MANILA, Philippines — The Public-Private Partnership (PPP) Center has released the initial draft of changes to the Build-Operate-Transfer (BOT) Law as the government moves to ensure that PPP projects will not be disadvantageous to Filipinos.

This comes after President Duterte ordered the changes in the implementing rules and regulations of the BOT Law, which was enacted in 1990.

The BOT Law IRR Committee, led by Socioeconomic Planning Secretary Karl Chua, recently approved a draft of the amended IRR, which is up for stakeholder consultation on March 11.

The draft amendments require that “key performance indicators” or how the performance of the proponent shall be measured be specified in the contract.
It also adds rules for government liabilities in contracts, such as liabilities disclosure, risk mitigation plan, approval of the nature and the amount of the liabilities, and monitoring and reporting of such.

For performance securities, these are now required for the pre-construction phase and for any works or services that are outside the approved scope.

It is also required that the value of the amount guaranteed by performance securities be maintained throughout the life of the contract.

For unsolicited projects, the draft amendments provide that the grant of the original proponent status be conditional and shall be subject to confirmation by the approving body.

The draft IRR expands the role of the Commission on Audit, requires agencies to publish the signed PPP contracts in their websites, and restricts the kinds of variations that can be allowed.

The BOT scheme is a contractual arrangement where the contractor undertakes the construction, including financing, of a given infrastructure facility, and the operation and its maintenance.

The contractor operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges sufficient to enable the contractor to recover its operating and maintenance expenses and its investment in the project plus a reasonable rate of return.

The contractor will then transfer the facility to the government agency or local government unit concerned at the end of the fixed term, which shall not exceed 50 years.

The changes in the IRR aims to facilitate the development of well-structured PPPs that deliver high quality services to the people and protect the public from excessive payments and undue guarantees arising from PPP projects.

It also targets to promote the interests of Filipinos, who ultimately pay for the costs and returns of private proponents of PPP projects

Chua earlier said PPPs with unwarranted guarantees, contingent liabilities, and other onerous contract provisions take up the government’s already-limited fiscal space and hamper the country’s development.

Louise Maureen Simeon – The Philippine Star
March 9, 2022 | 12:00am