Public-Private

Partnerships (PPPs)
1
PPPs, Alberto C. Agra 2
Needs of the Community
IMPLEMENTATION-FUNDING JUNCTION
Loans/ Grants/
Official Devt
Assistance
Public-Private
Partnerships
National/ Local
Government
Funds
3
Public
Entity
2 or all of
the above
DEFINITION(S) OF PPP
Restrictive or Broad
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Definitional Realities
1. No universal definition of PPP
a) each country will have its own definition
b) No one-size-fits-all definition
2. In the Philippines, there is no single law on PPPs.
a) National Government
I. Only administrative definition
II. Various modalities anchored on different laws, rules,
guidelines, and resolutions
b) Local Government
I. Consider autonomy of local governments
II. 7 provinces and 5 cities adopted PPP Code/ Ordinance
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PPP Centers Definition
A contractual agreement between government and
a private firm targeted towards financing,
designing, implementing and operating
infrastructure facilities and services that were
traditionally provided by the public sector. It
embodies optimal risk allocation between the
parties minimizing cost while realizing project
developmental objectives. Thus, the project is to
be structured in such a way that the private sector
gets a reasonable rate of return on its investment.
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Broad or Restrictive?
1. PPP = BOT
2. Excludes other PPP
Modalities
a) Service Contracts
b) Management
Contracts
c) Joint Ventures
d) Disposition
e) Lease and Affermage
f) Corporatization
g) Donation
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RATIONALE/ VALUE DRIVERS
Why Enter into PPPs
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1. More, better, affordable and timely services
2. Part of a Strategy and Vision
3. Public Good
4. Additionality (now rather than later)
5. Value for Money (least cost)
6. Optimal Risk-Allocation (retention, transfer
and sharing)
7. Scarcity of Resources
8. Innovation (Output-based)
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PPP PROJECTS
Inclusive List
PPPs, Alberto C. Agra 11
Types of Projects
Infrastructure Assets
Roads, Bridges, Water, Power, Ports, Solid
Waste, Reclamation, Land Development,
Government Buildings, etc.
Social Assets
Education, Health, Agriculture,
Accommodation, Prisons, and Social Services
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Viable
PPP
Project
Pursuant to Strategy
Technically Feasible
Legally Acceptable
Environmentally Compliant
Socially Sustainable
Economically Viable
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PPP MODALITIES
Expanded or Limited
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18 PPP Modalities
1. Build-Operate-
Transfer and 8
variants
2. Concession
3. Joint Ventures
4. Service Contract
5. Management
Contract

6. Lease or Affermage
7. Corporatization
8. Disposition/ Divestment
9. Donation
10.Private Sector
Participation
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Governing Laws/ Rules
PPP Modality Governing Law
Build-Operate-Transfer and Variants BOT Law
Concession Special Laws
Joint Ventures Law on Partnerships/ NEDA JV Guidelines
Service Contract Government Procurement Reform Act
Management Contract Government Procurement Reform Act
Lease / Affermage, Donation, PSP Civil Code
Divestment/ Disposition Commission on Audit Circular No. 89-296
Corporatization Corporation Code
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PPPs, Alberto C. Agra 17
Modality Nature Key Objectives Functions Term
Service
Contract
Provides particular service for
a fee
Improve efficiency Single 2-3 years
Mgt.
Contract
Supplies management service
for a fee
Install new mgt.
systems
Single 2-3 years
Lease Uses property, runs business
where lessee pays a lease fee
Efficient use of
asset
Single 7-15 years
BOT Designs, builds, finances,
operates and maintains asset
Innovate, design,
build, finance and
operate
Bundle 25-50
years
Joint Venture Pooling of resources in
funding, building and O&M
Joint undertaking Bundle 25-50
years
Concession Rehabilitates, finances,
operates and maintains asset;
performance-based
Innovate, design,
rehabilitate, fund
& operate
Bundle 25-50
years
Divestment Runs the business and owns
asset
Innovate, design,
build, finance and
operate
Bundle In
perpuity
Modality Working Capital Receives Net
Income
Long-Term
Financing
Ownership of
Asset
Service Contract Public Public Public Public
Mgt. Contract Public Public Public Public
Lease Private Private Public Public
BOT Private Private Private Public
Joint Venture Joint based on
equity
Joint based on
equity
Joint based on
equity
Public or Private
Concession Private Private Private Public
Divestment Private Private Private Private
PPPs, Alberto C. Agra 18
Modality Customer of
Private Sector
Revenue Source Tariff
Collection
Risks
Service
Contract
Public Paid per unit of service Public or
Private
Mostly Public
Mgt. Contract Public Fixed fee + bonus +
salaries
Public or
Private
Mostly Public
Lease End-Users Revenue O&M lease
fee
Private Shared
BOT End-Users or
Public
Capital + Revenue +
O&M costs finance
costs license fee
Public Mostly
Private
Joint Venture End-Users or
Public
Share in revenues Jointly or
Private
Shared based
on equity
Concession End-Users or
Public
Revenue O&M costs
finance costs
concession fee
Private Mostly
Private
Divestment End-Users Revenue O&M costs
finance costs license
fee
Private Mostly
Private
PPPs, Alberto C. Agra 19
THANK YOU
PPPs, Alberto C. Agra 20
Build-Operate-Transfer
Single-Purpose
Project Company
Sponsors Lenders
Incorporate &
Contribute
Lends
Pays
Suppliers
Supplies Pays
Off-Taker
Users
Off-Take
Agreement
Govt
Guarantee?
Supplies
Pays
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Designs, Builds,
Finances, and
O&M
Concessions

Single-Purpose
Project Company
Government
Sponsors Lenders
Lends Pays
Incorporate
& Contribute
Users
Services
Pays
Concession
Agreement
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Joint Ventures
Joint Venture Company/ Agreement
Private
Sector
Public
Sector
Contributions
Equity
Functions
Dividends
Income
Risks
Governance
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Service Contract
Service 1 Service 2 Service 3
Service 1 Service 2
Service 3
LGU
LGU
Service Provider
Services
Fees
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Management Contract
Public Sector Management Contractor
Board
Management
Employees
Management
Fees
Management
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Lease and Affermage
Leased Corporation
Lease
Contractor
Asset Holding
Company
Users
Lease
Contract
Working Capital
Net Profits
Service
Tariff
Leased
Fee
Operators
Tariff
26
Divestment/ Disposition
Public Sector
Asset 1 Asset 2 Asset 3
Asset 3
Sells Pays
Private
Sector
27
Corporatization/ Ring-Fencing
Public Sector
Corporation
Subsidiary
Create
Assign Asset
Users
Services Rates
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