Amended BOT Law IRR OKd
The amended implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) Law has been approved as the government moves to ensure that publicprivate partnership (PPP) projects will not be disadvantageous to Filipinos.
The BOT Law IRR Committee, led by Socioeconomic Planning Secretary Karl Chua has approved the amended IRR which aims to ensure that project proponents applying the BOT scheme are qualified to implement properly designed PPP proposals to the benefit of Filipinos.
The PPP Center said the 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.
The amended IRR also reflects appropriate sharing of risks and allowing reasonable rates of return on investments, incentives, support, and undertakings.
It also introduced amendments that respect the authority of the various regulatory bodies and allow them to exercise their mandates.
New monitoring mechanisms are also included in the IRR to ensure compliance with PPP obligations both by the implementing government agency and the private sector.
To allow flexibility in the implementation of the project, no requirement of firm membership was imposed in cases of operations and maintenance arrangements and unsolicited proposals.
To remove uncertainty in the rules on project variations, the IRR authorized 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.
Further, the IRR now requires the contract to define the materiality thresholds and compensation which the proponent shall be entitled to, following the occurrence of a material adverse government action.
For the benefit of the public, regulatory acts of the executive branch are excluded from material adverse government action.
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.