Yesterday I wrote a short overview about the seminar I attended on “Public-Private Partnerships for LGUs“ organized by The Center for Global Best Practices, in collaboration with Forensic Solutions and International Chamber of Commerce. The objective of the seminar is to empower the LGUs to create their Public-Private Partnerships Program. The topics presented including among others modalities, procedures, funding mechanisms and contract templates for LGUs.
The Local Government Code of 1991 set the phase to enable all LGUs in the country to have a comprehensive PPP policy that can fast track their negotiations, contract drafting, selection of private sector proponent and implementation of PPP Projects.
Course Director and Principal Resource Person was none other than the brilliant, former Acting Secretary of Justice, Acting Solicitor General and Government Corporate Counsel, Atty. Alberto C. Agra. He is the President of Forensic Law and Policy Strategies (Forensic Solutions), a private think tank offering services in the fields of policy, law reform, advocacy and governance. Forensic Solutions currently focuses on PPPs, has recently published Knowing PPP, BOT and JV: A Legal Annotation and has issued 11 policy papers on PPP. He drafted the model PPP Code for LGUs.
I wish to share some practical advice on how one may benefit and put into practice the vast business opportunities by going into a “bite size” PPP Project with local governments. We learned from basic principles of marketing that an ideal business model always begins with supplying a need or demand. One has to be observant, creative, and undertake necessary surveys as to what particular need does a local government community wishes to improve on.
To name some specific needs of local government units are in areas of waste management, neighborhood water distribution, day care center for infants or the elderly, safety and security services, parking facilities, transportation terminal, community medical health care, community pre-school, public market, library, community training center, mini parks entertainment and recreation facilities, and many more that could cater to specific barangay, subdivision, neighborhood and communities, city and municipalities.
A prudent businessman first undertake a feasibility study and see the options available, and determine the viability and acceptability of the business proposition to the local government unit as to PPP Project conceptualize. The key to the success in getting into a micro or “bite size” Public-Private Partnership is the LGU’s need for a framework. A PPP framework sets the vision, the strategies, options available, legal parameters and creates the structures that may empower local governments in implementing the different PPP Projects needed by the local government unit.
It is important that the local government as a clear development plan and set up policies for proper implementation through an ordinance or set of guidelines enabling the PPP structure to be stable, consistent, transparent, have integrity, accountability, reliability and enforceability.
The business opportunities in getting into a “bite size” PPP Projects for LGUs is rooted for the general welfare and public good of the community, barangay, municipality of the local government. Why will a local government need the private sector in forming partnerships to deliver the basic services needed?
What I’ve gathered from seminar and in consultations with some of my “LGU classmates” that most LGUs depend on funding requirements, technical know-how, private sector expertise; in short, private sector can deliver basic services that will be cost efficient and more value for money.
This will benefit the community and the general public. Moreover, the public sector or LGU will not be totally exposed to the various risks of the proposed project. Some of these risks are force majeure, political, financial, social civic forces, natural disasters, mismanagements, fraud, and the like.
We can divide the two major types of PPP Projects for LGUs namely:
A.) Infrastructure Assets such as
- Solid waste
- Land development
- Transport systems
- Government buildings
- Information technology
b.) Social Assets and Services
- Education institutions
- Health care
- Urban/rural agriculture and food production
- Rehabilitation, repairs and maintenance
- Prison management
- Other social services
- Tourism oriented services
- Recreation and entertainment facilities
Public-Private Partnership modalities
The legal foundation of the Public-Private Partnerships framework is taken from Republic Act 7718, popularly known as “The BOT Law” (Build Operate Transfer and Variants). From here we can draw aside from the Build Operate Transfer and Eight Variants that we find in RA 7718 are other types of PPP Modalities:
- Joint Ventures
- Service Contract
- Management Contract
- Lease or Affermage
- Disposition / Divestment
- Private Sector Participation
To illustrate on how Build-Operate and Transfer works, Justice Alberto C. Agra presented a slide showing the flowchart of Build-Operate-Transfer mechanism.
To conclude this second part, I would advice for those who wish to benefit from the business opportunities by going into a public-private partnership with a local government unit is to seek professional advice, specially if one is certain that the project is feasible, needed, and financially viable.
For this, I would like to make a personal endorsement and recommendation book written by former Justice Alberto C. Agra entitled “Proposed PPP Code for Local Governments; Annotated”, published by Forensic Solutions.
To add value to Atty. Alberto C. Agra’s book is the foreword was written by none other than one of the greatest local government personalities I’ve ever known, a patriotic leader and visionary, former Department of Interior and Local Government Secretary Jesse Robredo.
Course Manual, Slide Presentations of “Public-Private Partnerships for LGUs“
Prepared by : Atty. Albert C. Agra