PPP Flashcards
8 financing options for the government
- Commercial loans
- Foreign investment
- Investment bank
- Bonds and stocks may be floated by the LGU
- Mutual funds
- Interpersonal loans
- Supporting resources
- Official Development Assistance
(C FIB MISO)
3 basic modalities of PPPs
- Build-Operate-Transfer and variants
- Joint Ventures
- Concession Agreement
3 kinds of BOTs
a. Transfer immediately
- BT and BTO
b. Transfer after cooperation period
- BLT, BOT, CAO, DOT, ROT
c. No transfer
- BOO, ROO
The financing and construction of an infrastructure or development facility; facility is turned over to the government after completion
Build-and-Transfer
The construction, including financing, of an infrastructure facility, and its operation and maintenance; once the facility is commissioned satisfactorily, the title is transferred to the government. However, the private entity operates the facility on behalf of the government
Build-Transfer-and-Operate
The financing and construction of an infrastructure or development facility; the government leases from the private sector. The ownership is transferred to the government after the lease period.
Build-Lease-and-Transfer
The financing and construction of an infrastructure facility, and its operation and maintenance. During the operation period, the facility belong to the project proponent, who transfers the facility to the government at the end of the fixed term
Build-Operate-and-Transfer
An addition to an existing infrastructure facility which it is renting from the government. There may or may not be a transfer arrangement in regard to the facility, but the project proponent operates the expanded project over an agreed franchise period
Contract-Add-and-Operate
The development of adjoining property is integrated into the agreement for new infrastructure project which is to be built by a private proponent
Develop-Operate-and-Transfer
The refurbishing, operation, and maintenance of an existing facility, or the purchase of an existing facility from abroad, importing, refurbishing, erecting, and consuming it within the host country. No time limitation imposed on ownership
Rehabilitate-Operate-and-Transfer
The financing, construction, ownership, operation, and maintenance of an infrastructure or development facility. Ownership is retained by the project proponent
Build-Own-and-Operate
The refurbishing, operation, and maintenance of an existing facility; private proponent will own the facility. No time limitation imposed on ownership
Rehabilitate-Own-and-Operate
An arrangement whereby a private sector entity on one hand, and a government entity on the other hand, contribute money, services, assets, or a combination of any or all of the foregoing to undertake an investment activity.
Joint Venture
2 kinds of joint ventures
Contractual JV and corporate JV
Included in the coverage of JV (5)
- Government-Owned and Controlled Corporations (GOCCs)
- Government Instrumentalities with Corporate Powers (GICPs)
- Government Corporate Entities (GCEs)
- Government Financial Institutions (GFIs)
- State Universities and Colleges (SUCs)
Excluded in the coverage of JV (3)
- Government Financial Institutions involved in banking, financial, or portfolio management operations
- Government Corporate Entities with the mandate to dispose government assets or properties
- LGUs
GOCC
Government-Owned and Controlled Corporations
GICP
Government Instrumentalities with Corporate Powers
GCE
Government Corporate Entities
GFI
Government Financial Institutions
Mode of BOT: agency/LGU prepares the project and contract since project is in the list of priority projects of the government
Solicited Mode
Mode of BOT: private sector prepares the project and contract, which must have new concept/technology, and must not be in the list of priority projects
Unsolicited Mode
In charge of approval of JV agreements, and given amount
Head of agency/GOCC, regardless of amount
DOF/DBM clearances are required for the following (3)
- National Government undertakings
- National Government subsidies
- National Government guarantees
JV mode of selection of private sector partners (2)
- Open competitive bidding
2. Negotiated proposal
2 situations wherein there would be negotiated procurement
- Unsolicited proposal
2. Failure of bidding
Official Development Assistance: approving authority if total project cost is less than 1 billion
Head of agency and governing boards of GOCCs
Official Development Assistance: approving authority if total project cost is equal to or more than 1 billion
NEDA board thru Investment Coordination Committee
Public-Private Partnership: national projects, approving authority if total project cost is less than or equal to 300 million
Investment Coordination Committee
Public-Private Partnership: national projects, approving authority if total project cost is more than 300 million
NEDA Board thru Investment Coordination Committee
Public-Private Partnership: national projects, approving authority for negotiated projects, regardless of amount
NEDA Board thru Investment Coordination Committee
Public-Private Partnership: approving authority if total project cost is less than 20 million
Municipal Development Council
Public-Private Partnership: approving authority if total project cost is equal or more than 20 million or less than 50 million
Provincial Development Council and Local Sanggunian
Public-Private Partnership: approving authority if total project cost is equal or more than 50 million
City Development Council
Public-Private Partnership: approving authority if total project cost is equal to or more than 50 million to 200 million
