infrastructure Zone infrastructure Industrial infrastructure
      Tourism infrastructure Tourism estates or townships, including ecotourism projects such as terrestrial and coastal/marine nature parks, among others, and related infrastructure facilities and utilities

      ICT = information and communication technology, NA = not applicable.

      Source: Public–Private Partnership Center. What is PPP? https://ppp.gov.ph/ppp-program/what-is-ppp/.

      All concerned government agencies, including government-owned and controlled corporations and local government units, incorporate in their development programs the priority projects that may be financed, constructed, operated, and maintained by the private sector under the provisions of the BOT Law and its IRR.

      The list of all such national projects must be part of the development programs of the agencies concerned. The list of projects costing up to ₱300 million ($6 million as of April 2020) are approved by NEDA-ICC and projects costing more than ₱300 million by the NEDA Board.

      The list of local projects costing up to ₱20 million ($394,800 as of April 2020) to be implemented by the local government units concerned is submitted, for confirmation, to the municipal development council. Those costing above ₱20 million up to ₱50 million ($1 million as of April 2020) are submitted to the provincial development council; those costing up to ₱50 million to the city development council; those above ₱50 million up to ₱200 million ($4 million as of April 2020) to the regional development councils; and those above ₱200 million to ICC of NEDA.

      ICT = information communication technology.

    • National Framework for Enabling PPPs

      PPP Institutional Framework

      Parameters

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      Does the country have a national PPP unit?
      What are the functions of the national PPP unit?

      • Supporting the design and operationalization of the national PPP-enabling framework?

      • Helping develop a national PPP pipeline?

      • Supporting the arrangement of funding for project preparation (budgetary allocations, technical assistance funding from multilateral development agencies, operating a dedicated project preparation/project development fund)?

      • Guidance for project preparation to and coordination with the government agencies responsible for sponsoring the projects?

      • Making recommendations to the PPP Committee and/or other approving authorities to provide approvals associated with various stages of PPP process?
      • Yes
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      National Framework for Enabling PPPs

      PPP Institutional Framework

      Principal Public Agencies, Institutions, and Firms That Support PPPs in the Philippines

      Key Agencies/Facilities Function(s)

      PPP Center
      • Conducts project facilitation and assistance to national implementing agencies, including government corporations and LGUs, in addressing impediments or bottlenecks in the implementation of PPP programs and projects
      • Provides advisory services, technical assistance, training, and capacity development to agencies/LGUs in PPP project preparation and development
      • Recommends plans, policies, and implementation guidelines related to PPP in consultation with appropriate oversight committees, implementing agencies, LGUs, and the private sector
      • Manages and administers a revolving fund, known as the Project Development and Monitoring Facility (PDMF), for the preparation of business case, pre-feasibility and feasibility studies, and tender documents of PPP programs and projects
      • Monitors and facilitates the implementation of priority PPP programs and projects designed by agencies/LGUs in coordination with the National Economic Development Authority (NEDA) Secretariat
      • Establishes and manages a central database system of PPP programs and projects
      • Recommends improvements to timelines in processing PPP program and project proposals, and monitor compliance of all agencies/LGUs
      • Prepares reports on the implementation of PPP programs and projects of the government for submission to the President by the end of each year
      • Performs other functions which may be critical in expediting and implementing effectively the government’s PPP programs and projects
      • Acts as the secretariat of the PPP Governing Board

      PPP Governing Board (PPPGB)
      • Undertakes the overall policy making for all PPP-related matters, including the PDMF
      • Sets the strategic direction of the Philippines’ PPP program and creates an enabling policy and institutional environment for PPPs

      National Economic and Development Authority (NEDA)
      • Functions as the independent planning agency of the government and implements integrated and coordinated programs and policies for national development, in consultation with the appropriate public agencies, the private sector, and LGUs

      Investment Coordination Committee (ICC)
      • Evaluates the fiscal, monetary, and balance of payments implications of major national projects and recommends to the President the implementation timetable of these projects on a regular basis
      • Recommends to the President a domestic and foreign borrowing program, which is updated each year, and subsequently submits to the President a status of the fiscal, monetary, and balance of payments implications of major national projects
      • Reviews national BOT projects costing up to ₱300 million ($6 million as of April 2020) submitted for ICC approval; projects costing more than ₱300 million for NEDA Board approval; and LGU PPP projects costing more than ₱200 million ($4 million as of April 2020), submitted for ICC confirmation

      Department of the Interior and Local Government (DILG)
      • Coordinates the PPP programs and projects at the local government level
      • Organizes capacity-building, training, and technical assistance programs for LGUs and their key officials, in coordination with the PPP Center
      • Assists the PPP Center in gathering reports on the implementation of PPP programs and projects of LGUs and in addressing impediments or bottlenecks
      • Provides inputs for and assists in disseminating the PPP resource materials to LGUs

      Department of Finance (DOF)–Municipal Development Fund Office (MDFO)
      • Administers the Municipal Development Fund (MDF), which forms a critical component of the LGU Financing Framework. The MDF is a revolving fund created and capitalized by foreign loans and grants made available as loans to LGUs for projects specified in the agreements with international financial institutions and foreign governments.
      • Administers the PPP Fund (with a corpus of approximately ₱1 billion [$20 million as of April 2020]) to provide funding support to LGUs that are already implementing or planning to implement PPP projects. The MDFO coordinates with the PPP Center in identifying LGUs that already have project proposals and feasibility studies and that may be interested in availing the PPP Fund.
      • Administers the Project Technical Assistance and Contingency Fund, which LGUs can access to fund the feasibility study or detailed engineering design of projects that can be implemented under BOT or similar schemes or through bond flotations or loans from private financing institutions, government financial institutions, or the MDFO itself

