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Foot dragging and PPP delays

August 06, 2015News

With the “anointment” of Interior Secretary Mar Roxas as the Liberal Party standard bearer, everyone including businessmen will be carefully watching the political landscape, as stocks and share prices are sensitive to political developments or changes.

It helps, however, that international credit ratings agency Standard & Poor’s has previously maintained its “stable” rating for the country, saying that not even the weakened approval ratings of President Aquino will affect the outlook for the Philippines in the next couple of years.

As he promised, Vice President Jejomar Binay delivered his “True State of the Nation Address” that, like President Aquino’s final SONA, drew mixed reactions. Some businessmen credit PNoy for the unprecedented economic growth and the positive image the Philippines has been getting from the international community. However, many also agree with VP Binay, saying a lot more needs to be done to eradicate poverty and sustain growth momentum.

One area business leaders say showed a glaring gap between potential and actual performance was in the public-private partnership program and other big-ticket infra projects that have been delayed for one reason or another. Business leaders like John Forbes of the American Chamber of Commerce and European Chamber of Commerce vice president Henry Schumacher said they would have wanted the President to talk more on future challenges the country will face, citing recommendations submitted by the Joint Foreign Chambers and the Philippine Business Groups to accelerate infrastructure projects and ensure massive job generation.

Aside from right-of-way issues, administrative and operational snags, including delays in the issuance of necessary permits, have hampered the rollout of these big-ticket PPP projects – among them toll ways, the Skyway 3, as well as the SLEX-NLEX connector road project being pushed by the Metro Pacific Investments Corp.

Observers have described what’s happening as a “cha-cha” because it’s been forward-backward going nowhere with the concerned government agencies taking years to decide on a Swiss challenge (after toying with the idea of a joint venture with the Philippine National Construction Corp.).

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And then there’s the power situation, with former Budget Secretary Ben Diokno saying the Philippines is now among the worst in the major economic indexes of the World Economic Forum, citing very low foreign direct investments (the lowest of the Asean-5 economies), poor public infrastructure and poor quality of electricity supply.

Yet in the President’s SONA, he talked about the administration’s successful sitio electrification program and even showed a video of a farmer from Bauko, Mountain province who said their lives have changed because they now have access to electricity – in contrast to what’s happening in Mindanao with an estimated 800,000 households now reeling from rotating brownouts due to insufficient power supply.

Although a lot of positive developments are in the horizon with several power plants expected to become operational by 2016, the power interruptions will have a very negative impact on many businesses which, in turn, will affect the economic situation of the people. What makes it worse is the onset of El Niño with the rains falling in the wrong places in Mindanao.

According to the National Grid Corp. of the Philippines, Mindanao continues to suffer from a considerable deficiency in power – ironic since there are some sources of additional power that, for some reason, government has not been utilizing. For instance, the interruptible load program launched in Zamboanga City.

The program – similar to the one planned last summer in Luzon and Metro Manila – aims to lessen demand during peak hours by having large consumers such as factories, malls, hotels, and other establishments utilize their generator sets instead of accessing power from the local distribution utility, thus allowing the rest of the consumers to enjoy uninterrupted access to power during these hours.

But more than a month after the program’s launch, the local power distributor – the Zamboanga City Electrical Cooperative, Inc. (Zamcelco) reported the ILP has failed to make an impact on the city’s power situation. News reports quoted Zamcelco as saying only five commercial/industrial establishments have joined the program and Zamboanga City continues to suffer from brownouts lasting up to nine hours.

Another case involves the Southern Philippines Power Corp. (SPPC) that entered into an 18-year agreement to supply power to the National Power Corp. (NPC)/Power Sector Assets and Liabilities Management Corp. (PSALM), which in turn would dispatch the output to power distributors in Mindanao. From what we know, the terms of the contract say SPPC would supply 50 megawatts to NPC/PSALM with a provision to supply an additional 10 percent or five megawatts as standby power – which is why the company also provided for an extra engine with a 5-MW capacity.

Considering the present power crisis in Mindanao, one would have thought the NPC/PSALM would utilize the extra power but for some reason these government agencies have been “reluctant” to utilize the additional 5-MW which is sorely needed by the long-suffering residents.

The contract with SPPC is about to end in 2016, but not surprisingly, there’s been foot dragging on the part of the government – the same affliction that has resulted in the delays on the rollout of the President’s much-vaunted PPP projects. Meantime, it’s the people who continue to suffer.

‘Mar will win without Grace’

Liberal Party insiders told Spy Bits the sentiment among party leaders is that Mar Roxas is “sure to win” in the May 2016 elections – which explains the festive atmosphere during the “pre-victory” celebration (seen in the PhilStar’s Wednesday headline photo). Some politicians, however, have dismissed the show of force as an early display of “arrogance of power.”

The insider said they are confident the presidency is now “in the bag” with PNoy’s anointment of Mar, and that regardless of whether Grace Poe will agree to become Mar’s running mate or not, the “anointed one” will still win “even without Grace.” 

Source: The Philippine Star