investphPPPs for Local Government Units

September 18, 2017 | 8:00 AM - 5:00 PMAuditoriums C and D, ADB Headquarters

Mandaluyong City, Philippines

PUBLIC-PRIVATEPARTNERSHIP CENTER

Ambisyon Natin 2040

AmBisyon Natin 2040 represents the collective long-term vision and aspirations of the Filipino people for themselves and for the country in the next 25 years. It describes the kind of life the Filipinos want to live, and how the country will be by 2040. As such, it is an anchor for development planning across at least four administrations.

By 2040, Filipinos will enjoy a strongly rooted, comfortable, and secure life.

Build Build Build

Infrastructure is among the top priorities of the government with public spending on infrastructure projects targeted to reach 8-9 trillion pesos from 2017-2022.

On April 19, 2017, the government launched the Build Build Build Portal (www.build.gov.ph), which lists down high impact projects, including PPPs, that are envisioned to increase the productive capacity of the economy, create jobs, increase incomes, and strengthen the investment climate leading to sustained inclusive growth.

In 2040, we will all enjoy a stable and comfortable lifestyle, secure in the knowledge that we have enough for our daily needs and unexpected expenses, and that we can plan and prepare for our own and our children’s future. Our family lives together in a place of our own, and we have the freedomtogowherewedesire,protectedandenabledbyaclean,efficient, and fair government.

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In line with the priorities of the Duterte Administration, the PPP Center is strengthening its support to LGUs in the development and implementation of projects under the Build-Operate-Transfer Law and Joint Ventures.

This activity aims to: (1) increase awareness on the services offered by the PPP Center at the local government level; (2) provide an avenue for development partners to share potential funding options for project preparation; and (3) link LGUs with potential PPP projects to development partners and partner agencies which can support project development and implementation.

investphPPPs for Local Government Units

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PUBLIC-PRIVATEPARTNERSHIP CENTER

8:00 – 9:00 REGISTRATION

9:00 – 9:10 Welcome Remarks Ferdinand A. Pecson, Executive Director and Undersecretary Public-Private Partnership Center of the Philippines

9:10 – 9:20 Special Message Ernesto M. Pernia, Socioeconomic Planning Secretary National Economic and Development Authority

9:20 – 9:30 Special Message Atty. Paola Sherina A. Alvarez, Assistant Secretary and Spokesperson Department of Finance

9:30 – 9:40 Special Message Richard S. Bolt, Director Asian Development Bank, Philippines Country Office

9:40– 9:55 PPP Center: Investing in the Accelerated Infrastructure Development for PH LGUs Mia Mary G. Sebastian, Deputy Executive Director Public-Private Partnership Center of the Philippines

9:55 – 10:15 COFFEE BREAK

SESSION ONE: Undertaking PPPs in Common Replicable Sectors

10:15 – 10:30 Beyond One-Size-Fits-All: Lessons Learned from Eight Water Utility Public-Private Partnerships in the Philippines Vickram Cuttaree, Program Leader for Sustainable Development for Brunei, Malaysia, Thailand and the Philippines World Bank

10:30 – 10:45 Case Study: Baggao Water Supply Project Engr. Jenison C. Herrera, Municipal Engineer Municipality of Baggao

10:45 – 11:00 Integrated Economic Development for Regional Trade in General Santos City Engr. Riza Marie T. Paches, Acting Department Head General Santos City, City Economic Management and Cooperative Development Office

investphPPPs for Local Government Units September 18, 2017 | 8:00 AM - 5:00 PMAuditoriums C and D, ADB HeadquartersMandaluyong City, Philippines

PROGRAMME_______________________________________________________

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11:00 – 12:00 Panel Discussion and Open Forum with the Session One Presenters Topic: Lessons Learned by Financers and Implementers on LGU- PPPs Moderator: Eleazar E. Ricote, Deputy Executive Director Public-Private Partnership Center of the Philippines

SESSION TWO: Financing Options for Project Preparation for LGU PPPs

12:00 – 13:15 LUNCH

13:15 – 13:30 Cities Development Initiative for Asia (CDIA) Brian Capati, Municipal Engineer and Country Coordinator for Philippines, CDIA