      Regional and local development councils
      • Serves as the counterpart of the NEDA Board in respective regions, provinces, cities, and municipal jurisdictions. These regional and local development councils are comprised of local government officials, regional heads of departments and other offices, and representatives from the private sector within the region. They have been set up to facilitate administrative decentralization, strengthen local autonomy, and accelerate economic and social development in the regions.
      • Serves as a forum where development planners, government implementing agencies, and the private sector can identify the priority programs and projects that support the objectives and thrusts of the region. These are then packaged into investment programs for endorsement to implementing agencies and institutions as well as to the private sector.
      • With the private sector’s representation in these regional and local development councils, their interests and concerns are articulated and used as input in formulating the development and investment plan of the region
      • Identifies measures to attract private investment in the region
      • Reviews and endorses, as appropriate, projects that have an impact on the region

      PPP subcommittees in local government units
      • Assists the local development council in formulating action plans and strategies related to the LGU’s implementation of PPP programs and projects

      BOT = build–operate–transfer, LGU = local government unit.

    • National Framework for Enabling PPPs

      The PPP Process

      Parameters

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      Does the PPP legal and regulatory framework provide for a PPP implementation process covering the entire PPP life cycle?
      Does the Feasibility Assessment Stage cover

      • Technical feasibility?

      • Socioeconomic feasibility?

      • Environmental sustainability?

      • Financial feasibility?

      • Fiscal affordability assessment?

      • Legal assessment?

      • Risk assessment and PPP project structuring?

      • Value for Money assessment?

      • Market sounding with stakeholders?
      Is the PPP procurement plan required?
      Is there a need to set up a separate PPP procurement committee?
      Is competitive bidding the only method for selection of PPP private developer?
      Is the prequalification stage necessary? Or does the PPP legal and regulatory framework allow flexibility to skip the prequalification stage? Flexibility is allowed to skip prequalification
      Does the PPP legal and regulatory process provide the option to the preferred bidder for contract negotiations? Only for negotiated contracts
      Does the PPP legal and regulatory framework allow unsuccessful bidders to challenge the award/submit complaints?
      What is the maximum time allowed for submitting a complaint/challenging the award by unsuccessful bidders from the announcement of the preferred bidder? 15 days
      Does the PPP legal and regulatory framework provide for transparency?
      Which of the following are required to be published?

      • Findings from the feasibility assessment?

      • Procurement notice?

      • Outcome of stakeholder consultations from market sounding?

      • Clarifications to prequalification queries?

      • Prequalification results?

      • Clarifications to pre-bid queries?

      • Results for the bid stage and selection of preferred bidder?

      • Final concession agreement to be entered between the government agency and the preferred bidder? And other PPP project agreements executed between government agency and preferred bidder?

      • Confidentiality
      • Yes
      • No
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      National Framework for Enabling PPPs

      The PPP Process

      As per the Build–Operate–Transfer (BOT) Law and its implementing rules and regulations, the overall PPP process in the Philippines includes the following stages:

      • Development includes project identification, preparation, and structuring.
      • Approval includes assessment and approval of the project by various approving entities.
      • Competition/procurement includes bid documentation and bid process management up to award of the PPP project to the identified private developer.
      • Cooperation includes activities from commercial close up to hand back/transfer of the project by the private developer to the implementing agency/local government unit at the end of the PPP contract period.

      The PPP Process

      img

      DENR = Department of Environment and Natural Resources; DOF = Department of Finance; EMB = Environmental Management Bureau; ICC = Investment Coordination Committee; NEDA = National Economic and Development Authority; NOA = Notice of Award; PBAC = PPP Prequalification, Bids, and Awards Committee; SBAC = Special Bids and Awards Committee.

      Source: Public–Private Partnership Center. PPP Processes. https://ppp.gov.ph/ppp-program/ppp-processes/.

    • National Framework for Enabling PPPs

      Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

      Parameters

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      Does the country have PPP Guidelines/PPP Guidance Manual?
      Does the PPP Guidelines/PPP Guidance Manual adequately cover the process, entities involved, roles and responsibilities of various entities, approvals required at various stages, and the timelines for the various stages of the PPP project life cycle?
      What are the templates and checklists available in the PPP Guidelines/PPP Guidance Manual?

      • Project Needs Assessment and Options Analysis checklist?

      • Project Due Diligence checklist?

      • Technical Assessment checklist?

      • Environmental Assessment checklist?

      • PPP Procurement Plan template?
      Does the country have standardizedmodel bidding documents for PPPs?

      • Model Request for Qualification (RFQ) document?

      • Model Request for Proposal (RFP) document?

      • Model PPP/Concession Agreement?

      • State Support Agreement?

      • VGF Agreement?

      • Guarantee Agreement?

      • Power Purchase Agreement?

      • Capacity Take-or-Pay Contract?

      • Fuel Supply Agreement?

      • Transmission and Use of System Agreement?

      • Performance-Based Operations and Maintenance Contract?

      • Engineering, Procurement and Construction Contract?

