AFTER President Aquino took his Oath of Office on June 30, 2010, a new buzzword quickly found its way to popular consciousness: Private-Public Partnership or PPP.
Used extensively in Australia and Canada, the PPP mode of delivering government services to the public was something Stradcom President Cezar Quiambao felt familiar with. Stradcom was one of the earliest proponents of PPP when the company entered into a Build-Own-Operate (BOO) agreement with the Land Transportation Office (LTO) for the delivery of IT-enabled licensing- and vehicle registration-related services in 2003.
The philosophy behind the agreement, carved out of the framework of the build-operate-transfer law, was the same with that of PPP: the private sector and government need to partner for the benefit of the people.
Almost 10 years into the partnership with the government, Quiambao said that there are potential pitfalls to the PPP as well as ways that these may be avoided.
Stradcom’s contract with the LTO is now on its fourth administration (Stradcom started negotiations under then-President Fidel Ramos) and 10th LTO head. Quiambao can only shake his head at how difficult each transition has been. Of course, the most difficult challenge for the IT company remains the refusal of the LTO to pay for the services the company has already rendered, despite orders from the Department of Transportation and Communications to do so. In an interview, Quiambao said we cannot expect private sector companies to even consider PPP investments if they know that the rules tend to change, whenever new government leaders are introduced. Long-term investments, such as those required by PPPs, necessitate a high level of predictability. Investors can calculate market risks, not political ones, Quiambao said. Both parties to a PPP must realize that their joint projects impact public interest, he said.
Quiambao said it is now apparent that comprehensive, over-reaching Implementing Rules and Regulations (IRR) must be established to govern every step of the PPP process. The BOT law must be fully and clearly understood by its implementing agencies.
“PPPs allow the equitable distribution of economic development. Government resources can be used for the less developed regions of the country, while, PPP’s can be applied over feasible areas through the ‘users pay’ concept, Quiambao said.
Without clear-cut IRRs and penalties for breaking them, Quiambao is afraid that “the noble PPP concept may just be used to skirt the procurement laws of our government – a case of doing the right thing for the wrong reason. Or just as bad perhaps, the executive and judiciary will not see eye to eye on contracts, resulting in PPP agreements being undone by the courts - a scenario, which is just as disadvantageous to private sector investors, as those illustrated in Pitfall 1.
