The Department
of Finance (DOF) welcomes the passage of
Senate Bill No. 2233 or
the Public-Private Partnership (PPP) Act on second
reading on September 20,
2023.
“I thank our good
sponsor Senator Joseph
Ejercito, as well as Senate President Juan Miguel
Zubiri and Senate Majority
Leader Joel Villanueva, for
working to pass this critical
piece of legislation. The
Department of Finance,
together with the National
Economic and Development Authority and the
PPP Center, will continue to work with Congress
to establish a stable and
predictable PPP policy
environment to pave the
way for high-quality and
cost-effective infrastructure in the country,” Finance Secretary Benjamin
E. Diokno said.
The PPP Act is a
priority measure of President Ferdinand R. Marcos,
Jr.’s administration. It supports the 8-Point Socioeconomic Agenda, which
prioritizes job creation
through the promotion of
trade and investments and
improving infrastructure.
The proposed
measure will consolidate
all legal frameworks and
create a unified system for
investors to refer to when
engaging in PPP projects.
To facilitate
a more effective and
streamlined PPP approval process, the PPP Act
will increase the approval
threshold for projects that
need the National Economic and Development
Authority (NEDA) Board’s
approval to PHP 15 billion.
Furthermore, it
removes the limiting provision of the ‘first-in-time’
approach of unsolicited
proposals. This will allow
the government to review
proposals for the same
project simultaneously
and choose the best candidate to be awarded the
project.
The Act also
provides for safeguards
such as the creation of a
Risk Management Fund
for Contingent Liabilities,
as well as the mandatory inclusion of dispute
avoidance and alternative
dispute resolution (ADR)
mechanisms for quicker
and more efficient rulings.
There is also
a penal provision that is
applicable to both private individuals or public
employees to ensure accountability.
When undertaking PPP projects, the private proponent shares in
associated risks for reasonable return on investment while contributing to
the effort of nation building. The PPP Act provides
investors with Certainty of
Tariff Regulation to reduce
the investment risk of private proponents.
Transparency is
also a key aspect of the
measure as it provides
for the public disclosure
of tender documents and
PPP contracts.
PPPs are contractual arrangements between the implementing
agency and the private proponent for the financing,
designing, constructing,
operating and maintaining,
or any combination thereof, of public infrastructure
or development projects.
These projects may be undertaken through various
modes, such as Build-Operate-and-Transfer (BOT)
and Joint Ventures (JVs).
Within the first
year of the administration, the government has
enhanced guidelines and
procedures governing
various modes of PPP to
allow for the speedy approval of projects, uphold
high standards of transparency and accountability, enhance the bankability
of PPP projects for private
partners, and ensure efficient risk allocation between the government and
the private sector.
These include
the revised implementing rules and regulations
(IRR) of the BOT Law,
revised Investment Coordination Committee (ICC)
guidelines on PPP approvals, and enhanced NEDA
JV guidelines.
As a result of
these reforms, Secretary Diokno said that four
PPP proposals with a total
project cost of PHP 212.8
billion (around US$ 3.8
billion) have already been
approved since the beginning of the President’s
term.
“Two of these
proposals were evaluated
in record time,” Secretary
Diokno said in reference
to the solicited proposal
for the rehabilitation of
the Ninoy Aquino International Airport (NAIA) and
the unsolicited proposal
for the Tarlac-Pangasinan-La Union Expressway
(TPLEX) Extension Project which were evaluated
and approved in around
six and eleven weeks, respectively.
The passage of the PPP
Act will institutionalize
timelines, revolutionizing
the evaluation and approval processes of PPP
proposals.
The government engages in PPPs to accelerate
the country’s economic
growth as it provides for
alternative funding sources, thereby alleviating fiscal strain on the national
budget and allowing public
funds to be allocated for
other priority projects.
The government has
identified 197 priority Infrastructure Flagship Projects (IFPs) amounting to
approximately US$ 155
billion, at least 39 of which
shall be financed through
PPPs. DOF.GOV
