PPP Conversations #9 with Bohol Gov. Chatto

‘We’ve already done it,” underscored Gov. Ed Chatto of the Provincial Government of Bohol (PGBh) in this ninth edition of PPP Conversations. In the areas of water and power, even prior to the enactment of its public-private partnership (PPP) Ordinance, the PGBh has entered into and has been benefitting, to this very day, from joint-venture arrangements with the private sector.

Chatto shares with us his thoughts on this strategy.

What is your concept of PPP?

Public-Private Partnership (PPP) presents the government (both national and local) with an opportunity to expand the reach of governance services by taking advantage of access to capital, management acumen and technological expertise that is abundant in the private sector.

What makes PPP a viable and preferred development strategy at all levels?

From a local government unit (LGU) perspective, the funds provided by the national government to LGUs, and even to its own line agencies, is limited. PPP presents an opportunity to address the always-prevalent scarcity of funds. On top of that, it also provides government with the benefit of top-of-the-line technology and expertise from the private sector. Operational efficiency and sustainability of enterprises (especially in terms of revenue), which are often not optimally explored (or at worst are even ignored) in purely government-run entities, become primordial concerns in PPP ventures.

What makes the Province of Bohol ready for PPPs?

We’ve already done it, through the joint venture initiative for the (partial) privatization of our electric and water distribution utilities, resulting in a 70/30 ownership ratio, with the Province of Bohol (PGBh) retaining 30-percent ownership in the utilities. To this day, the PGBh continues to enjoy dividends from its share—and it has received more than P50 million in dividends, without having to be burdened by the day-to-day management of these companies.

Also, the PGBh has already passed its own PPP Ordinance, paving the way for other PPP projects. In achieving both of these milestones, we had the benefit of the expertise and guidance of lawyer Al Agra.

What are the challenges and risks of local PPPs?

The most obvious risk is that of any PPP project being used as a political issue, especially in the lead-up to elections. There is also the risk of political persecution through the courts. True, any PPP project that is done properly and in a transparent manner may be given its own protection through compliance with the law, but the hassle of having to defend a PPP project in numerous court cases can become a disincentive, so that local chief executives (LCEs) of other LGUs, having seen what can happen to LCEs who are bold enough to embark on PPP projects, are no longer interested in pursuing PPPs.

What is your message to the public?

To the general public: Be supportive of PPP initiatives. Welcome them as opportunities for raising the standard of governance services, instead of viewing them with suspicion.

To the investing public: We welcome your participation in governance services. As is often said, governance is too important to be left to the government alone. We need the participation—nay, the partnership —of the private sector