The Ayala Group is one of the leading proponents and believers of the Philippine Public-Private Partnership (PPP) Program. Since 1996, it has been engaged in a water concession and, in the recent past, has been awarded the Muntinlupa-Cavite Expressway tollway, automated fare-collection system, extension of Light Rail Transit 1 system and integrated terminal system under the build-operate-transfer law.

Lawyer Solomon M. Hermosura, managing director, group head of corporate governance, general counsel, compliance officer and corporate secretary of Ayala Corp.,tells us Ayala’s PPP journey in this second edition of PPP conversations.

The Ayala Group has been an active participant in PPP projects. Why?

The Ayala Group’s commitment to PPP goes beyond any single project or legal framework. Whether the project involves hard infrastructure or investments in health and education, we see PPP as an avenue to be the government’s partner in effectively and efficiently delivering on the needs of the public.

What are the essential elements and ingredients for success in PPP projects?

We have been most successful in our PPP projects when stakeholders are committed to the desired outcome and cooperate toward getting the project done. We need to work closely with communities, similar to Manila Water’s previous experience in its “Tubig Para sa Barangay” program, which connected unserved and vulnerable communities to a safe and cheaper water supply. Our current work in the human infrastructure sector—health and education—is a response to glaring gaps that require complementary solutions.

(1) LGUs enjoy local autonomy. LGUs have the freedom to adopt their own PPP frameworks, and determine the requirements and procedures for the selection of the private-sector proponent (PSP), provided, no law is violated. They can undertake projects based on their priorities. They cannot be compelled to pursue PPPs and undertake a particular PPP project.

(2) LGUs have fiscal autonomy. They have the discretion to source additional revenues using the PPP approach, and to create fiscal space for other projects and activities. They have the power to allocate these revenues based on their priorities. Revenues generated from PPPs can be used for general or specific purposes.

(3) For as long as not prohibited by law. Under the liberal view of local autonomy, LGUs can, for as long as no law is violated, pursue PPPs for the general welfare even if there is no express statutory grant of power.

What do stakeholders have to say about public-private partnerships (PPPs)? What are their PPP stories? What are their roles and perceptions?

Starting today PPP Lead will feature PPP Conversations. This columnist will propound frequently asked questions to be answered by PPP stakeholders. Our first conversation will be with the PPP Center (PPPC), which will share with us its reason for being and its view on this developmental strategy.

• Agra: What is your concept of PPP?

PPPC: PPPs are contractual arrangements between the government and the private sector, intended to accelerate the delivery of infrastructure and development projects or services. Republic Act (RA) 7718, or the Amended BOT law and its implementing rules and regulations (IRR), generally govern PPPs in the Philippines, supplemented by other relevant policies that make up the country’s legal and institutional framework for PPPs.

• Is PPP critical for development? Why?

PPP is critical input to growth and development being a funding resource for selected infrastructure and development projects and a mechanism to free up government’s fiscal space for other development requirements. At the same time, it harnesses private sector efficiencies and innovation in the critical aspects of project design construction, operations, maintenance and actual service delivery.