13:30 – 13:45 Asia Pacific Project Preparation Facility (AP3F) Mr. Takeo Koike, Director Asian Development Bank, Office of Public-Private Partnership

13:45 – 14:00 Asia Infrastructure Center of Excellence (AICOE) Johan G. Martinez, Infrastructure Specialist Consultant, AICOE

14:00 – 14:15 COFFEE BREAK

SESSION THREE: Project Implementation Support

14:15 – 14:30 PPP Fund and Project Technical Assistance and Contingency Fund May Rose M. Faner, Policy Governing Board-Technical Review Committee Secretariat Department of Finance, Municipal Development Fund Office

14:30 – 14:45 LGU Guarantee Corporation Lydia N. Orial, PresidentandChiefExecutiveOfficer LGU Guarantee Corporation

14:45 – 15:00 Development Bank of the Philippines Jose Gabino L. Dimayuga, Senior Vice President Development Bank of the Philippines, Corporate Finance Group

15:00 – 16:00 Panel Discussion and Open Forum with the Session Two and Session Three Presenters Topic: Financing Options for LGUs Moderator: Ed Roche US Treasury, Office of Technical Assistance

16:00 – 16:15 Closing Remarks Eleazar E. Ricote, Deputy Executive Director Public-Private Partnership Center of the Philippines

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Dr. Ferdinand A. Pecson is the Executive Director of the Public-Private Partnership Center of the Philippines. Before joining the PPP Center, he worked at FLSmidth A/S as Performance Director and Executive team member leading the O&M business in Africa and Middle East. He also had worked at Holcim Philippines, Deere & Co., PricewaterhouseCoopers, Bacnotan Consolidated Industries, Solid Cement Corporation, PHINMA Inc. and the University of the Philippines.

Dr. Pecson has a PhD in Energy Engineering from the University of the Philippines under a joint program with the University of Wisconsin, an MBA from the Kellogg School of Management of Northwestern University and a Bachelor of Science in Mechanical Engineering from the University of the Philippines.

Keynote Speakers

invest phPPPs for Local Government Units

September 18, 2017 | 8:00 AM - 5:00 PMAuditoriums C and D, ADB HeadquartersMandaluyong City, Philippines

________________________________________________________Dr. Ernesto M. Pernia is the Secretary of Socioeconomic Planning, National Economic and Development Authority, Philippines. He is also Professor Emeritus of Economics, having served as Professor and Chairman, Department ofEconomics at the University of the Philippines.

Dr. Pernia was Lead Economist at the Asian Development Bank (ADB). His work experience covered investment climate and productivity, economic growth and povertyreduction, education and health, human resource development, and regional economic cooperation in Asia. He also served as Regional Adviser on population and employment policy for Asia and the Pacific with the International Labour Organization.

He obtained his PhD degree from the University of California Berkeley on a Ford Foundation scholarship and a Smithsonian Institution dissertation grant. He received the first award as Outstanding Young Scientist (economics and social sciences) from the National Academy of Science and Technology. He was chosen by the Philippine-American Academy of Science and Engineering for the 2015 Science Lectureship Award. He was a former President of the Philippine Economic Society and Co-Chair of the Federation of ASEAN Economic Associations (1988).

Dr. Pernia is the author of a number of books, articles in national and internationalprofessional journals, and chapters of books. He was an occasional contributor ofpublic-interest commentaries to the Philippine Daily Inquirer, Business World, andThe Philippine Star Science section.

September 18, 2017 | 8:00 AM - 5:00 PMAuditoriums C and D, ADB HeadquartersMandaluyong City, Philippines

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Richard S. Bolt is the Country Director of the Asian Development Bank’s (ADB) Philippines Country Office (PhCO). He assumed the position in March 2014. As head of PhCO, he oversees ADB’s operations in the Philippines including preparation of country strategy and programming, economic monitoring and reporting, portfolio management, and supporting loan processing and administration. His responsibilities include liaising closely with the full range of development partners, including the Government, civil society, private sector, and other funding agencies.

