Diokno defends hybrid PPP with ultra-low borrowing rates
No one other than the government can borrow this cheap.
Budget and Management Secretary Benjamin Diokno argued that the hybrid public-private partnership (PPP) mode is the most cost-efficient way to go, even as he faced doubters of the plan during an investor roadshow in the United States.
Diokno proudly defended the planned mode for infrastructure rollout by citing time and cost.
“[The Build, Build, Build team] would like to argue [hybrid PPP] takes less months to mount and is less expensive than the traditional PPP,” Diokno said, saying that it would depart from the 29 months taken up by the old model which the private sector spent for projects.
Under the hybrid platform, the government plans and builds the infrastructure but leaves its operations to the winning private bidder.
“With hybrid PPP, the cost of financing is lower, say in the neighborhood of 2%, long term, say 30 to 40 years. Which private company can borrow under those terms?,” Diokno said.
Treasury bonds are indeed cheaper than syndicated loans from banks. Ka-ching!