             		Only for LGU PPP Projects Model RFQ, RFP, and PPP Agreement are available
      Does the country have standardized PPP agreement terms? Except for LGU PPP Projectsa
      Does the country have standardized/ model tool kits to facilitate identification, preparation, procurement, and management of PPP projects?

      • PPP Family Indicator?

      • PPP Mode Validity Indicator?

      • PPP Suitability Filter?

      • PPP Screening Tool?

      • Financial Viability Indicator Model?

      • Economic Viability Indicator Model?

      • VFM Indicator Tool?

      • Readiness Filter?
      Is there a framework for monitoring fiscal risks from PPPs including the following?

      • Process for assessing fiscal commitments?

      • Process for approving fiscal commitments?

      • Process for monitoring fiscal commitments?

      • Process for reporting fiscal commitments?

      • Process for budgeting fiscal commitments?
      Are there fiscal prudence norms/thresholds to limit fiscal exposure to PPPs?
      Is there a process for assessing and budgeting contingent liabilities from PPPs?
      • aIt was previously understood that the PPP Center is currently developing a standard PPP concession agreement. As of April 2020, there has been no update on this.
      • Yes
      • No
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      National Framework for Enabling PPPs

      Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

      PPPs implemented under the framework of the Build–Operate–Transfer (BOT) Law and its implementing rules and regulations must comply with its requirements, processes, and procedures. However, for PPPs involving public utilities, the Philippine Constitution requires that:1

      • the franchise, certificate, or authorization to operate public utilities be held by Filipino citizens, or corporations or associations organized under the Philippine law with at least 60% of its capital owned by Filipino citizens; 
      • the participation of foreign investors in the governing body of any public utility enterprise should be limited to their proportionate share in its capital; and 
      • all the executive and managing officers of such corporation or association must be citizens of the Philippines. .

      Moreover, such franchise, certificate, or authorization for operation of a public utility is limited to a period of 50 years.

      LGU = local government unit, VFM = value for money, VGF = viability gap funding.

      Sources: Public–Private Partnership Center. PPPGB Guidelines and Issuances. https://ppp.gov.ph/guidelines-and-issuances/; Government of the Philippines. 2012. PPP Manual for LGUs – Volume 3: Utilizing LGU PPP Project Templates and Bid Documents. Manila. https://ppp.gov.ph/wp-content/uploads/2012/03/Volume-3-LGU-PPP-Manual.pdf; Law Business Research. 2015. The Public–Private Partnership Law Review. London. https://www.syciplaw.com/Documents/LegalResources/2015/PPP%20Law%20Review%20-%20Philippines%202015.pdf

      Parameters

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      Does the law specifically enable lenders the following rights:

      • Security over the project assets?

             		a

      • Security over the land on which they are built (land use right)?

      • Security over the shares of a PPP project company?

      • Can there be a direct agreement between the government and lenders?

      • Do lenders get priority in the case of insolvency?

      • Can lenders be given step-in rights?
      Does the law specifically enable compensation payment to the private partner in case of early termination due to:

      • Public sector default or termination for reasons of public interest?

      • Private sector default?

      • Force majeure?
      Does the law enable the concept of economic/financial equilibrium?
      Does the law enable compensation payment to the private partner due to:

      • Material adverse government action?

      • Force majeure?

      • Change in law?
      • aOn a case-by-case basis
      • Yes
      • No
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      National Framework for Enabling PPPs

      Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

      Key Clauses Related to PPP Agreement

      • Payments. To facilitate payments under PPP contracts, the build–operate–transfer (BOT) regulations prescribe specific payment schemes for particular contractual arrangements.

      Payment Schemes for Various Contractual Arrangements

      Contractual Arrangement Typical Payment Scheme
      Build–Operate–Transfer, Design–Operate–Transfer, and Rehabilitate–Operate–Transfer Collection of reasonable tolls, fees, and charges for a fixed term, which shall not exceed 50 years
      Build–Own–Operate and Rehabilitate–Own– Operate Collection of reasonable tolls, fees, and charges for a fixed term. Upon renewal of its franchise or contract with the implementing agency or LGU, the proponent is allowed to continue collecting tolls, fees, charges, and rentals for the operation of the facility or the provision of the service.1
      Build–Transfer–Operate

      Option 1: Appropriate amortization and collection of reasonable tolls, rentals, and charges while operating the facility on behalf of the implementing agency or LGU, which may be directly applied to the amortization. Moreover, the facility operator may be repaid by the implementing agency or LGU through a management fee provided in the management contract.
      Option 2: Directly collect tolls, rentals, and charges for a fixed term
      Build–Transfer and Build–Lease–Transfer Repayment through amortization
      NEDA Board approved/ authorized contractual arrangements/schemes not enumerated under Section 2 of the BOT Law Repayment through any of the schemes recommended by the ICC and approved by the NEDA Board
      Note: Where applicable, the proponent may likewise be paid in the form of revenue sharing or other nonmonetary payments (i.e., grant of commercial development rights, grant of a portion or percentage of the reclaimed land, subject to constitutional requirements or any other nonmonetary payments).

      BOT = build–operate–transfer, ICC = Investment Coordination Committee, LGU = local government unit, NEDA = National Economic and Development Authority. 