Mr. Bolt has more than 25 years of experience in development planning, management, and evaluation. He has worked throughout Southeast Asia, People’s Republic of China, the Pacific, and East and Southern Africa. He has a master’s degree in Tropical Agricultural Development from the University of Reading and a degree in Agricultural Economics from the Newcastle University. He has been with ADB for 16 years. Prior to his appointment, Mr. Bolt was Advisor for Knowledge and Results Management in the Southeast Asia Department, and coordinated the department’s disaster risk management support to the region.

Paola Sherina A. Alvarez currently works as the Assistant Secretary for the Department of Finance. She is the official spokesperson of Secretary Carlos G. Dominguez III who is in charge of the information and communication bureau of the Department of Finance. She is also the official Spokesperson of the PDP Laban.

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Mia Sebastian is the Deputy Executive Director of the Public-Private Partnership Center of the Philippines. She leads the development of PPP projects and management of a revolving fund for hiring of consultants. Prior to her current role, she worked in finance and law in London and Manila. She holds an MBA degree from London Business School and degrees in Law and Business Economics from the University of the Philippines.

Common development methodologies, framework and support needs create a compelling reason to identify a unified approach for developing LGU projects. The PPP Center intends to identify pilot PPP projects in LGUs in the sectors of water, solid waste management, vertical infrastructure, and septage treatment/disposal. Projects in these sectors are given priorities because they are common needs of the local constituents and at the same time can be easily replicated by other LGUs. In this session, the World Bank’s Water and Sanitation Program (WSP) will share the case study of eight water utility PPPs in the Philippines to provide an overview on the fundamental components in arranging water PPPs. The Municipality of Baggao and the City of General Santos will also share their current PPP projects, the issues they encountered and the lessons learned in developing their own PPPs.

Beyond One-Size-Fits-All: Lessons Learned from Eight Water Utility Public-Private Partnerships in the Philippines

Vickram Cuttaree has more than 20 years of professional experience in government, private sector and international organizations. He is a degree holder of Master in Engineering from the Ecole Nationale Superieure d’Arts et Metiers (France) and Masters in Business Administration (Economics and Finance) from Yale University (USA). He is currently the World Bank Program Leader for Sustainable Development for Brunei, Malaysia, Thailand and the Philippines, overseeing the following sectors: Agriculture, Energy & Extractive, Environmental and Natural Resources, Social/Urban/Rural & Resilience, Transport & ICT, Water, Climate Change, and Public-Private Partnership. He has also authored and co-authored several publications on topics related to sustainable development.

Case Study: Baggao Water Supply Project

Engr. Jenison Herrera graduated from St. Louis University with a Master’s Degree in Engineering. He has been the Municipal Engineer and Building Official of the Municipality of Baggao for the past 26 years. He administers, coordinates, and supervises engineering and public works projects of the municipality.

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Session 1: Undertaking PPPs in Common Replicable Sectors

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Integrated Economic Development for Regional Trade in General Santos City

Engr. Riza Marie Tan-Paches, EnP is the Acting Department Head/ Local Investment and Economic Promotion Office of General Santos City. A licensed Civil Engineer and Environmental Planner, Engr. Paches is a member of the General Santos City PPP Board. In 2017, she completed her Masters in Engineering Major in Civil Engineering from the Notre Dame of Dadiangas University.

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Panel ModeratorEleazar E. Ricote is the Deputy Executive Director of the Public-Private-Partnership Center of the Philippines. He is managing the Center’s various units tasked with PPP capacity building, policy formulation and evaluation, project review and evaluation, contract/project monitoring and management, knowledge and information systems management, and public communications.

He has more than 15 years of professional experience in BOTs and PPPs, and is a recognized PPP professional in the country and in the ASEAN region. He has represented the PPP Center in numerous national and international PPP conferences and workshops on infrastructure and PPP policies, institutions and programs, project opportunities, challenges, best practices and innovations.

The support of our multilateral development partners remain important as we renew our commitment to advance the development of LGU PPP programs and projects. CDIA, AP3F, and AICOE have existing facilities which may be tapped to provide support from project development to implementation of PPP projects. Their support for local PPPs gives us confidence that we are building a credible pipeline of local PPPs which provide reliable service and promote local indus-tries. Their involvement sends a positive signal to the market and we look forward to the active participation of private investors, lenders, contractors, and operators as we roll out LGU projects in different regions. This session intends to inform LGU participants about the types of assistance which they can expect from CDIA, AP3F, and AICOE.

