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House passes Public-Private Partnership (PPP) Act

December 12, 2022 Ryan Ponce Pacpaco 243 views

VOTING 254 against three, the House of Representatives on Monday approved on the third and final reading House Bill No. 6527 or the “Public-Private Partnership (PPP) Act,” meant to provide an enabling environment to foster the growth of public-private partnerships for infrastructure and other development projects.

Under the measure, PPP is defined as a “contractual arrangement between the implementing agency and the private proponent for the financing, designing, constructing, operating and maintaining, or any combination thereof, of infrastructure or development projects which are typically provided for by the public sector, where each party shares in the associated risks.”

PPP projects may also be financed partly from direct government appropriations or official development assistance (ODA) of foreign governments or institutions.

Such PPP projects may be undertaken through various modes, such as Build-Lease-Transfer (BLT), Build-Own-and Operate (BOO), Build-Operate and Transfer (BOT), Build and Transfer (BT), Build-Transfer and Operate (BTO), Contract-Add-and-Operate (CAO), and Develop-Operate-and-Transfer (DOT).

Other modes of undertaking PPP projects include Joint Venture (JV), Lease Agreements, Operate-and-Maintain (OM), Rehabilitate-Own-and-Operate (ROO), Rehabilitate-Operate-and-Transfer (ROT), and such other variations as may be approved by the appropriate approving body or authorities.

“Implementing agencies, in accordance with their respective mandates or charters, are hereby authorized to undertake PPP projects with a private proponent in accordance with the provisions of this Act,” the bill said.

In undertaking PPP projects, the private proponent is allowed to recover its investments and earn reasonable profit by authorizing it to charge and collect reasonable tools, fares, fees, rentals, or other charges subject to appropriate regulations.

On the other hand, the implementing agency may instead make regular payments to the private proponent in exchange for delivering an asset or service in accordance with the contract. Other non-monetary payments may also be allowed.

Authors of the bill include Reps. Manuel Jose “Mannix” M. Dalipe, Romeo S. Momo, Joey Sarte Salceda, Salvador A. Pleyto, Ralph G. Recto, Gus S. Tambunting, Bernadette “BH” Herrera, Luis Raymund “Lray” F. Villafuerte Jr., Jose C. Alvarez, Jose “Joboy” S. Aquino II, Bonifacio L. Bosita, Edgar M. Chatto, Ambrosio C. Cruz Jr., Ricardo S. Cruz Jr., Sergio C. Dagooc, Danny A. Domingo, Alan “Aldu” R. Dujali, Ian Paul L. Dy, Yevgeny Vincente B. Emano, Wowo Fortes, Jaime R. Fresnedi, Maria Angela S. Garcia, Vincent J. Garcia, Edsel A. Galeos, Joseph “Jojo” L. Lara, Wilbert T. Lee, Roy M. Loyola, Gerville “Jinky Bitrics” R. Luistro, Marissa “Del Mar” P. Magsino, Carlito S. Marquez, Khymer Adan T. Olaso, Arnan C. Panaligan, Celso G. Regencia, Noel “Bong” N. Rivera, Ramon Jolo B. Revilla, Florida “Rida” P. Robes, Dimszar M. Sali, Edgardo Salvame, Joseph S. Tan, Caroline L. Tanchay, Leody “Odie” F. Tarriela, Ralph Wendel P. Tulfo, Alfonso V. Umali Jr., Linabelle Ruth R. Villarica, Christopherson “Coco” M. Yap, Mohamad Khalid Q. Dimaporo, Sittie Aminah Q. Dimaporo, Faustino “Inno” A. Dy V, Eleandro Jesus F. Madrona, Mario Vittorio “Marvey” A. Mariño, Emmarie “Lolypop” M. Ouano-Dizon, Laarni Lavin Roque, Janice Z. Salimbangon, Gerardo P. Valmayor Jr., Alfredo D. Marañon III, John Tracy F. Cagas, Divina Grace C. Yu, Jeyzel Victoria C. Yu, Shernee A. Tan-Tambut, Kristine Singson-Meehan, Midy N. Cua, JC Abalos, and Keith Micah “Atty. Mike” D.L. Tan.

