Davao City Council okays local PPP ordinance

Aug. 25, 2012

Sheena Duazo of Bagong Alyansang Makababayan points out that once the government enters into a commercial relationship with a private entity, there will be no guarantee for transparency and accountability

Davao Today

DAVAO CITY, Philippines — The Davao City Council approved on Wednesday the controversial Public-Private Partnership (PPP) ordinance, to the dismay of progressive groups who earlier called for a prior public consultation and debate on the issue.

Sheena Duazo of Bagong Alyansang Makababayan-Southern Mindanao Region (Bayan-SMR) regrets the passage of the ordinance which, she said, most Davaoeños are still unaware of.

Councilor Jimmy Dureza, proponent of ordinance, has said that they have posted notices on bulletin boards at the city council building to ensure the public is informed.

But Duazo said this was not enough.  A wider public scrutiny, she pointed out, was supposed to be undertaken since her group finds that many of the PPP law’s provisions are disadvantageous to the public.

Davao’s PPP ordinance is an adoption of the present administration’s centerpiece program intended to allow more private businesses to cash in on government’s undertakings as mutual partners.

The said PPP projects, as provided in the recently passed Davao ordinance, “include but may not be limited to the following: power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and railways, transport systems, land  reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses, bulk grains handling facility or logistic support system, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, dredging, among others.”

This, for one, Duazo said, poses great risks.  Once the government enters into a commercial relationship with a private entity, there will be no guarantee for transparency and accountability.

This, she pointed out, is proven in the previous PPP projects where the government ended up with more public debts.

An example of this, she cited, is what happened to the country’s power sector where the state-run National Power Corporation incurred ballooning debts after partnering with private power companies under the Build-Operate-Transfer scheme.

The government she said incurred debts for the losses in the implementation of the project with its private partners, and ended up paying for the debts which are in turn, being passed on to consumers via power rate hikes.

Questions raised on the floor

Questions were also raised by some legislators on some of the local PPP ordinance’s provisions.

Presiding Office Councilor Melchor Quitain himself questioned provisions on the ordinance that are vague in defining the conditionality and accountability of the local government and private sector in entering projects.

“It (the provisions) can mean that if the city government is at fault, no need for notice to be given in order to terminate the contract, if the private sector is at fault, notice is to be given, before termination can be made,” he said at the floor deliberation.

He asked further on who will own a facility if a contract is terminated.

“In such an event, the city government may take-over the facility?  Does it also mean that the government becomes the owner of the facility? Are we to understand that there is no need to reimburse the Project Proponent the cost or value or the improvements or

Patrick Rosales, appearing as resource person for the Davao City Chamber of Commerce explained that “those particular conditionalities can be stated in the contract.”

Rosales said that in several projects, “if the private sector did incur losses or will incur losses by reason of the termination of the contract, wouldn’t it only be fair to them to be given just compensation?”

Quitain, however, argued that if the contract is terminated based on the private sector’s failure to perform its task, “Is it not only reasonable that the facility should be taken over the city without reimbursing the private sector and that should be made part of the ordinance?”

Quitain also asked, “Why do we have to wait for the contract to put it there?  Why do we not put it in the ordinance itself, already?”

The council also debated on the formation of Pre-qualification, Bids and Awards Committee (PBAC), to which the council asked lawyer Jessie Marvin Melodias, the head of the city General Services Office, who said that the ordinance lacks a provision wherein a technical working group of the PBAC must be created.

“By experience, the PBAC might be burdened by the complexity and number of projects,” Melodias said.

How they voted

Nine councilors approved the ordinance to allow private companies to finance and support local government projects.  Two councilors, Leah Librado-Yap and Bernie Mambuo, rejected the ordinance; while six abstained.

Voting yes to the ordinance were councilors Marissa Salvador-Abella, Louie Bonguyan, Pilar Braga, Arnulfo Cabling, Myrna Dalodo-Ortiz, Jimmy Dureza, Rene Elias Lopez, Tomas Monteverde III, and Rachel Zozobrado.  Those who abstained were councilors Dante Apostol, Louie John Bonguyan, Edgar Ibuyan, Jackson Reyes, and Jose Louie Villafuerte.

Eight councilors were absent from the floor when voting began, prompting an irate Councilor Quitain for a roll call.

“Why are they afraid to vote on this very important proposed ordinance?” Quitain said.

PPP prelude to privatization

Bayan Muna Davao Vice-Chairperson Ariel Casilao who was also invited to the deliberations said they are opposing the PPP ordinance as it will “pave the way to privatization of services” that government is supposed to provide.

He said private companies aim for profit more than services.  Having the private sector handle public services and utilities may lead to steep prices that the public cannot afford.

Bayan Muna pointed out that the city’s water utility and Davao Region’s Southern Philippine Medical Center are now up for privatization.

“We are dismayed that the yes votes won.  But, we appreciate and commend the councilors who voted no for the approval of the ordinance: Councilor Librado-Yap and Counclor Mambuo and the councilors who decided to abstain,” Casilao said.

Casilao said the option for the public is to be vigilant especially on contracts under the PPP scheme.  He also said more public actions and forums will be made in “streets, schools and communities” to oppose the scheme.  (John Rizle L. Saligumba/davaotoday.com)

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