Press Release
November 29, 2010

Increased governmental participation, spending in PPPs sought

Sen. Ralph G. Recto today said the national government should play a "bigger role" in public-private partnerships (PPPs) involving big-ticket infrastructure projects in order to safeguard the welfare of the people.

Recto, chair of the Senate ways and means committee, said it would be "easier, more convenient and a lot cheaper" if the government frontloads its anticipated subsidy to PPP projects aimed at providing essential government services like toll roads, mass transit systems and expressways.

"Government participation in these projects should not be limited to the sovereign guarantees it can provide the private sector partner because we end up paying more for a project at a later time. Not only that, our people are also burdened for paying a higher cost for the use of these services," he said.

He explained that if the government, at the onset of an infrastructure project it develops with the private sector, owns half or more of the equity in the venture, it can dictate the resulting price of the service the project will provide the people.

As an example, Recto added, if the national government owned half of the South Luzon Expressway (SLEX), then the impending 250-percent increase in toll fees can be cut in half and it will not burden the people using the main thoroughfare too much.

"The government is not in the business of making profits out of the essential services it provides the people. In fact, the opposite should be true: that it should work to make these services more affordable to a large segment of the population," he said.

He also said that he is also in favor of building these infrastructure projects through local funding or entirely on public funds.

"We should look at all our resources. If the government can fund these projects entirely, it would be faster and cheaper. It would also do away with drafting a complicated contract that sometimes ends up being grossly disadvantageous to the government," he said.

In the case of the Metro Rail Transit 3 (MRT 3), which is a build-lease-transfer (BLT) project, Recto said the government ended up paying a high price for the subsidy it gives to the mass transit system by virtue of the BLT agreement.

"It should not cost us an arm and a leg to build these infrastructure projects. I can say the same for our people, which should not be forced to pay exorbitant fees and charges for the use of these services," he said.

"We should remember that the private sector's motivation in aiding the government build these projects is profit. But if the government, which does not need to recoup its investments, owned half or a portion of the equity in the venture that built these projects, then we can expect the price for the use of these infrastructures to be cut in half."

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