Investment Incentives

HB 6527 provides, among others, that PPP projects undertaken in accordance with its provisions shall be entitled to various incentives under applicable laws and existing policies of the government.

Once a PPP contract is executed and upon application by the private proponent “the regulator shall automatically grant in favor of the private proponent a franchise to operate and maintain the facility including the collection of tolls, fares, fees, rentals, and other charges.”

If the implementing agency fails to implement the initial rates for tolls, fares, fees, rentals, and other charges and adjustments stipulated in the PPP contract, the private proponent shall be allowed to recover the difference through measures consistent with the PPP contract and applicable laws, rules, and regulations.

Identification and Approval of PPP projects

In identifying PPP projects, implementing agencies should be guided by the following principles: effectiveness in meeting government objectives, appropriateness of the chosen procurement modality and source of funding, value for money, accountability and transparency, consumer rights, affordability, public access, safety, and security.

The measure provides that PPP projects undertaken by the National Government costing above P5 billion shall be submitted to the National Economic Development Authority (NEDA) Board for approval, upon favorable recommendation of the Investment Coordination Committee of the NEDA (ICC-NEDA).

Projects with costs ranging from P3 billion to P5 billion shall be submitted to the ICC-NEDA for approval.

If the project costs below P3 billion, it shall be approved either by the head of the department or agency to which the implementing agency is attached, the respective board of the implementing agency or by the head of the implementing agency which has no governing board and is not an attached agency.

Local government units (LGUs) or local universities and colleges (LUCs) are allowed to undertake PPP projects which shall be approved by the local Sanggunian or the Boards, in case of the latter.

Solicited and Unsolicited Proposals

In the case of solicited proposals, or submission by the private proponent to bid for PPP projects, the contract shall be awarded to the bidder who has satisfied all pre-qualification and eligibility requirements and has submitted the most compliant bid.

However, the contract may be awarded to the next most compliant bidder if the winning bidder fails to comply with any post-award requirements or fails to enter into a contract with the implementing agency.

Unsolicited proposals, or those submitted by private proponents, not in response to a formal request issued by the implementing agency, may be allowed under the measure subject to certain procedures and conditions.

In case the implementing agency has already incurred any development cost for the PPP project, such as the conduct of feasibility study, business case, and surveys, among others, for the last three years, the private proponent shall reimburse such documented development costs.

Likewise, an unsolicited proposal should not contain any of the following government undertakings: viability gap funding and other forms of subsidy; payment of right-of-way related costs; performance undertaking; tax exemptions; guarantee on demand, loan repayment or return; government equity; and contribution of assets, properties, and rights.

Unsolicited proposals for PPP projects are subject to comparative challenge which shall be accepted within six months from the publication of the invitation of the implementing agency for such

Dispute avoidance and TRO prohibition

All PPP contracts are required to include provisions on the use of dispute avoidance and alternative dispute resolution, as well as the adoption of contract management and risk mitigation plan.

Likewise, the bill prohibits courts, except the Supreme Court, from issuing any temporary restraining order, preliminary injunction, preliminary mandatory injunction, temporary environmental protection order, or similar provisional reliefs against any implementing PPP agency or their employees.

Such provision does not apply when matters of extreme urgency involving a constitutional issue, grave injustice, or irreparable injury will arise unless a TRO is issued.

Under the measure, any judge who shall issue a TRO or similar provisional reliefs shall suffer the penalty of suspension for at least 60 days without pay, in addition to any civil and criminal liabilities he may incur.

The bill maintains the existing PPP Center and institutionalizes the PPP Governing Board, composed of the following: Secretary of NEDA, as chairperson; Secretary of Finance, vice-chairperson; Secretary of Budget and Management; Secretary of Justice; Secretary of Trade and Industry; Secretary of Interior and Local Government; Secretary of Environment and Natural Resources; Executive Secretary; Executive Director of the PPP Center; and one private sector representative.

In addition, the bill creates a Joint Congressional Oversight Committee to oversee the implementation of the PPP law.

The bill mandates the PPP Governing Board to issue rules and regulations to ensure the efficient implementation of the provisions of PPP law within 60 days from the effectivity of the Act.