Tweaks to BOT law's IRR sought to avoid infra deals with 'unwarranted guarantees'

MANILA, Philippines (Update 1, 7:28 p.m.) — The Duterte administration wants to amend the implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) law to avoid “unwarranted guarantees” in future projects.

Socioeconomic Planning Secretary Karl Kendrick Chua would head the IRR committee tasked to tackle the amendments, the National Economic and Development Authority said in a statement on Tuesday.

According to NEDA, the proposed amendments to the IRR of the law that facilitates public-private partnership (PPP) projects aim to “protect the public from excessive payments and undue guarantees arising from PPP projects.” 

“PPPs have the potential to help stimulate the economy, bring back jobs, and address our people’s urgent, present, and future needs,” Chua said.

“However, it is the government’s job, on behalf of the Filipino people, to ensure that private sector interests are aligned to the public’s interests, with the overall goal of providing the best services to the people,” he added. 

The PPP projects are undertaken as a partnership between the government and private sector, where the former’s contributions are given in-kind in a bid to make these ventures enticing for private investors. 

Before the pandemic hit, Finance Secretary Carlos Dominguez III himself had consistently opposed guarantee clauses on PPPs or those which assure the contractor payments in case the project fail. He had said guarantees are costly.

That stance reverberated across the overarching “Build, Build, Build” infrastructure agenda, which initially saw projects mostly funded by official development assistance (ODA) or taxpayers’ money and transferred only to private firms for operations— like the Clark Airport. That changed only in late 2019, when it became apparent that the government’s reliance on ODA slowed down the building process.

Based on the latest list of flagship projects as of May, 29 PPP projects worth a cumulative P1.77 trillion were included. The list has gone through several revision since its creation, with the latest tweaks implemented due to the pandemic.

The BOT IRR Committee held its first meeting on October 26 and will begin its stakeholder consultations in December.  The government aims to approve and publish the amended BOT IRR by the first quarter of 2022, or before the end of the Duterte administration in mid-2022.

But Terry Ridon, convenor at Infrawatch PH, a think tank, said that while the Duterte government's intention is good, it's already too late for such a move.

"It would be best for the President to leave these amendments to the next administration, in order to not tie its hands on their policy direction by 2022," Ridon said in a text message.

"All of these things are cute, at best, because these amendments should have come at the start of their term, not in their final days in office," he added.

Editor's note: Added Infrawatch PH's comment.