Press Release
September 12, 2011

After DPWH hearing

Drilon: The committee is generally satisfied with the presentation of Sec Singson and the efforts he has taken in order to have reforms in the DPWH. We believe that we have now a secretary who fully understands the mission of the DPWH in order to move his department forward. We have, however, certain constraints and there are certain issues that two senators raised which have nothing to do with the present secretary. Questions were raised on the bridge program which happened before Sec Singson came into the picture but as we said by and large we are generally satisfied with the manner by which the DPWH is being managed today.

Today, we examined the budget of DPWH amounting to P125 billion, including MVUC. Just talking about capital outlay which is the meat of the budget--these are infrastructure projects--the 2012 proposed budget would provide for P99.3 billion in infrastructure projects, consisting of locally-funded projects of P82.6 billion and foreign-assisted projects of P16.7 billion. While there appears to be an increase of P8.389 billion in capital outlay over the 2011 budget, the infrastructure budget of our government is still grossly inadequate and we need a lot of catching up. The estimates of the World Bank is that we should have a budget of P550 billion for infrastructure projects, which is about 5% of our GDP. The major part of this is the DPWH budget but the other infrastructure implementing agencies such as GOCCs and LGUs, the total infrastructure budget for 2012 is P270 billion. Out of which, LGUs would account for P54.6 billion, GOCCs P21.7 billion and the rest would be in the national government under the GAA and as we said the DPWH would account for P99 billion. We still have a lot of catching up. In fact, in terms of competitiveness ranking in terms of infrastructure, in ASEAN we only beat Cambodia. Singapore is the most competitive; Malaysia comes next, Thailand, Indonesia, Vietnam the Philippines and Cambodia. This is the World Bank report in terms of competitive ranking in terms of infrastructure. Here, we really have inadequacy in infrastructure.

The often repeated criticism about underspending in public construction sector is recognized by our secretary. His report is that out of the P90.9 billion in capital outlay for 2011, we have certain targets and certain catch-up projects.

Singson: We have to implement certain kind of discipline in the preparation of projects. We just want to make sure that the projects being funded are the right projects so we required the completed program of work for every disbursement. Since there were also requests for realignments coming from various sectors, we have to redo a lot of program support. We did most of that already during the first half. We can really see a ramping up of the implementation of projects in the 2nd half. As we speak, most of the projects--P50 million and below--are already ongoing and in fact, some of the district offices have already completed 100% of the projects below P50 million. For purposes of projections, out of the P90 billion (2011 capital outlay), we expect that we will be targeting a disbursement of about 80% by yearend. We expect a significant improvement in disbursements during the 2nd half.

Drilon: Just to put it in context, the capital outlay of DPWH for the entire year is P90.9 billion and as of June 30, 2011, the report was that P500 million was allocated and disbursed. This has resulted in the contraction of public infrastructure spending and it has affected our GDP growth. For the 2nd quarter, it went down to 3.4%, the first quarter was about 4.9%. For the 1st half, GDP growth was only about just over 4%. We are gratified that this has been recognized and we are confident that the commitment of Sec Singson that expenditure will be accelerated so that by the end of 2011, the actual disbursement would be about P80 billion. That should accelerate our expenditure program and address the difficulty of disbursement after we have put the reforms in place.

Singson: Just in the month of July, we were able to actually disburse P26 billion. In August, we were able to bring this up some more to P37 billion. We are confident that we have been able to iron out the delays in the 1st half and so we can expect about P80 billion total disbursement by December.

Drilon: There is an ambitious project which the secretary has undertaken and this is to build an elevated EDSA. This will cost about P50 billion, consisting of 6 lanes, from Roxas Blvd up to Balintawak. This is a total of approximately 22 kilometers. The DPWH is already starting the technical evaluation. It's a question of elevated vs tunnel, but the inclination seems to be on an elevated EDSA. The other issue is whether or not this should be totally funded from official development assistance from JICA, which has offered to fund this or we will let the private sector participate, in which case it will be toll either fully or partly. But what is important is that this will be started during the term of the President. This will be sectionalized so that while the ambition is to finish this before 6 years, the reality is that we will be able to finish sections of this project which we believe is the ultimate solution to the hell that we go through every time we pass by EDSA.

Q: Kailan target masimulan?

Singson: We're completing the studies because there are also concepts being proposed that we can do a smart tunnel. Smart tunnel being if there is excess water you close one direction and you let the tunnel be used as water impounding. This is being done in other countries. That's precisely why we are doing estimates. If this is just a road tunnel that we are looking at, definitely the elevated is going to be more efficient. But if we want to use the tunnel as a smart tunnel to bring in all the excess water that comes into Metro Manila, then that's the number that we are trying to assess--whether it is more efficient to do a joint smart tunnel or just an elevated expressway.

Q: Yung smart tunnel parang sa Malaysia?

Singson: That's correct.

Q: How much is the cost of smart tunnel?

Singson: We're not done with the numbers. I'd rather just finish up with our studies on this, but definitely we need a new EDSA.

Q: It will cause more traffic sa EDSA kung hindi nyo gagawin ang elevated?

Singson: Kasama sa mga pag aaral yon. As I was mentioning in the hearing, sa tunnel walang istorbo... that's part of the study that we are doing.

Q: Yung elevated EDSA hindi sa current EDSA?

Singson: No, we will build it on top of EDSA. In other countries nagti-three levels na, tayo pinag iisipan pa lang natin kung may 2nd level tayo.

Q: Do we have a separate funding for PPP projects in the DPWH to be implemented in 2012?

Singson: We have provisions for PPP support, in other words, right of way. The projects that we have listed some of them will require government subsidy. That's provided in the 2012 budget.

Q: How much?

Singson: For 2011, we provided P5 billion, for 2012, P3 billion.

Q: Hindi ba masyadong malaki yon?

Drilon: Put it in context. As we earlier stated, we have to lay the premise that what we need to spend every year is approximately P550 billion which is about 5% of our GDP. Obviously, we cannot fund this out of public funds so that we now have basically the government and we have to encourage the private sector through the PPP program to increase our infrastructure spending as part of our GDP. As we said we are looking at P270 billion next year for public infrastructure spending, but we need approximately P550 billion which means we are talking about P280 billion more. P3 billion as allocation for PPP projects, which, by the way, only covers project studies, right of way acquisitions, is not even a drop in the bucket. We need to encourage PPP projects if we are to achieve competitiveness in infrastructure.

Q: The P5 billion that Singson mentioned is for?

Singson: Right of way... Some projects that we have listed require a government subsidy as counterpart.

Q: These are not new PPPs? Are these existing PPPs?

Singson: These are the projects that we have listed in out PPP program.

Q: Do we have new PPPs in the works for 2012?

Singson: Yes. As we have mentioned, we are looking at the elevated EDSA. That's not in the PPP, but it could be a combination of ODA and PPP.

Q: Yung due for implementation by 2012?

Singson: We have the Central Luzon East, this is the extension of SCTEx that would bring you closer to Nueva Vizcaya, passing through San Jose and Cabanatuan.

Q: How long is that?

Singson: I don't have the actual length of that road. We are also working on the C6 which is the road dike, around 43 kms from Taguig to Sta Rosa that we are putting together. These are the new ones. The others that are included in our PPP program are Cavite-Laguna Expressway, which runs from Cavite going all the way to Silang, down to Laguna, connecting to the South Luzon Expressway.

Q: Yung 1% of GDP, magkano yon sir?

Drilon: 1% of P11 trillion is P110 billion.

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