SINGAPORE—The country’s chief economist has sought President Marcos’ go-ahead to review the recently revised but supposedly “antimarket” guidelines of the Amended Build-Operate-Transfer (BOT) Law to attract more private sector interest in the administration’s priority infrastructure projects.
Through a memo, Socioeconomic Planning Secretary Arsenio Balisacan already asked permission from the President to convene the BOT implementing rules and regulations (IRR) committee, Public-Private-Partnership (PPP) Center Deputy Executive Director Eleazar Ricote said in a chance interview on the sideline of the Asia Infrastructure Forum 2022.
To recall, former President Rodrigo Duterte late last year formed the BOT IRR committee, then chaired by former National Economic and Development Authority (Neda) chief Karl Kendrick Chua, to amend the IRR of the BOT Law. The revised rules came out in April of this year.
Awaiting approval
The Inquirer asked Balisacan, who heads the state planning agency Neda, if Mr. Marcos approved his request, but he did not reply. Last week, Balisacan said the amended IRR crafted by the previous administration for Republic Act No. 7718 was “even more problematic.”
Once the President approves Balisacan’s request, Neda and the PPP Center can buckle down to work.
Ricote said the review will zero in on three issues raised by big business groups: the definition of material adverse government action (Maga); the government’s exemption from arbitration; as well as the financial capacity requirement.
To recall, the amended BOT law’s IRR zeroed in on minimizing contingent liabilities, which it defined as “liabilities that may be incurred from events specified in a contract, the occurrence, timing, or amount of which are uncertain.”
Contingent liabilities included Maga clauses, force majeure and failure to deliver contractual obligations. The IRR defined Maga as “any act of the executive branch, which the project proponent had no knowledge of, or could not reasonably be expected to have had knowledge of, prior to the effectivity of the contract; and that occurs after the effectivity of the contract, that: specifically discriminates against the project proponent; and has a material adverse effect on the ability of the project proponent to comply with any of its obligations under the contract.”
“For purposes of the contract, the provisions on Maga shall also provide for the rules on materiality or amount threshold, nature and compensation, cap on monetary compensation, conditions for termination and termination payment due to Maga,” the IRR read.
Business groups like the Makati Business Club had expressed concern that the definition of Maga in the revised IRR “creates higher risks for businesses from a regulatory and political standpoint which would discourage private sector participation in infrastructure projects” as extensive exclusions practically absolve the government of all blame and responsibility for any changes and foist all project risks, such as increased costs and difficulties on the private sector partner.”