      Source: Law Business Research. 2015. The Public–Private Partnership Law Review. London. https://www.syciplaw.com/Documents/LegalResources/2015/PPP%20Law%20Review%20-%20Philippines%202015.pdf

      • Distribution of risk. In the Philippines, PPP projects follow the risk allocation principle that the risk should be assigned to the party that is best able to control or influence the occurrence or manage the consequences of the risks. Thus, commercial risks (e.g., demand risk, supply risk, operational risk, and financing risk) are typically allocated to the private sector, while legal, political, or regulatory risk are allocated to the government (e.g., approval of rates or tariff adjustments, change in law, and material adverse government action). In some instances, the parties may agree to share certain risks.(e.g., force majeure risk). In December 2010, the Investment Coordination Committee (ICC)–Cabinet Committee adopted the Generic Preferred Risk Allocation Matrix. It is also based on the same principles and identifies the party that could best handle the risk involved in undertaking a PPP project, including some proposed mitigating strategies and contractual provision for each risk.2
      • Lenders’ security and step-in rights. Security over the shares of a PPP project company and the possibility of a direct agreement between the government and project lenders are not explicitly stated in the regulations; however, it is possible on a contract case-by-case basis. Domestically owned companies can get security over land on a case-by-case basis.3
      • Ownership of project assets. Generally, the government would obtain ownership of the underlying assets; however, the time of the transfer of ownership would depend on the contractual agreement between the parties. For example, in a build–transfer–operate or build–and–transfer scheme, transfer of ownership of the assets to the government occurs immediately after completion of the project, subject to later payments to the private party comprising its investment plus a reasonable rate of return. In contrast, in a build–operate–transfer or build–lease–transfer scheme, transfer will occur only after an agreed period, during which the private entity will be allowed to operate or lease the facility and charge its users the appropriate rentals, fees, or tolls (footnote 1).
      • Termination and compensation. The PPP Governing Board Policy Circular 06-2015 on Termination Payment for PPP projects has introduced a regulation of events that trigger termination and compensation payment. Force majeure and private sector default were also among these. Until then, regulations have been allowing a compensation payable to the private sector only in case of adverse public sector actions or public sector defaults.4

        The government compensates the proponent for the actual expenses incurred in the project as of termination, including a reasonable rate of return, in cases wherein: (i) the implementing agency or LGU terminates, cancels, or revokes the contract through no-fault of the project proponent; (ii) the parties terminate the contract by mutual agreement; or (iii) a court revokes or cancels the contract by final judgment through no-fault of the proponent, thereon not exceeding those stated in the contract and subject to such reliefs available to it under the insurance provision of the contract (footnote 1).

      • Adjustment and revision to the PPP contract. Changes to the PPP contract may be allowed before the submission of the bids provided the head of the relevant implementing agency or LGU secures the approval of the approving body.5  Changes after the bid submission and before the execution of the contract are not allowed except for changes to contract terms affected or decided by the winning bidder’s bid (footnote 1).

        During the implementation of the PPP contract, a contract may be varied upon approval by the head of the implementing agency or LGU provided that: (i) there is no impact on the basic parameters and terms of the contract as approved by the approving body; (ii) there is no reduction in the scope of works or performance standards, or fundamental change in the contractual arrangement nor extension in the contract term; (iii) there is no increase in the agreed fees, tolls, and charges, or a decrease in the implementing agency or the LGU’s revenue or profit share derived from the project; or (iv) there is no additional government undertaking, or increase in the financial exposure of the government under the project. For contract variations that do not meet these requirements, approval by the approving body is required.

    • National Framework for Enabling PPPs

      Unsolicited PPP Proposals

      Parameters

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      Does the PPP legal and regulatory framework allow submission and acceptance of unsolicited proposals?
      What are the advantages provided to the project proponent for an unsolicited bid?

      • Competitive advantage at bid evaluation?

      • Swiss Challenge?

             		a

      • Compensation of the project development costs?

      • Government support for land acquisition and resettlement cost?

      • Government support in the form of viabiity gap funding and guarantees?
      • aThere are LGU PPP Codes (i.e., Quezon City, Cebu City) that allow losing parties to recoup compensation for project development costs in the case of the Swiss Challenge.
      • Yes
      • No
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      National Framework for Enabling PPPs

      Unsolicited PPP Proposals

      Unsolicited proposals are generally accepted on a negotiated basis, provided certain conditions are met:1

      • The project involves new concept or technology and/or is not part of the list of priority projects.
      • No direct government guarantee, subsidy, or equity is required.
      • The implementing agency/local government units have invited, by publication in a newspaper of general circulation for 3 consecutive weeks, comparative or competitive proposals; and no other proposal is received for a period of 60 working days. In the event another proponent submits a lower price proposal, the original proponent has the right to match that price within 30 working days. If the original proponent fails to match the price proposal of the comparative proponent within the specified period, the contract is awarded to the comparative proponent. On the other hand, if the original proponent matches the price proposal of the comparative proponent within the specified period, the project is immediately awarded to the original proponent (footnote 1).

      Source: PPPGB. 2018. Guidelines on Managing Unsolicited Proposals under RA 6957, as amended by RA 7718. Manila.

    • National Framework for Enabling PPPs

      Foreign Investor Participation Restrictions

      Parameters

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      Is there any restriction for foreign investors on:

      • Land use/ownership rights as opposed to similar rights of local investors?

