DPWH hears private-sector concerns about BOT Law IRR

By Arjay L. Balinbin, Senior Reporter

THE Department of Public Works and Highways (DPWH) said on Tuesday that it will convey to the President issues raised by the private sector about the risk-sharing provisions of the revised implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) Law.

In a statement, the DPWH said Public Works Secretary Manuel M. Bonoan met with Makati Business Club (MBC) officials who paid him a call on Monday at the DPWH in Manila.

“Secretary Bonoan hopes to strengthen relations with MBC as he affirmed his commitment to spearhead discussion of the reported concerns to the Cabinet infrastructure cluster meeting and with the President,” the department said.

In a statement issued following a BusinessWorld query about the meeting, MBC Executive Director Francisco Alcuaz, Jr. asserted the MBC’s position, which cited the “need to cancel or defer the implementation of the recently revised IRR for the BOT Law.”

Mr. Alcuaz attended the DPWH meeting along with Ayala Corp. chairman Jaime Augusto Zobel de Ayala and Aboitiz InfraCapital, Inc. President and CEO Cosette V. Canilao.

According to Mr. Alcuaz, “The new IRR takes the ‘partnership’ out of public-private partnership by putting all the risk with (the private sector) and taking away provisions that would allow (for) a fair, predictable return,” he said in his statement.

Ateneo de Manila University Economics Professor Leonardo A. Lanzona said in May that the revised IRR raises the risk for companies participating in joint projects by relieving the government of any responsibility for delays and increased costs.

“An efficient contract should be one that distributes the risks between the principal (government) and the agent (private contractor),” he told BusinessWorld.

Another concern raised by the MBC was the “need to reduce duplication of submissions and approvals between the national government (NG) and the local government units (LGUs), (as well as the need to) limit new or additional requirements that are not in the original list of requirements,” Mr. Alcuaz said.

“You have to submit to NG, then submit the same to the LGU, usually in a different format, then when you think you’re done, they add new requirements. So many hoops, when all the private sector wants to do is help the government build the infra our people need.”

“There is also a need to further improve right-of-way (RoW) acquisition, which holds up projects even as costs rise,” Mr. Alcuaz noted.

The government, the MBC said, should acquire RoW before bidding out or awarding the project, or the law can be revised so RoW funds can be released at least a year earlier.

Mr. Alcuaz said the MBC also welcomed Mr. Bonoan’s interest in more rail projects to bring down freight costs, which the department secretary said are “the highest” in Southeast Asia.

“The President and his cabinet have generated a lot of excitement with their plans to make the Philippines an investment destination and revitalize PPPs. Local and foreign players await more signs — and bids — that will prove business is welcome again as a partner in boosting jobs, infrastructure, and quality of life,” Mr. Alcuaz added.

The MBC put forward proposals to help protect both the government and contractors from sharp rises in steel, cement, and other material costs,, Mr. Alcuaz said.