Delays hit 2011 PPP projects BIDDING FOR SEVERAL public-private partnership (PPP) projects on offer this year will be pushed back, officials yesterday told prospective investors, given unfinished studies and rules governing the Aquino administration’s centerpiece infrastructure program. Following the postponed privatization of three airports, two more projects -- the Ninoy Aquino International Airport (NAIA) expressway and the southward extension of the Light Rail Transit (LRT) Line 1 -- will be auctioned off at a later date, all due to slow work on feasibility studies. Foreign business groups and diplomats were also told that the framework to implement promised guarantees remained incomplete. "We have slipped a bit," Transportation Assistant Secretary George D. Esguerra said at a briefing for embassies and investors. This came as the International Finance Corp.’s (IFC) Manila representative, in another event, said project preparation was a major hurdle to the successful implementation of the PPP program. "The problem with PPP is the pipeline is not robust. Projects must be structured to be able to entice the private sector’s participation," IFC Resident Representative Jesse O. Ang told reporters on the sidelines of a sustainable energy funding forum. Asked if IFC, the private sector investment arm of the World Bank, would be providing financial assistance, Mr. Ang said "financing is never an issue, the preparation is. So rather than providing the financial assistance which can be provided by other multilateral companies like ADB (Asian Development Bank) and other local banks, we would rather provide transactional advisories," he said. Noting the country’s lack of infrastructure, Mr. Ang said: "Investments in infrastructure cover only 2.8% of the country’s GDP (gross domestic product), so a well-slated process for the transactions between investors and the government is important." The Aquino administration has made PPPs a priority program, noting the need to bridge the country’s infrastructure gaps amid a chronic lack in government revenues. The Transportation department’s Mr. Esguerra told BusinessWorld, "Most of the feasibility studies have been completed but we are doing the updates, the due diligence. We only have one team... and support from [consultants] came later than expected." The contract to extend and operate the LRT-1 towards Cavite, the Transportation department’s P70-billion "big-ticket project", will be offered in July instead of within the second quarter, he said. The P10.590-billion NAIA Expressway, which would have improved the Cavite economic zones’ access to the airport -- will likewise be auctioned off sometime between August and November instead of May, Public Works and Highways Assistant Secretary Maria Catalina E. Cabral said. These two projects, along with the privatization of airports in Bohol, Palawan and Albay, bring the tally of delayed projects to five out of the 10 that the government said would be sold in 2011. The other five projects where bidding schedules reportedly remain on track are the expansion of the LRT-2 and Metro Rail Transit-3 lines, the sale of an airport in Misamis Oriental, and the construction of the Cavite-Laguna Expressway and the North Luzon Expressway-South Luzon Expressway link. "The reason it is taking some time is we don’t want to make a false start again. These projects will become the precedent," Investor Relations Office Executive Director Claro P. Fernandez said. The issues of guarantees against risks posed by possible contract changes, and also resolving the dispute over the mothballed NAIA Terminal 3, were raised during the briefing for diplomats and foreign business chambers. Possible rules to guard against regulatory risks "are now subject to discussion at the National and Economic Development Authority’s infrastructure committee... and details will be provided in due time," PPP Center Executive Director Philamer C. Torio said. One route being explored to prevent arbitrary contract changes is to limit the involvement of local government units (LGUs), Board of Investments managing head Cristino L. Panlilio said. The state agency is looking at proposing amendments to the Local Government Code to "unravel the authority of LGUs which are subject to abuse", Mr. Panlilio said. It is also considering a scheme that will rank LGUs according to "how much they use discretionary authority in a business-friendly" way as a guide to investors, he added. The Joint Foreign Chambers, for its part, urged the government to stop accepting unsolicited proposals as these have reportedly resulted in ventures that "usually [have] not reached financial closure, construction and viable operation." "While the unsolicited route is allowed under the BOT (build-operate-transfer) Act, the solicited route is more transparent and more competitive," the chambers said in a statement released yesterday. Mr. Esguerra affirmed this, saying: "The government will concentrate on the solicited approach. It provides for more transparency and accountability." |
U.S. Stocks Gain as McDonald’s Leads Rally in Consumer Shares U.S. stocks rose, giving the Dow Jones Industrial Average the longest winning streak since July, as retail sales rebounded and asMcDonald’s Corp. rallied after reporting higher-than-estimated monthly results. McDonald’s jumped 2.6 percent. J.C. Penney Co. and Macy’s Inc. gained at least 3.2 percent as the International Council of Shopping Centers said weekly retail sales snapped four straight declines. Banks had the biggest gain in the Standard & Poor’s 500 Index within 24 groups, rallying 1.7 percent as RBC Capital Markets said regulators may soon enable higher dividends. A gauge of homebuilders in S&P indexes gained 2.7 percent as executives and economists predicted a bounce in demand. The Dow climbed 71.52 points, or 0.6 percent, to 12,233.15 at 4 p.m. in New York, rising for a seventh day and jumping to the highest level since June 16, 2008. The S&P 500 added 0.4 percent to 1,324.57, also the highest since June 2008. The gauge needs to rise 2.2 percent to 1,353.06 in order to complete a 100 percent rally from its March 2009 low. Around 7 billion shares traded in the U.S., the lowest total of the year, according to data compiled by Bloomberg.
Ten-year note yields rose to the most since April before Treasury sells $24 billion in 10-year notes tomorrow and $16 billion in 30-year bonds the following day. An unexpected drop in U.S. unemployment Feb. 4 and measure of small business confidence rose, adding to evidence the economy is accelerating. Federal Reserve Chairman Ben S. Bernanke testifies tomorrow before the House Budget Committee amid speculation about how the central bank will pull back from its debt-buying to bolster the U.S. economy. “The assumption is if the three-year can’t go well, then people are readjusting their positions and their outlook for the Fed,” said Michael Franzese, managing director and head of Treasury trading at Wunderlich Securities Inc. in New York. “The Fed may be more aggressive in tightening.” The yield on the existing three-year note rose 12 basis points, or 0.12 percentage point, to 1.36 percent at 5:01 p.m. in New York, according to BGCantor Market Data. The yield has risen for a seven straight days, the longest streak since December 2009. The price of the 1 percent security maturing in January 2014 fell 10/32, or $3.13 per $1,000 of face value, to 98 31/32. Two-year notes rose nine basis points to 0.85 percent, the highest since June 3. |
Gold Futures Rise as Inflation Concerns Mount; Silver Tops $30 Gold futures climbed to a two-week high on demand for a hedge against rising consumer prices, after China increased borrowing costs to slow inflation. Silver advanced to a one-month high, topping $30 an ounce. China joined India, Indonesia, Thailand and South Korea in boosting interest rates this year as Asian policy makers seek to cool the economies leading a global rebound. A report in China is forecast to show inflation in the country expanded at the fastest pace in 30 months. World food prices rose to a record in January and probably will remain elevated, the United Nations said last week. “People are buying gold as an inflation hedge,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “A more hawkish tone on the part of central banks is going to have people concerned about inflation.” Gold futures for April delivery rose $15.90, or 1.2 percent, to settle at $1,364.10 an ounce at 1:15 p.m. on the Comex in New York. Earlier, the price reached $1,368.70, the highest since Jan. 20. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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