Cities Development Initiative for Asia (CDIA)

Brian Capati has joined the Cities Development Initiative for Asia as a Municipal Infrastructure Engineer. Mr. Capati is a Civil Engineer with more than 12 years of experience in the construction, project management and urban development sector. He has worked throughout Asia in a wide variety of projects funded by ADB, KfW and the World Bank. His focus in CDIA is project development and preparation. Most recently, Mr. Capati worked with ADB and KfW on the Rapid Assessment of Solid Waste Management in Da Nang, Vietnam.

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Session 2: Financing Options for Project Preparation for LGU PPPs

Asia Pacific Project Preparation Facility (AP3F)

Takeo Koike is the Director of ADB’s Office of Public–Private Partnership. He has over 20 years of experience in private sector infrastructure finance and PPPs across Asia and the Pacific. He joined ADB in 2002 and currently manages ADB’s transaction advisory services for PPP projects as well as PPP coordination and operations functions including the operation of multi-donor Asia Pacific Project Preparation Facility. He spent more than 12 years in ADB’s Private Sector Operations Department where he covered private sector infrastructure finance operations in South Asia, Central Asia and South Caucasus. Prior to joining ADB, he worked for Japan Ministry of Finance, and the Export-Import Bank of Japan. Mr. Koike holds a Master’s degree in Business Administration from The Wharton School, University of Pennsylvania, USA; a Master’s degree in Economics from London School of Economics and Political Science, UK; and a Bachelor’s degree in Economics from the University of Tokyo, Japan.

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Asia Infrastructure Center of Excellence (AICOE)

Johan Martinez is a professional Civil Engineer and Transport Planner. Currently, he is engaged as an Infrastructure Specialist Consultant for the Asian Development Bank under AICOE. He is also currently assisting the Department of Transportation (DOTr) to undertake a comprehensive Metro Manila public transport evaluation study. Previously, Mr. Martinez held the position of Director III for Project Development Service (PDS) at the PPP Center of the Philippines. During his appointment at the PPP Center, he was actively involved in the development of PPP projects and tender of some of the recent PPP projects such as LRT1 Cavite Extension, AFCS (Beep Card), and Mactan Cebu International Airport. He was also involved in some of the capacity building activities provided by the PPP Center to various national government agencies and local government units in the Philippines.

Session 3: Project Implementation Support

In line with the development thrust of the current administration, the DOF-Municipal Development Fund Office (MDFO), LGU Guarantee Corporation (LGUGC), and Development Bank of the Philippines (DBP) have enhanced their services and products to better respond to the needs of LGUs in implementing PPP projects. Their assistance aims to facilitate collaboration between the private sector and local governments toward improved quality of public service and infrastructure. In this session, the partner government agencies of the PPP Center will share their assistance program for LGUs ranging from technical assistance, provision of capital for implementation, to third-party monitoring.

Development Bank of the Philippines (DBP)

Jose Gabino L. Dimayuga has over 29 years of experience in banking and finance. He currently leads the Corporate Finance Group of the DBP, a team composed of 12 individuals that offers clients a range of corporate financial services including fixed income arranging and underwriting, corporate and limited recourse project finance syndication, and financial and privatization advisory services. Prior to joining DBP, he headed the Corporate and Financial Institutions Lending unit of the Manila branch of Dutch banking giant ING Bank N.V. where he was responsible for overall structuring and implementation of lending transactions to corporates and financial institutions. Previous to that, he was a Director of Citicorp International Limited, based in Hong Kong, where he handled the overall origination, structuring and implementation of Export Credit Agency-supported and/or limited recourse project finance transactions for both the Philippines and Indonesia focusing on the power/utilities and telecommunications/media sectors. His current stint in DBP brings his career in full circle, as he started his career in the public sector. Before leaving the same in 1991, he held the rank of Assistant Secretary, and headed the International Finance Group of the Department of Finance.