      • Currency conversion?
      PPP projects with foreign sponsor participation (number) 39
      • Yes
      • No
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      National Framework for Enabling PPPs

      Foreign Investor Participation Restrictions

      In case an infrastructure facility’s operation requires a public utility franchise, the facility operator must be a Filipino, or if a corporation, it must be duly registered with the Securities and Exchange Commission and owned up to at least 60% by Filipinos. In the case of foreign contractors, Filipino labor are employed or hired in the different phases of construction where Filipino skills are available.1

    • National Framework for Enabling PPPs

      Dispute Resolution

      Parameters

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      Does the country have a Dispute Resolution Tribunal?
      Does the country have an Institutional Arbitration Mechanism?
      Can a foreign law be chosen to govern PPP contracts?
      What dispute resolution mechanisms are available for PPP agreements?

      • Court litigation

      • Local arbitration

      • International arbitration
      Has the country signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards?
      • Yes
      • No
      LEARN MORE

      National Framework for Enabling PPPs

      Dispute Resolution

      Typically, the resolution of disputes is left to the discretion of parties, including the use of alternative dispute resolution with agreements citing international arbitration as a mechanism of choice. Executive Order 78 of 6 July 2012 mandates alternative dispute resolutions on all PPP contracts.1

      In the Philippines, the Alternative Dispute Resolution Act (Republic Act 9285) provides that international commercial arbitration shall be governed by the UN Commission on International Trade Law Model Law (chapter 4, section 19) and contains provisions on international commercial arbitration (sections 19–31). Domestic arbitration is governed by the Arbitration Law (Republic Act 876), and by certain provisions of the UN Commission Model Law (footnote 1).

      The Philippines ratified the New York Convention with the reservation that it does so on the basis of reciprocity. It applies the convention to the recognition and enforcement of awards made only in the territory of another contracting state, and only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the state making such a declaration (footnote 1).

      Neither online alternative dispute resolution nor fast-track arbitration is currently available in the Philippines.

      The Philippine Dispute Resolution Center, Inc. (PDRCI) was incorporated in 1996 out of the Arbitration Committee of the Philippine Chamber of Commerce and Industry. As an arbitral institution, it does not itself resolve disputes. The PDRCI promotes and encourages the use of arbitration, mediation, and other modes of avoiding or settling commercial disputes such as dispute boards. It also provides alternative dispute resolution services to the business community.2

    • National Framework for Enabling PPPs

      Environmental and Social Issues

      Parameters

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      Is there a local regulation establishing a process for environmental impact assessment?
      Is there a legal mechanism for the private partner to limit environmental liability for what is outside of its control or caused by third parties?
      Is there a local regulation establishing a process for social impact assessment?
      Is there involuntary land clearance for PPP projects?
      • Yes
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      National Framework for Enabling PPPs

      Environmental and Social Issues

      Project implementation is subject to the implementing rules and regulations of Presidential Decree 1586, also known as the Philippine Environmental Impact Statement System. It requires a project proponent to conduct an environmental impact assessment (EIA) to ensure that all possible environmental effects of the project are addressed, in line with the country’s overall goal of sustainable development. The Environmental Management Bureau of the Department of Environment and Natural Resources (DENR) is responsible for conducting a review of the EIA, the environmental risk analysis, and the proposed mitigation measures. The review also covers the integration of climate change adaptation measures and disaster risk reduction, if there are any, as well as the environmental monitoring and management plan for the project. The DENR then issues the Environmental Clearance Certificate, which is necessary to obtain before the commencement of project construction.1

      The process for social compliance is regulated by a number of regulations, such as the Right-Of-Way Act 10752 (2016) and PPPGB Policy Circular 10-2016 on public consultations and engagement for PPP projects (footnote 1).

      The land can be expropriated. The property owner is given 30 days to decide whether to accept the offer as payment for the property. Upon refusal or failure of the property owner to accept such an offer, expropriation proceedings can be initiated (footnote 1).

      In December 2018, the PPP Governing Board (PPPGB) Resolution 2018-12-02 was passed for mainstreaming environmental, displacement, social, and gender concerns associated with PPP projects.2  The objective of this resolution is to prevent delays associated with safeguard concerns in the PPP process due to the lack of capacity and resources of implementing agencies to review all safeguards-related laws and regulations that have an impact on various stages of a PPP project delivery.

    • National Framework for Enabling PPPs

      Land Rights

      Parameters

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      Which of the following is permitted to the private partner:

      • Transfer land lease/use/ownership rights to third party

      • Use leased/owned land as collateral

      • Mortgage leased/owned land
      Is there a legal mechanism for granting wayleave rights, for example, laying water pipes or fiber cables over land occupied by persons other than the government or the private partner?
      Is there a land registry/cadastre with public information on land plots?
      Which of the following information on land plots is available to the private partner?

      • Appraisal of land value

      • Landowners

      • Land boundaries

      • Utility connections

      • Immovable property on land

      • Plots classification
      • Yes
      • No
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      National Framework for Enabling PPPs

      Land Rights

      Republic Act 8974 (2000) and Republic Act 10752 (2016) facilitate the acquisition of right-of-way, site, or location for national government infrastructure projects. For PPP projects, the private sector might be requested to either finance the right-of-way cost which can be recovered partly or fully by the investor from the tolls, fees, or tariffs to be charged to the users of the completed project, or advance the funds covering the cost of the right-of-way which would be reimbursed later by the implementing agency, with the exception of unsolicited proposal.1

      According to the 1987 Constitution, private ownership of land is only allowed for corporations which are at least 60% owned by Filipino citizens. Public land cannot be owned irrespective of company ownership structure and can only be leased from the government (footnote 1).

