Pursuant to IRR Committee Resolution No. 2, dated April 4, 2022, the PPP Center is posting the following:
BOT Law IRR Committee approves 2022 Amended BOT Law IRR
The committee tasked to craft the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 6957 or the Build-Operate-Transfer (BOT) Law has approved the 2022 Amended IRR of this measure.
Approved by the BOT Law IRR Committee on March 28, 2022, the Amended IRR aims to, among others, ensure that project proponents applying the BOT scheme are qualified to implement properly designed public-private partnership (PPP) proposals that will effectively and efficiently render public services that will benefit the Filipino people.
Taking into consideration the comments from various stakeholders, the Committee-approved 2022 IRR provides a balanced sharing of risks between the Government and the Project Proponent, while emphasizing safeguards for the benefit of the public, both as taxpayers and consumers.
Under the BOT Law, the Committee is authorized, from time to time, to formulate and prescribe amendments to its IRR.
The 2022 IRR seeks to strike a balance in protecting the interests of the Project Proponents, the Government, the consuming public, and taxpayers in general by ensuring that contractual arrangements reflect appropriate sharing of risks and allowing reasonable rates of return on investments, incentives, support, and undertakings, financial or otherwise, that may be granted to Project Proponents as part of clearly defined parameters, terms and conditions for the Project.
The 2022 IRR introduces amendments that respect the authority of the various regulatory bodies and allow them to exercise their mandates.
New monitoring mechanisms are also introduced in the 2022 IRR to ensure compliance with PPP obligations both by the Implementing Government Agency and the Private Proponent.
In streamlining the evaluation and approval process of PPP proposals, the following provisions were placed in the 2022 IRR:
- Enumeration of parameters, terms and conditions that are required to be submitted to the Approving Body. The parameters, terms and conditions approved by the Approving Body shall be the basis of the PPP contracts to be executed relative to the approved projects;
- Enumeration of the criteria that the Approving Body may use in evaluating a particular proposal; and
- Confirmation of the Original Proponent Status by the Approving Body before the actual evaluation of the merits of a particular proposal.
To allow Project Proponents flexibility in the implementation of the project, no requirement of firm membership was imposed in the 2022 IRR in cases of Operations and Maintenance (O&M) arrangements and Unsolicited Proposals, as opposed to what was originally proposed during the drafting of the 2022 IRR.
To remove uncertainty in the rules on project variations, the 2022 IRR authorizes the Approving Body to set a cap on allowable variations during the project evaluation stage, which in no case shall exceed 10 percent of the original project cost.
Moreover, the 2022 IRR now requires the contract to define the materiality thresholds and compensation which the Project Proponent shall be entitled to, following the occurrence of a material adverse government action.
Nonetheless, for the benefit of the consuming public, regulatory acts of the Executive Branch are excluded from MAGA (material adverse government action).
While the 2022 IRR maintains the requirement of contract review by the Office of the Solicitor General/ Office of the Government Corporate Counsel and the Department of Finance (DOF), for transparency, government undertakings approved by the Approving Body are now required to be enumerated in the DOF Opinion.
Following its publication in the Official Gazette on 11 April 2022, the 2022 Amended IRR became effective on 26 April 2022. The BOT Law IRR was last revised in 2012.