Regional Development Council
Public-Private Partnership: approving authority if total project cost is more than 200 million
Investment Coordination Committee
Public-Private Partnership: Thru BOO or thru Contractual Arrangements
Presidential approval
Capital Projects: total project cost is less than 1 billion
Heads of Implementing Agencies or governing boards if GOCCs
The country’s economic and planning agency
National Economic and Development Authority
The governing body that sets major development policy directions for the Philippines
NEDA Board
The NEDA Board’s research and technical support arm
NEDA Secretariat
How many government agencies are attached to NEDA for the purposes of supervision
7 agencies
Chairman of the NEDA Board
President of the Philippines
Vice chair of the NEDA Board
Socio-economic palanning secretary
DBCC
Development Budget Coordination
SDC
Social Development
CTRM
Tariff and Related Matters
RDCOM
Regional Development Committee
NLUC
National Land Use
7 stages of the NEDA Project Development Cycle
- Identification
- Pre-feasibility
- Feasibility
- Design and Engineering
- Implementation
- Operation
- Ex-Post Evaluation
A methodological framework designed to assist the government in deciding whether or not a project is in the country’s best interest
Project Evaluation
Duration of the Investment Coordination Committee Approval Process, if the requisite documents are complete
6 weeks
PER
Project Evaluation Report
Objective is to analyze the demand for the project’s output where the current prices and benefits are established, past prices and trends are determined, and future demand and prices are estimated
Demand-and-Supply or Market Study
Objective is to determine if the program/project is technically feasible, workable, and that its operations and maintenance can be locally sustained
Technical Evaluation
Objective is to assess the financial viability of a project and its ability to meet its debt-service obligations
Financial Evaluation
Choice of discount rate: is generally used since most public sector projects have multiple sources of financing
Weighted Average Cost of Capital (WACC)
Choice of discount rate: average lending rate, average deposit rate, average rate of return on money market instruments, and treasury bill rate
Market Interest Rate
Choice of discount rate: can vary from one owner to another depending on nature of risk, with the rate of return to be paid to company’s shareholders
Opportunity Cost of Equity
Choice of discount rate: return to capital being earned in its alternative use
Opportunity Cost of Funds
Choice of discount rate: sources of funds are postponed/displaced investments, reduced private consumption by individual savers, and foreign capital inflows
Economic Opportunity Cost of Capital
Compares cost and benefit streams discounted to the present year
Net Present Value (NPV)
Discount rate at which the present value of benefits equals the present value of costs
Internal Rate of Return (IRR)
Ratio of the present value of benefits to the present value of the costs
Benefit-Cost Ratio (BCR)
The number of years before the discounted cumulative benefits are sufficient to repay the discounted cumulative costs
Payback Period
Alters the amount and timing of the financial gains and losses of various parties involved in a project
Inflation
The value of the inputs and outputs including the effect of general inflation
Nominal price or current price
The value of the inputs and outputs without the effect of general inflation
Real price/constant price
Objective is to ascertain the program/project’s desirability in terms of its net contribution to the economic and social welfare of the country as a whole
Economic Evaluation
Costs: Land, detailed engineering and design, preparatory installation work, cost of equipment and raw materials, cost of buildings, engineering and administrative cost during construction, and organization cost
Capital costs
Costs: raw materials and other supplies, energy and fuel, labor, rent and insurance
Operating and maintenance costs
Costs: defined as all those costs incurred on the project prior to the preparation of the feasibility study; not included in the analysis
Sunk costs
A benefit constitutes an increase in output or savings in resource use
Benefits
Applied to correct the distortion in the prevailing exchange rate due to balance of payments disequilibrium and the projection structure
Shadow Exchange Rate (SER)
Used to reflect the true economic value of labor employed in a program/project
Shadow Wage Rate (SWR)
Used to discount the stream of economic costs and benefits to their present values
Social Discount Rate (SDR)
Objective is to determine if the proposed program/project is responsive to national objectives of poverty alleviation, employment generation, and income redistribution
Social Impact Analysis (SIA)
A probability or threat of a liability, loss, or other negative occurrences caused by external or internal vulnerabilities, or the possibility of deviation in the actual project outcome
Risk
An evaluation or analysis of the potential impact of a proposed program/project with a view of deciding whether or not to proceed with the program/project implementation
Feasibility study
For a project passed thru NEDA Investment Coordination Committee, the project proponent has to submit a ___ from the start of the implementation up to the time it is completed
Quarterly report
Within ___ after the completion of the project, a Project Completion Report has to be submitted by the proponent to the NEDA Investment Coordination Committee
6 months