LGU Guarantee Corporation (LGUGC)

Lydia N. Orial is currently the President and Chief Executive Officer of the LGUGC a position that she holds since 2007. Ms. Orial was part of the pioneer group and was primarily responsible for developing the company’s strategic plans, operating and non-operating guidelines, manuals, systems and procedures. Prior to her stint at the LGUGC she was the Managing Director/Assistant Treasurer of the Bankers Association of the Philippines from March 1999 to June 2004. Ms. Orial was part of the pioneer group that developed BCGC’s systems and procedures. She was the primary author of the BCGC internal Borrower Classification System, which is used to assess SME loan applicants on several risk factors.

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Panel Moderator

Ed Roche is part of the US Treasury’s Office of Technical Assistance (OTA), serving as a resident advisor on infrastructure finance and capital markets to the Philippines’ SEC and PPP Center. Ed has worked as a credit analyst and debt advisor in both private and public sectors for the past 20 years. He was a Vice President/Senior Credit Officer at Moody’s Investors in New York, where he assigned ratings to US public finance debt transactions, including large infrastructure projects. After nine years at Moody’s he entered the government, working at USAID where he structured and assessed the risk associated with partial credit guarantees extended by the US Treasury in support of commercial lending in developing countries. In 2009, Ed moved to Senegal to serve as Treasury’s OTA resident advisor to the Senegalese Trésor, and ultimately, the Guinean Debt Division. In both countries, he provided technical support to their Ministry of Finance’s newly created Debt Management Offices, focusing on domestic capital market development. Throughout his time with Moody’s he was also an adjunct lecturer at New York University’s Wagner School of Public Service, where he earned a Master’s degree in Public Administration

Cities Development Initiative for Asia (CDIA)

CDIA is an International Partnership Initiative, established in 2007 by the Asian Development Bank (ADB) and the Government of Germany, with additional core funding support from the governments of Austria, Sweden, Switzerland and the Shanghai Municipal Government. The Initiative provides assistance to medium-sized cities to bridge the gap between their development plans and the implementation of their infrastructure investments.

Asia Pacific Project Preparation Facility (AP3F)

The $73 million AP3F is a multi-donor trust fund aiming to increase the level of infrastructure development and enhance the quality of infrastructure in Asia and the Pacific. AP3F’s primary objective is to assist developing member country (DMC) governments and their public sector agencies prepare and structure infrastructure projects with private sector participation, including PPP modalities, and bring them to the global market. AP3F can also provide: capacity-related assistance, including for the reform and improvement of policy, legislative, regulatory and institutional practices in DMCs; and ongoing project performance assistance, including project monitoring and project restructuring.

Asia Infrastructure Center of Excellence (AICOE)

AICOE assists ASEAN countries in (i) building capacity to identify, screen and prioritize projects for private sector participation, and develop a pipeline of financeable PPP projects; and (ii) fund project structuring support to prepare PPP transactions for financing.

Development Partners for LGU Strategy

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Municipal Development Fund Office (MDFO)

On 29 March 1984, through Presidential Decree (PD) No. 1914, the Municipal Development Fund (MDF) was created, a special revolving fund for re-lending to Local Government Units (LGUs). It became an effective mechanism that enabled LGUs to avail of financial assistance from local and international sources for the implementation of various social and economic development projects. The MDF is administered by the Department of Finance (DOF) - Bureau of Local Government Finance (BLGF) and the Department of Public Works and Highways (DPWH) - Central Project Office (DPWH-CPO).

LGU Guarantee Corporation (LGUGC)

LGUGC is the first private corporation to go into the financial guarantee business in the Philippines. It is the recognized private sector link in PPPs for local development financing, and is in fact one of the most successful models of PPP in the country. Anchored on good governance values, LGUGC mobilizes the resources of private sector financial institutions toward funding local development projects.

Development Bank of the Philippines (DBP)

The DBP is the country’s most progressive development banking institution. Through the years, DBP has been a key player in nation-building by assisting critical industries and sectors, promoting entrepreneurship particularly in the countryside, helping build more productive communities, advancing environmental protection and contributing to the improvement of lives of Filipino across the nation. Presently, DBP has been designated as the infrastructure bank of the country to help spur the Build-Build-Build agenda of the national government.