  • Government Support for PPP Projects

    Project Funding Support

    Parameters

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    Project Funding Support
    Is there a dedicated government financial support mechanism for PPP projects? a
    What are the instruments of government financial support available under this government financial support mechanism?

    • Capital grant

    • Operations grant

    • Annuity/availability payments

    • Guarantees to cover

    • Currency inconvertibility and transfer risk

    • Foreign exchange risk

    • War and civil disturbance risk

    • Breach of contract risk

    • Regulatory risk

    • Expropriation risk

    • Government payment obligation risk

    • Credit risk

    • Minimum demand/revenue risk

    • Risk of making annuity/availability payments in a timely manner
    What are the caps/ceilings for the government financial support under each of the abovementioned government financial support instruments? 50% of project cost
    Is there a minimum PPP project size (investment) for a PPP project to be eligible for receiving government financial support?
    Are there minimum financial commitment requirements for the private developer equity before the government support could be drawn?
    Is the government financial support required, usually the bid parameter for PPP projects?
    Are unsolicited PPP proposals eligible to receive government financial support?
    Are there standard operating procedures for providing government financial support to PPP projects?

    • Appraisal and approval process

    • Budgeting process

    • Disbursement process

    • Monitoring process

    • Accounting, auditing, and reporting process
    Who are the signatories to the government financial support agreement? Head of implementing agency, but Department of Finance and Department of Budget and Management must approve of any financial support
    Who is responsible for monitoring the performance of PPP projects availing government financial support?

    • Independent engineer?

         		b

    • Government agency?

    • Ministry of Finance?
    What are the other forms of government support available for PPP projects?

    • Land acquisition funding support?

         		c

    • Funding support for resettlement and rehabilitation of affected parties?

    • Tax holidays/exemptions?

    • Real estate development rights?

         		d

    • Advertising and marketing rights?

    • Interest rate/cost of debt subventions?

    • Other subsidies and subventions?
    Can the other forms of government support be availed over and above the government financial support through various instruments listed above?
    • aThere is no dedicated financial support mechanism. Financial support is decided and set up on a per project basis.
    • bIndependent engineer, implementing agency, and PPP Center.
    • cWhere land is required, the project is usually on government land or on land acquired by the government.
    • dThough such rights are granted, the government does not provide financial support for real estate development.
    • Yes
    • No
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    Government Support for PPP Projects

    • Capital grant/cost sharing. As per the Amended Build–Operate–Transfer (BOT) Law Republic Act 7718 and its Revised Implementing Rules and Regulations (IRR) 2012, the concerned contacting agency could fund a portion of capital expenses associated with the establishment of an infrastructure development facility. This may include access infrastructure; right-of-way; transfer of ownership, usufruct, or possession of land; or a building or any real or personal property for direct use in the project and/or any partial financing of the project, or components of the project. The provided support does not exceed 50% of the project cost, and the balance to be provided by the project proponent. No direct government guarantee, subsidy, or equity would be provided for unsolicited proposals. 
    • Operations and maintenance support. As per the Amended BOT Law and its IRR, the implementing agency can pay for or shoulder a portion of the project cost or the expenses and costs in operating or maintaining the project and contribute any property or assets to the project.1
    • Availability- and performance-based payment schemes are allowed under the build–transfer–operate arrangement and have been implemented in practice in Investment Priorities Plan projects. Many of the bulk water supply systems were awarded on availability- and performance-based payment schemes.2
    • Credit enhancements/government guarantees refers to the support to a development facility by the project proponent and/or implementing agency/local government unit (LGU) concerned. The provision of these guarantees is contingent upon the occurrence of certain events and/or risks, as stipulated in the contract. Credit enhancements are allocated to the party that is best able to manage and assume the consequences of the risk involved. Credit enhancements may include, but are not limited to, government guarantees on the performance, or the obligation of the implementing agency/LGU under its contract with the project proponent. Few past Investment Priorities Plan contracts also received tariff rate guarantees (footnote 1).
    • Direct government subsidy refers to an agreement whereby the government, or any of its implementing agencies/LGUs, would (i) defray, pay for, or shoulder a portion of the project cost or the expenses and costs in operating or maintaining the project; (ii) in the case of LGUs, waive or grant special rates on real property taxes on the project during the term of the contractual arrangement; (iii) contribute any property or assets to the project; and/or (iv) waive charges or fees relative to business permits or licenses that are to be obtained for the construction of the project, all without receiving payment or value from the project proponent and/or facility operator for such payment, contribution, or support (footnote 1).
    • Direct government equity refers to the subscription by the government or any of its agencies or LGUs of shares of stock or other securities convertible to shares of stock of the project company. This applies irrespective of whether such subscription will be paid by the money or assets (footnote 1).
    • Land acquisition and resettlement support. Support for land acquisition and resettlement cost could be provided by the implementing agency/LGU on a case-by-case basis only for solicited projects (footnote 2).
    • Tax incentives. Among other incentives, for projects in excess of ₱1 billion ($20 million as of April 2020), there are investment incentives established under the Omnibus Investment Code of 1987,3  subject to the compliance of the project to the criteria set by the Board of Investment (footnote 2).
    • Performance undertaking refers to an undertaking of a department, bureau, office, commission, authority, agency, government-owned and controlled corporation, or LGU in assuming responsibility for the performance of the implementing agency/LGU’s obligations under the contractual arrangement, including the payment of monetary obligations, in case of default.
    • Renewable energy projects receive special incentives under Republic Act 9513, also known as the Renewable Energy Act of 2008, and Republic Act 7156, also known as the Mini-Hydroelectric Power Incentives Act (footnote 2).

