Megawide pullout not excuse to push PPP Act–IBON

December 9, 2015

by superadmin

The group reiterated its concern over an existing policy that favors investor rights over public interest

Government should not invoke the pending pullout of a huge company from a public-private partnership (PPP) project to push the PPP Act, research group IBON said. The group also reiterated its concern over an existing policy that favors investor rights over public interest.

Infrastructure giant Megawide Construction Corporation recently sought to end the PPP deal to modernize the Philippine Orthopedic Center (POC) citing government delay in preparing the project site. Referring to this,  PPP Center Executive Director Cosette Canilao underscored the need to pass the PPP Act. She said that the bill can help protect investors through the creation of a continent liability fund to finance the risks involved in any undertaking with government.

Under the bill, courts will be prohibited from negating PPP-related acts. The bill also guarantees the availability of public funds whether through foreign debt or local resources to finance government obligations arising from PPP contracts.

IBON criticizes the proposed amendment. These add another layer of protection to private investors’ profit-making. This, to the point of disempowering the legal system which should be defending the public, for instance from onerous rates and lopsided business deals. It also consolidates and expands Aquino’s overly investor-biased reforms.

The group said that PPPs already undermine public interest by transforming people’s money into private profits. For instance, the ‘regulatory risk guarantee’ ensures government funds to cover the gap between contractually agreed fees and user fees.

This is true in the case of the Deficit Payment scheme in the Concession Agreement (CA) between the Aquino government and the Ayala-Pangilinan consortium for the Light Rail Transit (LRT) 1 project. PPPs also mandate the Alternative Dispute Resolution between government and private companies where investors, not the public, have a say in the final decision, as in the case of water services in Metro Manila (also involving Ayala and Pangilinan) and again, the LRT1 project.

According to IBON, government should make the Megawide pullout an opportunity to stop commercializing the health system. The commercialization of the POC was bound to lead to increased rates and deprive its up to 80% indigent patients of health services. Treatment and confinement in private health facilities have been found to be at least four times and thrice, respectively, as expensive than that in public health facilities.

The health system should instead be controlled by government to uphold the people’s right to health, said the group.