BOT Law amendment process stalls; no assurance of passage

By Melissa Luz T. Lopez, Reporter

THE PROPOSAL to amend the country’s rules governing public-private partnership (PPP) deals in infrastructure projects faces rough sailing in Congress with lawmakers unable to assure its passage.

Measures seeking to change the current Build-Operate-Transfer (BOT) law that covers government agreements with the private sector remain pending at the committee level at the House of Representatives with barely four months of legislative work left.

“We cannot predict whether the bill will definitely pass under the present Congress given the matters needed to be deliberated upon as well as the time to be consumed relative to its deliberations and enactment,” Davao City Rep. Isidro T. Ungab (3rd district), chairman of the House committee on appropriations, said in a text message.

“We conducted a committee hearing for the BOT Law amendments on Oct. 5 but have deferred its consideration considering that there were members who asked several questions related to the Regulatory Risk Guarantee and the Project Development Management Facility.”

Once passed, the measure will serve as the uniform guidelines that will cover all PPP agreements entered into by the state. It will also institutionalize the PPP Center created in 2010 by President Benigno S. C. Aquino III.

The House committee on ways and means was also poised to approve the tax provisions of the bill — among them duty exemptions and investment incentives — but was deferred amid questioning from Bayan Muna Rep. Neri J. Colmenares, particularly on the provision on the risk management guarantee or the contingent liability fund (CLF).

The CLF provides the compensation for private firms in case the government fails to fulfill its obligations as stated in the project contract.

Mr. Colmenares opposed such a provision, saying it was unnecessary to keep such a standby fund separate from recompense duly ordered by the courts.

In September, leaders of the House of Representatives and the Senate agreed to classify the PPP Act as one of the measures to be approved before a three-week break starting Oct. 10. However, the bill has barely progressed in the series of approvals it must secure from Congress.

Speaker Feliciano R. Belmonte, Jr. said the continuing delay could mean that the stakeholders and lawmakers have “no single version” to agree upon, but said there may still be time for its approval.

“I think it can still be passed,” Mr. Belmonte said separately.

“Some bills that should be in like for instance the PPP Act, I understand there has been a hitch to it, they will still try to see how to reconcile such provisions.”

As in the measure, contractors of PPP projects will be exempted from paying real property tax and transfer taxes, such as capital gains tax and documentary stamp tax, and all local taxes in the case of projects of national significance.

The bill also provides for the automatic grant of licenses and permits for winning bidders, alongside prohibitions against the issuance of temporary restraining orders in the bidding, awarding, and construction of PPP projects to avert delays in project implementation.

Investment incentives also await infrastructure projects worth P1 billion or higher. Joint ventures, where risks will be equally split between government and private sector, will also be recognized as PPP agreements under the proposed law.

Malacañang and business groups see the measure as among their priority reforms, as it serves to boost investor confidence and attract more firms to bid for PPP projects.

Industry leaders have said that the government’s tendency to change the rules of the game for PPPs is disliked by investors, with the recent mess surrounding the P35.42 billion contract for the Cavite-Laguna Expressway (CALAx) project held up as an example.

Counterpart versions of the PPP Act also remain pending at the committee level in Senate.

Source: www.bworldonline.com