PPP conversations #10 with Metro Pacific Tollways Corp.

ALL over the world, public-private partnerships (PPPs) are undertaken for roads. In the Philippines road infrastructure is done through either build-operate-transfer, build-transfer-operate, joint venture, concession or procurement arrangements with national government agencies, local governments or government corporations.

Metro Pacific Tollways Corp.(MPTC) has done and continues to operate over 200 kilometers of road PPPs in North Luzon Expressway (Nlex) and Cavite Expressway (Cavitex) and will soon complete three more—Cavite–Laguna Expressway (Calax), Nlex-South Luzon Expressway (Slex) connector road and Cebu-Cordova link expressway.

MPTC President and CEO Rodrigo Franco shares his insights on the need for resource exchange, the readiness of the government and the private sector to enter into such collaborative arrangements, and the successes and risks of PPPs. He calls on us to support and be patient with this alternative development strategy. Thank you MPTC for keeping the PPP flame burning.

• What is your concept of PPP?

PPP is a joint endeavor of the government and private entities to
deliver essential services, especially infrastructure, to the public.  As its resources and capabilities are never enough, the government through the PPP Program contracts private- sector entities to help deliver basic services. The government and its private-sector partner share the risks and rewards of the endeavor. The private entity generates returns from a stream of payments either from the government or the recipient of the services.

• What makes PPP a viable and preferred development strategy? What PPP projects have your company done, or plan to engage in?

The PPP is a preferred development strategy as it leverages the combined resources and skills of the private- and public-sector partners.  The partners work together and share the risks and rewards.  Our company, MPTC, has already implemented several toll road PPPs, including Nlex and Cavitex. Among the other projects that are currently under development through the PPP Program are Calax, the Nlex-Slex Connector Road and the Cebu-Cordova Link Expressway.

• Is your company ready for PPPs? Why? Is the government ready?

Our company is fully geared for PPPs, especially in the toll-road sector.  We are currently the leading toll-road developer and operator in the Philippines with over 200 kilometer of tollways in operations.  We have learned a lot from the development and operation of Nlex, Subic-Clark-Tarlac Expressway and Cavitex. We have highly engaged personnel who have the skills, experience and motivation to deliver PPP projects. The Philippine government is among the more experienced implementors of the PPP scheme.

• What are the challenges and risks of PPPs?

The main risk of PPPs in the Philippines is the unstable commitment of the public sector to adhere to the terms of PPP contracts. There have been several cases of the government partner unilaterally reneging on its obligations under the PPP Program.  In the toll-road sectors, there are also significant risks like right-of-way availability.  These risks often result in delays in the development of the project.

• What is your message to the public?

I urge the public to be patient with PPP projects.  While PPP endeavors generally entail payment of fees for basic services provided by private-sector operators, the program allows a more efficient allocation of resources. The PPP Program enables the government to focus on the development projects that are badly needed but less appealing to private investors.  On the other side, the private entity uses its skills and resources to enhance the quality of its service in order to generate a stream of payments from its customers or government partner.