Municipal DevelopmentFund Office

Public-Private Partnerships (PPPs) can be broadly defined as a contractual arrangement between the government and a private partner targeted towards financing, designing, constructing, operating and maintaining infrastructure facilities and services that were traditionally provided by the public sector. It embodies optimal risk allocation whereby risks are allocated to the party best able to manage them at the lowest cost, without compromising the realization of project development objectives.

Projects under the PPP scheme are implemented through the Build-Operate-Transfer (BOT) Law or Republic Act (RA) No. 6957, as amended by RA No. 7718.

WHAT IS PUBLIC-PRIVATE PARTNERSHIP?

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The 1987 Constitution explicitly acknowledges the critical role that the private sector plays in the development agenda of the country. The Duterte Administration aims to address the infrastructure requirements of the Philippines through accelerating the country’s annual infrastructure spending to account for 5% of the Gross Domestic Product (GDP), with Public-Private Partnerships (PPPs) playing a key role.

The government envisions the implementation of infrastructure projects to generate significant employment opportunities, boost economic activities and attain inclusive growth.

Guided by the principles of transparency, accountability, and good governance, the PPP Program engages the private sector as vital partners who can bankroll critical infrastructure projects that will deliver much needed services for its growing populace.

Under the hallmark of good governance, the Philippine government guarantees that the private sector will be able to do business in an environment that nurtures fair and transparent transactions. The Government ensures that the interests of both the private sector and its citizens are balanced, where policies and procedures are continually enhanced.

The robust pipeline of PPP projects is a product of the government’s continuing efforts to deliver viable and well-structured infrastructure projects that will attract investors to bring their business to the Philippines.

PUBLIC-PRIVATE PARTNERSHIPSIN THE PHILIPPINES

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PUBLIC-PRIVATE PARTNERSHIP CENTER OF THE PHILIPPINES

By virtue of Executive Order No. 8, series of 2010, as amended by Executive Order No. 136, series of 2013, the Public-Private Partnership (PPP) Center of the Philippines is mandated to facilitate the implementation of the country’s PPP Program and projects. The PPP Center serves as the central coordinating and monitoring agency for all PPP projects in the Philippines. Together with the various implementing agencies (IAs), the PPP Center champions the PPP Program. It provides technical advisory services to IAs in the entire life-cycle of critical PPP infrastructure and development projects - from development, approval and procurement to implementation and monitoring stages - ensuring that the projects are bankable, well-structured and highly beneficial to the public.

The PPP Center manages a funding mechanism known as the Project Development and Monitoring Facility (PDMF) that gives IAs access to a panel of consulting firms tasked to provide transaction advisory support and multi-disciplinary expertise required to successfully tender PPP projects. The PPP Center also advocates policy reforms to improve the legal and regulatory framework governing the PPP Program.

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WHO CAN PARTICIPATE IN THE PHILIPPINE PPP PROGRAM?

• Regardless of nationality, anyone is encouraged to invest and participate in the Philippine PPP Program.

• Project proponent can obtain financing from foreign and/or domestic sources and/or engage the services of a foreign and/or Filipino contractor.

• 100% foreign equity may be allowed in all areas of investment EXCEPT in case of infrastructure facility whose OPERATION requires public utility franchise. In such case, the facility operator must be Filipino or if a corporation, it must be duly registered with the Securities and Exchange Commission (SEC) and owned up to at least sixty percent (60%) by Filipinos.

DEVELOPMENT STAGE- Project preparation (feasibility study, and market sounding activity)- Finalization of project structure

APPROVAL STAGE- Project submission to relevant approving bodies- Project assessment and appraisal- Submission to relevant approving bodies

PROCUREMENT STAGE- Pre-qualification (advertisement of Invitation to Pre-qualify and Bid, pre-qualification conference and submission of pre-qualification documents)- Bid proper (pre-bid conference, bid submission, bid opening and evaluation)- Award and contract signing with the private sector partner

IMPLEMENTATION STAGE- Financial close- Implementation (preparation of Detailed Engineering Design, construction and commissioning)- Turnover of facility/infrastructure back to the government

HOW DOES THE PPP PROCESS WORK?

investphPPPs for Local Government Units