BOT law amendments being drafted; may address rate-setting — PPP Center

THE Public-Private Partnership (PPP) Center said Wednesday that an executive branch proposal amending the build-operate-transfer (BOT) law, which could include a tariff-setting feature, is currently being prepared for submission to Congress.

In a news conference in Quezon City, PPP Center Director Jeffrey I. Manalo said: “The executive is coming up with a version of the bill (amending the BOT law) that will be endorsed to both the House and Senate. It’s for one last cabinet committee meeting, the infrastructure committee meeting of the National Economic and Development Authority (NEDA) Board. Once approval is obtained, then it will be endorsed to both houses.”

As for the key features of the proposed measure, Mr. Manalo said: “Essentially the PPP Act version of the executive would tackle accelerating infrastructure development. That means deleting unnecessary requirements that could hamper the fast-tracking of projects; there are good governance mechanisms, particularly in ensuring competition in the process; and the transparency mechanisms, for example contracts disclosures; institutionalization of the good practices that have been experienced under the program for the last 20 years; and the enhancement of the unsolicited proposals framework.”

He cited some “vague” rules in the existing BOT law, saying: “For example, what is exactly a direct subsidy equity or guarantee? These are not clearly or explicitly defined in the law. So with the PPP Act, the objective is to clearly define these so that during implementation plantsado na ‘y�ܲԲ� mga definitions na ito (these definitions are ironed out).”

PPP Center Executive Director Ferdinand A. Pecson said adding a tariff-setting feature to the law is also being considered, but discussions on the matter may take some time as there are many stakeholders involved.

“This will take quite some time. There are many parties that have to come together,” he said.

Asked if the tariff-setting feature will be applied to past PPP projects, he said: “It will not affect past projects, but this is forward-looking. What we are trying to include here is the robustness of agreed tariff adjustments or initial tarrifs for concessionaires’ agreements, just like variations which are governed by rules found in the IRR (implementing rules and regulations of the (BOT) law, so we don’t have such rules yet on tariff setting and even for regulation of PPP contracts.”

He said that with the tariff-setting feature, it will be easier for private proponents to prepare their proposals.

“If we have this tariff-setting feature in the law, maiiwasan din natin na iniisa-isa natin ‘y�ܲԲ� kontrata na tingnan kasi meron tayong basehan eh (we will avoid having to go through contracts one by one because they will all be based on this model),” Mr. Pecson said.

President Rodrigo R. Duterte has ordered the Office of the Solicitor General and the Department of Justice to review all government contracts to ensure they do not have “onerous provisions that might be detrimental to Filipinos.”

“Right now it’s all by contract. Every contract can have a different way of computing (rates). For example the water concessions are based on rate rebasing, so kino-compute ‘y�ܲԲ� capital cost ng private sector for the past five years (it needs a computation of five-year capital costs for the private sector). Sa ibang kontrata depende sa inflation. Pagtumaas ‘y�ܲԲ� inflation, tataas din ‘y�ܲԲ� tariff. ‘Yung iba, fixed increase, 10% every two years. So right now ang status quo natin, iba-iba siya per contract (Others are indexed to inflation, while others call for fixed increases like 10% every two years, So right now the status quo is that the mechanism varies by contract)” Mr. Manalo said.

PPP deputy executive director Eleazar E. Ricote said the PPP Center intends to respond to more projects from tourism and information and communications technology (ICT)-related proponents and other “new sectors” from 2020 onwards.

“The program will respond to new sectors, new areas, new infrastructure projects that the private sector can initiate doing through unsolicited proposals, so we will see more of that sa mga susunod na taon.”

Asked what sectors are being eyed by the program, he said: “Tourism, maraming ICT-type of development projects ang lumalabas (many ICT-type of development projects are emerging); also, for LGUs (local government units), solid waste management, water sanitation, and some property development kind of PPPs.”

Deputy Executive Director Mia Mary G. Sebastian said that as of December, there are 56 PPP projects in various stages of development, procurement, and approval. She said 32 of these projects are unsolicited while 24 are solicited. — Arjay L. Balinbin