    The government support should be based on the approved risk allocation matrix issued by the approving body/Investment Coordination Committee.4

    Project Development Funding

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    Project Development Funding
    What are the various sources of funds for PPP project preparation?

    • Budgetary allocations

    • Dedicated project preparation/project development fund

    • Technical assistance from multilateral/bilateral/and donor agencies

    • Recovery of project preparation funding from the preferred bidder
    At what stage of the PPP project, can the project preparation/development funding be availed by the government agency?

    • Pre-feasibility stage

    • Detailed feasibility stage

    • Transaction stage
    Is there a list of project preparation/project development activities towards which the project development funding can be utilized?
    Can the project development funding be utilized to appoint transaction advisors for PPP projects?
    Is there a specific process to be followed by government agencies to appoint transaction advisors?
    What are the payment mechanisms for making payments to transaction advisors?

    • Timesheet-based

    • Milestone-based
    Are there standard agreements and documents to avail project development funding? a
    Who are the signatories to the project development funding agreements? PPP Center head and implementing agency headb
    • Yes
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    Government Support for PPP Projects

    Project Development and Monitoring Facility

    The Project Development and Monitoring Facility (PDMF) is a revolving fund established by Executive Order 144, with assistance from development partners, Australian Department of Foreign Affairs and Trade, and Asian Development Bank.1  Managed by the PDMF committee (National Economic and Development Authority, Department of Finance, Department of Budget and Management, and PPP Center), the facility aims to develop a robust pipeline of properly prepared and well-structured PPP projects. The PDMF was created with an initial seed capital of ₱300 million ($6 million as of April 2020) from the Government of the Philippines. Appropriated funds under the BOT Center’s Project Development Facility (PDF) were also added to this seed capital pursuant to Executive Order 8.

    The PDMF is a funding mechanism available to implementing agencies/local government units (LGUs) for developing bankable PPP projects and ensuring effective monitoring of project implementation. The PDMF can be used to engage consultants for any or a combination of the following services:

    • Project preparation and assistance in managing the bidding process for solicited projects.
    • Assistance in evaluation of unsolicited proposals submitted to implementing agencies or LGUs. 
    • Assistance in contract negotiations between the implementing agencies/LGUs and the private sector proponent for unsolicited proposals. 
    • Assistance in management of the competitive bidding process for unsolicited proposals.
    • Assistance up to financial close.
    • Assistance in probity advisory. 
    • Assistance in monitoring of project implementation.

    As a revolving fund, reimbursement of the PDMF support is a condition precedent for contract award to the winning project proponent.

  • Maturity of the PPP Market

    Parameters

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    PPP Project Statistics

    • Is there a national PPP database for the country?

         		a
    Is the distribution of PPP projects across infrastructure sectors available?
    Is the distribution of PPP projects across various stages of the PPP life cycle available?
    • Yes
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    Maturity of the PPP Market

    The PPP Center maintains a project database listing the names, size, and status of the projects, and distribution of projects across sectors. 

    PPP Project Pipeline

    Parameters

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    Does the country publish a national PPP project pipeline?
    At what frequency is the national PPP project pipeline published? As updates arise
    Is the national PPP project pipeline based on the national infrastructure plan for the country?
    • Yes
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    Maturity of the PPP Market

    The priority projects identified across various sectors (roads, railways, airports, energy, social infrastructure, water and sanitation) for the PPP mode of implementation based on the National Economic Development Authority’s Revised List of Infrastructure Flagship Projects (published on 17 February 2020) guides implementing agencies and the PPP Center in developing a pipeline of PPP projects. 

    Sources of PPP Financing

    Parameters

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    Sources of PPP Financing
    Who are the typical entities financing PPP projects in the country?

    • Private developers

    • Construction contractors

    • Institutional/financial/private equity investors

    • Pension funds

         		a

    • Insurance companies

         		b

    • Banks

    • Nonbanking financial corporations/Financial institutions

         		c

    • Donor agencies

    • Government agencies and state-owned enterprises
    What is the distribution of financing among these entities financing PPP projects? Mainly financed through bank loans and equity
    Does the country have the history/track record of issuing bonds by infrastructure projects?
    How many infrastructure projects private developers for infrastructure projects have raised funding through bond issuances?
    What is the value of funding raised through capital markets by PPPs?
    Does the country have a matured derivatives market to hedge certain risks associated with PPPs?
    Does the country have a national development bank?
    Does the country have credit rating agencies to rate infrastructure projects?
    Typically, what are the credit ratings achieved/received by infrastructure projects?
    Is there a threshold credit rating for infrastructure PPPs below which institutional investors, pension funds, and insurance companies would not invest in infrastructure PPPs?
    What is the typical funding model for infrastructure PPPs -- corporate finance or project finance? Both models are used
    Are there regulatory limits/restrictions for the maximum exposure that can be taken by banks to infrastructure projects?
    • aGovernment pension funds, Social Security System and Government Service Insurance System (GSIS), do not participate in financing. However, GSIS insurance coverage is a requirement in some projects.
    • bInsurance companies typically do not participate as a financier, but they provide insurance coverage instead.
    • cExcept for captive financial institutions of large conglomerate groups, which may participate as financiers in some cases.
    • Yes
    • No
    • Unavailable
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    Maturity of the PPP Market

