PPP-BOT PROGRAM
The 1987 Philippine Constitution recognizes the private sector as the government´s partner in development. Its role as the main engine of growth and development has been most prominent in critical infrastructure and development projects that can best be undertaken through Public-Private Partnerships (PPPs). It is through this partnership with the private sector that government, with its limited resources, addressed the power crisis in the early 1990s under Executive Order No. 215, series of 1987.
The passage of Republic Act 6957 in 1991 entitled "An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for other Purposes" institutionalized private sector participation in infrastructure and development projects. Hence, the Philippine Government´s Public-Private-Partnership – Build-Operate-and-Transfer (PPP – BOT) Program was set in motion. Consequent amendments to the BOT Law through the ratification of Republic Act 7718 in May 1994 and the succeeding amendments to its implementing rules and regulations IRR) have made investment in the Program PPP – BOT Program more attractive to the private sector.
R.A. 7718 and its amended IRR have provided the following: liberalized the regulatory framework for pricing using market-based principles in rate setting and adjustments to allow equity investors a competitive rate of return; a clear framework for structuring BOT contracts, particularly on the scope of authority and obligations and rights of the private sector; standard and streamlined government procedures for approval of projects and contracts, selection of proponents with clear-cut decision rules; a reasonable security package to make projects financially viable for private financing; and a coordinating and monitoring body within the government.
Highlights of the amended BOT Law and its IRR include the provisions for unsolicited proposal. It also introduced new BOT variants or contractual arrangements allowing more creativity on the part implementing agencies (IAs) and local government units (LGUs) to structure more viable agreements with private partners. The Law likewise covers most infrastructure sectors --- hard infrastructure (transportation, power, water facilities, etc) and non-traditional infrastructure projects (health, education, water, transportation, information and communication technology, etc.). Provision of reasonable rate of return and an institutionalized government support are also incorporated in the amended BOT Law and its IRR.