Alvarez wants BOT law revisited for airport projects

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MANILA, Philippines – Speaker Pantaleon Alvarez wants a review of the law governing Public Private Partnership (PPP) programs as he raised questions about upcoming airport project deals that he deems disadvantageous to the government.

Among the major amendments he pitched was for all companies involved in the operation of public utilities to first obtain a franchise from Congress.

Republic Act 6957, as amended by RA 7718 (commonly known as the Build-Operate-Transfer Law) and its Implementing Rules and Regulations (IRR) is the legal framework when the government enters into partnerships with the private sector, according to the web site of the PPP Center.

Alvarez told a radio interview on Friday that he wants to look at the invitation to bidders by the Department of Transportation (DOTr) for the development, operation and maintenance of five unbundled airport projects, namely Bacolod-Silay, Davao, Iloilo, Laguindingan, and New Bohol (Panglao) under the PPP scheme.

He questioned the number of years – 30 to 35 years – to be granted to the winning bidders, in which to exercise the exclusive right to operate and maintain the airports.

He said this was much longer than the 25-year franchise granted by Congress.

Alvarez pointed out that winning bidders don’t have to spend much to maintain and develop these airports built using government funds, especially those which are still relatively new.

Alvarez reiterated that the winning bidders have to secure a franchise from Congress to legally operate the airports, brushing aside the contention of the DOTr that under the Build-Operate-Transfer (BOT) law the grant of such franchise is deemed automatic.

“Granted that, eve if it is so granted in the BOT Law, it is likely a provision that is constitutionally inform. In Congress, the longest franchise period is no more than 25 years,” he said, in Filipino.

Article XII, Section 11 of the 1987 Constitution provides that “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years.”

Alvarez added that the longer period granted to winning bidders would practically tie the hands of the government.

He explained that, when it becomes necessary to expand or build additional runways or terminals before the expiration of the 35 year contract, it’s possible the winning bidder can hinder the expansion.

A House bill would soon be filed seeking amendments to the BOT law, he said.

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