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After listening, they nailed it!
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You can find horror stories almost everywhere. Not just developed countries. And successful ones too… as it’s not rocket science. ​ Before 2010, the Philippines’ PPP program was infamous for all the wrong reasons: legal uncertainty, endless bid delays, weak feasibility studies, and risk allocations that scared investors away faster than typhoons. ​ So they decided to stop, review, learn and repeat. They started to ask the market about what was wrong with the last projects. They noted. And decided to change. ​ The Mactan–Cebu International Airport (MCIA) project became the flagship test case. $700 million expansion and modernization of one of the country’s busiest airports. ​ What they did different this time: ​ 1. Genuine market sounding, not performative local and international operators, major banks and multilaterals, construction firms and equity investors. ​ Questions not made to please, but to get good information: What deal size feels bankable? What concession length makes sense? What level of government guarantee is needed? What are the showstoppers? ​ The answers shaped the structure that followed. ​ 2. “Smart” risk allocation ​ The government retained: Land ownership and expansion risk, Regulatory and tariff-setting authority, Force majeure exposure, ​ while transferring: Design–Build–Finance–Operate risk to the concessionaire, Revenue and O&M risk, Commercial performance. ​ They also provided clear non-compete clauses and dispute resolution frameworks. ​ So uncommon!!! ​ Result: bankable, understandable, and financiable. ​ 3. Transparent and credible process ​ They ran a single-stage, two-envelope process (technical + financial). All pre-qualified bidders were vetted on experience and financial strength. Bid opening was public and televised. No last-minute rule changes. No hidden criteria. ​ That level of transparency built enormous market confidence. ​ Just as I like it… Not 6 months of bid reviews where you put candles to saints to give you inspiration. ​ 4. Multilateral and institutional support ​ The Asian Development Bank (ADB) and IFC acted as transaction advisers that not only gave global credibility to the project documents, risk matrix, and model, but that they brought the experience they country did not have. ​ They helped the government speak the language of investors and investors noticed. ​ The Outcome The GMR–Megawide consortium (India–Philippines) won the bid. Their premium payment to the government blew past expectations, clear proof of investor confidence. Construction completed in 2018. The new terminal won international design awards and became one of Southeast Asia’s most efficient mid-size airports. Passenger satisfaction skyrocketed. The concession is profitable and stable. ​ As you can imagine, this was very difficult to do… ​ The Philippines government listened before dictating. They didn’t assume they knew what the private sector wanted. They asked. They calibrated. They adjusted. They gave clarity and predictability. ​ Remember this… Listening isn’t weakness. It’s strategy. ​ For more PPP insights, click below: ​The top 15 Lessons of a successful project​ ​The top 15 lessons of a nightmare project​ ​Don't be embarrassed. ​ ​ PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. ​ ​ |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
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