Enhancing BOT Law and Implementation for Infrastructure Development

1. Enhancing BOT Law and Implementation for Infrastructure Development Gilberto M. Llanto Philippine Institute for Development Studies April 11, 2007

2. Objective • Infrastructure development through an enhancement of the BOT law and its implementation G.M. LLANTO: Enhancing BOT Law and Implementation

3. Rationale for BOT • Pricing through user charges of the service • User, instead of taxpayer, pays for infrastructure • An alternative mode for infrastructure development, especially in difficult fiscal situations G.M. LLANTO: Enhancing BOT Law and Implementation

4. BOT Institutional Arrangement • Government is the project granting authority (implementing agencies and oversight body such as the ICC). • Private sector finances, constructs and operates the project. G.M. LLANTO: Enhancing BOT Law and Implementation

5. Areas of Concern • Projects are delayed and contracts are even voided. • Inefficient implementation and monitoring. • Contracting issues, e.g., guarantees and performance undertakings, setting user charges and approval by regulatory bodies, judicial risks, etc. G.M. LLANTO: Enhancing BOT Law and Implementation

6. Proposed solution: Amend IRR • Amend the IRR of the BOT Law (RA 6957, as amended by RA 7718). IRR amendments done 1998 and 2006. • 1998: clarified procurement requirements and procedures for competitive bidding and the Swiss challenge process • 2006: fast-track BOT approvals by prescribing a single pass project review procedure. G.M. LLANTO: Enhancing BOT Law and Implementation

7. Most recent (2007) proposal to amend IRR: (a) remove power of ICC to review and approve BOT projects and contracts and (b) shorten the processing time for BOT projects. • Implementing agencies- review and approve projects, including unsolicited proposals. • ICC- review and approve list of priority projects submitted by implementing agencies G.M. LLANTO: Enhancing BOT Law and Implementation

8. Proposed solution: Amend BOT Law • Salceda bill G.M. LLANTO: Enhancing BOT Law and Implementation

9. Proposed solution: Executive Action Project Quality at Entry • Delays due to inadequate technical, financial and legal expertise at the implementing agency; and • Limited information about requirements of oversight agencies G.M. LLANTO: Enhancing BOT Law and Implementation

10. For least-cost purchase, simply follow the rule: stick to transparent competitive bidding. • To maintain investor interest, show credible commitment to property and contract rights. • For project quality at entry, make the implementing agencies responsible and accountable but raise legal, technical and financial capacity. G.M. LLANTO: Enhancing BOT Law and Implementation

11. For efficient implementation, maintain ICC oversight function for third party check on consistency with policies on investment, fiscal incentives and procurement. Streamline ICC membership; maintain professional staff support. G.M. LLANTO: Enhancing BOT Law and Implementation

12. Thank You! G.M. LLANTO: Enhancing BOT Law and Implementation