Having government skin in the game helps future-proof PPPs because it demonstrates that the government is fully committed, not merely delegating risks to its partner.
This allows for fair allocation of risks, making the project more sustainable. When the government invests public resources or issues guarantees, projects are harder to cancel or abandon. The government is also incentivized to ensure that the project truly benefits the people.
A key form of government commitment
In public-private partnerships (PPPs), the government’s “skin in the game” refers to its direct commitments, contributions, and the risks it undertakes to ensure project success. This underscores that the government is not merely an overseer but an active stakeholder in the partnership.
Such participation may take various forms, including:
• Contribution of assets, properties, or rights, and payment for right-of-way
• Co-financing, equity participation, subsidies, or viability gap funding
• Guarantees, such as those covering demand, loan repayment, private sector returns, or performance undertakings
• Policy commitments, including tariff-setting authority, regulatory stability, or additional tax incentives
• Long-term monitoring and enforcement responsibilities
Another form of government support is an availability payment. As defined under the PPP Code, it refers to “predetermined payments by the implementing agency to the private partner in exchange for delivering an asset or service in accordance with the PPP contract.”
For example, when a private entity allows its existing solid waste facility to be used for a PPP project, or when it builds socialized housing units or classrooms and makes them available for use under a PPP arrangement, the private sector may be entitled to these predetermined payments.
Ensuring accountability and proper oversight
Simply put, by making an asset or service available, the private partner is paid regardless of actual demand or usage.
Availability payments are therefore performance-based, not demand-risk dependent, providing predictable government obligations. If performance standards are not met, deductions or penalties may apply.
This mechanism promotes value for money, efficient service delivery, and optimal risk allocation.
Unlike subsidies, viability gap funding, and guarantees—which are not allowed for unsolicited proposals—availability payments are permitted for both solicited and unsolicited projects. In fact, they are the only form of government undertaking in which public funds may be used regardless of the mode of selection of the private partner.
However, national projects—or those implemented by national government agencies, government-owned or -controlled corporations, government instrumentalities, government financial institutions, state universities and colleges, water districts, and economic zones —with a project cost below P15 billion and whose availability payments will come from the General Appropriations Act must first secure ICC approval from the Department of Economy, Planning, and Development.
Shared commitment for public value
Availability payments embody the principle of shared commitment and accountability in PPPs. They reflect a partnership where both government and private sector invest, not just financially, but institutionally and morally, in delivering infrastructure and services that matter.
When structured well, availability payments transform PPPs from mere contractual arrangements into enduring collaborations for public value where performance is rewarded, risks are balanced, and the people ultimately benefit.
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