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Changes to BOT law’s rules may be too late, analysts say

PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibanez, Senior Reporter

PLANNED CHANGES to the rules implementing the Build-Operate-Transfer (BOT) law could be too late after the announcement was made just eight months before a new administration takes over, political analysts said.

“Since we’re already in the election season, it is ill-advised to amend the said implementing rules and regulations, even if the concerned administration officials claim that it is meant to promote transparency and to fast-track the approval of proposed PPP (public-private partnership) projects,” Philippine Political Science Association President Dennis C. Coronacion said in a Viber message.

Political strategist Gerardo Eusebio said any amendment might not be feasible given the time left for the administration, “and especially if the administration’s presidential candidate will not win.”

“The administration would certainly seek to stay on top of it because they consider the former to be one of their more successful, tangible flagship projects,” he said in a Viber message.

President Rodrigo R. Duterte recently named Socioeconomic Planning Secretary Karl Kendrick T. Chua as the chairman of an interagency committee that will amend the rules of Republic Act (RA) 6957 as amended by RA 7718.

RA 6957 or the Build-Operate-Transfer Law authorizes the private sector to finance, build, operate and maintain infrastructure projects.

The National Economic and Development Authority (NEDA) and PPP Center had said the amendments aim to protect the public from “excessive payments and undue guarantees arising from PPP projects, and promote the interests of Filipinos, who ultimately pay for the costs and returns of private proponents of PPP projects.”

The committee plans to start stakeholder consultations in December and come out with the amended rules by the first quarter of 2022.

Changes to BOT rules are likely a gesture from the outgoing administration to provide a social safety net for PPP and other development projects so that the government and Filipino taxpayers don’t get pushed into a fiscally aggravating position, said Marlon M. Villarin, a political science professor from the University of Santo Tomas.

The government’s stance is that private companies should embrace legally demandable accountability and better transparency measures, he said in a mobile phone message.

The Duterte administration previously steered clear of PPPs due to allegedly disadvantageous provisions such as subsidies and guarantees.

Experts have said well-designed PPPs could accelerate the country’s “Build, Build, Build” program.

Ragnar Gudmundsson, International Monetary Fund (IMF) representative to the Philippines, said PPPs could help mobilize financing for priority infrastructure projects.

“What matters is to ensure that PPPs are well managed so that they deliver results without adverse impacts on fiscal space and debt sustainability through unwarranted guarantees and contingent liabilities,” he said in an e-mail.

Byunghoon Nam, an ASEAN+3 Macroeconomic Research Office (AMRO) senior economist on the Philippines, said in an e-mail there is no reason for the Philippines not to take advantage of PPP-type projects, as long as safeguards are in place.

He said BOT rule changes seek to improve the design and management of PPP projects.

“Tighter controls could reduce the infrastructure investments funded by PPPs in the short term. Nevertheless, if the amended rules are properly implemented, more transparent and efficient management will lead to more financially viable PPP projects, preventing unnecessary fiscal payments and guarantees,” he said.

The “Build, Build, Build” program includes 112 priority projects worth P4.687 trillion. The government aims to complete 29 before Mr. Duterte steps down from office in mid-2022, while 51 projects are ongoing and 28 are in the pipeline.

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