    The government has been looking into the Philippine bond market as another alternative source of financing for PPP projects. In 2016, ADB provided support for the issuance of the Philippines’ first peso-denominated green project bond for the refinancing of the Tiwi and Makiling–Banahaw (Tiwi–MakBan) geothermal facilities. The Securities and Exchange Commission (SEC) approved the listing of PPP projects on the Philippine Stock Exchange in November 2016.1

    Special Purpose Vehicles (SPV), with project cost of at least ₱5 billion ($99 million as of April 2020), are permitted to list in the Philippine Dealing and Exchange Corporation (PDEX) as per the SEC-approved PPP Listing Rules (9 November 2016).2   However, until 2019, no SPV has been listed.

    Key Infrastructure Financing Sources in the Philippines

      Non-Limited Recourse Loan Non-Limited Recourse Local Currency Loan Project Financing, Local Public Sector Banks Interest Rate Swaps Currency Swaps Project Financing through Project Bond Issuance
    Maximum tenor (in years) 15–20 Up to 15 7–8 20 5-9 UA
    Up-front arrangement fee (bps) 100–300 100–150        
    Floor rate LIBOR PHP BVAL Reference Rates        
    Margin rate (bps) 100–500 100-300        
    Percentage of foreign debt out of total debt for project financing UA UA UA UA UA UA
    Percentage of project bonds out of total debt for project financing UA UA UA UA UA UA
    Typical debt to equity ratio 70:30 (In some cases, it can be 80:20)
    Timeline to financial close (month) 6–12
    Minimum DSCR covenant levels (x) 1.25x–1.3x
    Nominal interest rates UA
    Real interest rates UA
    Security package UA

    BPS = basis points, DSCR = debt service coverage ratio, LIBOR = London Inter-Bank Offered Rate, PDST = Philippine Dealing System Treasury, UA = unavailable.

    The project financing scenario in the Philippines is monopolized by local banks that have strong relationships with local conglomerates. The requirement for loans to be in local currency provide the local banks a distinct advantage over foreign loans in terms of pricing. Furthermore, domestic banks do not require any political risk guarantee, unlike the international lenders, and offer terms which are light on covenants (footnote 1).

    In late 2016, the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) announced an end to the temporary single borrowing limit relief, which had been available to companies involved in PPP projects.

    Nevertheless, in 2018, the central bank decided to review the single borrowing limit to provide leeway for infrastructure financing. The single borrower limits were relaxed to accommodate bank lending for Special Purpose Vehicles holding big-ticket projects (footnote 1). A cap of 25% was made available for exposure to a single Special Purpose Vehicle. 

    Banks in Project Finance in the Philippines in 24 Months Preceding December 2019

    Name Total Project Financing Transactions
    ($ million) (₱ billion)
    ING Group (ING) 275 138.52 2
    Australia and New Zealand (ANZ) Banking Group 200 100.74 1
    Banco de Oro Unibank 91 45.84 1
    Land Bank of the Philippines 91 45.84 1
    Security Bank Corporation 91 45.84 1
    Bank of the Philippine Islands 91 45.84 1
    DBS Bank 20 10.07 1
    Standard Chartered Bank PLC 20 10.07 1
    Mitsubishi UFJ Financial Group and BTMU 20 10.07 1
    Mizuho Bank 20 10.07 1
    Fubon Financial 16.50 8.31 1
    Bank of China 16.50 8.31 1

    BTMU = Bank of Tokyo-Mitsubishi, DBS = Development Bank of Singapore Limited, ING = Internationale Nederlanden Groep, UFJ = United Financial of Japan.

    Source: Inframation Deals. Country Fact Books. Philippines. Debt and Equity. https://www.inframationnews.com/countryfactbook/1414947/philippines.thtm (accessed 28 August 2020).

    Active Project Sponsors in the Philippines in 24 Months Preceding December 2019

    Private Sponsor Country of Origin Total Investment Number of PPP Projects
    ($ million) (₱ billion)
    Metro Pacific Investments Philippines 1,478 74.45 2
    D.M. Consunji Philippines 1,100 55.41 1
    Tollways Management Co. (Philippines) Philippines 1,100 55.41 1
    Manila North Tollways Development Co. Philippines 1,100 55.41 1
    Aboitiz Power Philippines 573 28.86 1
    Udenna Corporation Philippines 400 20.15 1
    Kohlberg Kravis Roberts (KKR) United States of America 192 9.67 1
    Manila Electric Company (MERALCO) Philippines 120 6.04 2
    Kansai Electric Power Company Japan 120 6.04 1
    Marubeni Japan 120 6.04 1
    Chubu Electric Power Company Japan 120 6.04 1

    Source: Inframation Deals. Country Fact Books. Philippines. Debt and Equity. https://www.inframationnews.com/countryfactbook/1414947/philippines.thtm (accessed 28 August 2020).

    Credit Rating Agencies in the Philippines

    The credit rating agencies involved in rating infrastructure projects are the Philippine Rating Services Corporation (PhilRatings) and the Credit Rating and Investors Services (CRISP) Inc.