By ARNOLD PADILLA
MANILA — In his first State of the Nation Address (SONA), President Benigno Aquino III used the various cases of misuse of public funds by the Arroyo administration as a pretext to promote the so-called Public-Private Partnerships or PPPs. According to Aquino, PPPs will address the lack of resources due to a depleted government budget for the country’s many needs.
(Read the full text of Aquino’s SONA here)
Incidentally, PPPs were among the legacies of the first Aquino administration. It was during the term of Noynoy’s mother, the late President Cory Aquino, that the first PPPs in the power generation sector were implemented. In 1987, she issued Executive Order (EO) No. 215 that allowed private corporations to construct and operate electric generating plants. (Read here) Cory’s privatization formed part of a wide-ranging package of structural reforms pushed by the International Monetary Fund (IMF) and the World Bank to supposedly address the country’s fiscal crisis in the late 1980s.
Meanwhile, together with transnational corporations (TNCs) and other foreign firms, the country’s richest families who are also perceived supporters of Aquino like the Lopezes, Ayalas, Cojuangcos and Pangilinans among others have been aggressively investing in PPP projects including in energy, water, toll roads and other vital infrastructures.
‘Progressive and Creative’
Aquino said in his speech that he remains upbeat despite a budget of just 6.5 percent of the total with still six months remaining as private investors have expressed renewed interest and confidence in the Philippines. In fact, according to Aquino, one investor is proposing to construct an expressway connecting Manila and Cagayan Valley at no cost to the government.
Another investor is proposing to lease the lands occupied by the Philippine Navy headquarters along Roxas Boulevard and its Naval Station in Fort Bonifacio, disclosed Aquino. The unnamed investor will foot the bill of the Navy’s transfer to Camp Aguinaldo, immediately pay US$100 million, and share a portion of profits from businesses it will establish on the leased lands.
“Sa madali pong sabi”, said the President proudly, “makukuha natin ang kailangan natin, hindi tayo gagastos, kikita pa tayo”. Aquino identified the most pressing needs of the country as education, infrastructure and health, as well as the needs of police and military personnel. He described PPPs as a progressive and creative way to raise funds and address the country’s age-old problems.
Aquino’s PPPs, however, are neither progressive nor creative and as pointed out, simply a continuation of the neoliberal policy pushed by the IMF-World Bank and implemented by Cory. PPPs are simply a mode of privatization implemented through the build-operate-and-transfer (BOT) and other similar arrangements between the government and big private corporations. (For a full list of completed, operational, and awarded PPP/BOT projects in the Philippines, click here) (The World Bank continues to promote PPPs in infrastructure development through capacity building and technical assistance. Read here)
EO No. 215 was expanded and reinforced by Republic Act (RA) 6957 which introduced BOT and build-and-transfer (BT) schemes in the country. This law, passed in 1990, authorized the financing, construction, operation, and maintenance of infrastructure projects by the private sector. (Read here)
Like her son, Cory used the grim fiscal situation left behind by the Marcos dictatorship to justify her privatization/BOT program that was later expanded (in 1993) by the Ramos administration through RA 7718. (Read here) This legislation introduced other BOT schemes such as build-own-and-operate (BOO), build-lease-and-transfer (BLT), build-transfer-and-operate (BTO), contract-add-and operate (CAO), rehabilitate-operate-and-transfer (ROT) and rehabilitate-own-and-operate (ROO).
These schemes allowed the biggest foreign and local corporations to invest in infrastructure development and operate or own strategic facilities that are “normally financed and operated by the public sector”. These facilities include power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and railways, transport systems, land reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, markets, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, dredging and other infrastructure and development projects.
Among the notable examples of and biggest PPP projects in the Philippines are the privatization of the National Power Corp. (Napocor) and the Metropolitan Waterworks and Sewerage System (MWSS).
It is actually ironic that while championing the PPP, Aquino cited the P200-billion debt of Napocor from 2001 to 2004 as among the examples of wasteful and flawed programs of the Arroyo administration. Aquino claimed in his SONA speech that the state power firm’s debt ballooned because it was forced to sell cheap electricity at a loss presumably for electoral reasons. What Aquino did not mention was that Napocor’s financial bleeding was caused by PPP initiatives implemented by past administrations.