Alvarez: Dump automatic grant of franchise to winning proponents of public-utility projects

The leader of the House of Representatives is pushing for a measure that will require private proponents seeking to build, operate and maintain public utilities to secure first a franchise from Congress.

House Speaker Pantaleon D. Alvarez said he is pushing for the passage House Bill (HB) 5270, which seeks to amend Republic Act (RA) 6957, as amended by RA 7718, otherwise known as “An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector”.

Currently, under Section 5 of RA 6957, as amended, automatically grants the winning project proponent a franchise to “operate and maintain the facility, including the collection of tolls, fees, rentals and charges”.

Alvarez, however, criticized the existing arrangement, which, he said, has been suspected of serving private interests instead of that of the general public.

The bill removes the automatic grant of franchise and requires a project proponent to first secure a legislative franchise for public utilities from Congress for it to qualify as a bidder and in order to operate and maintain such facilities, including the collection of fees.

In the case of a build-operate-and-transfer arrangement, the bill provides that the contract shall be awarded to the proponent, who, after having satisfied the minimum requirements, has submitted the bid that is most advantageous to the government and provides the most favorable terms for the project.

But the bill added that when a Filipino contractor submits an equally advantageous bid, with exactly the same price and technical specifications as those of a foreign contractor, the former shall be given preference.

It also provides that all existing operators must obtain such franchise for public utilities from Congress within one year from the time the proposed law takes effect. Otherwise, the franchises they presently hold shall expire and cease to have any legal effect.

The legislative franchises for public utilities shall be subject to amendment, alteration or repeal by Congress, when the common good requires it.

The bill also limits the term of such franchises to 25 years, subject to a renewal.

Alvarez filed the bill after questioning several projects being implemented by the Department of Transportation (DOTr) under the public-private partnership (PPP) scheme.

He earlier warned the DOTr not to push through with the intended bidding for the development, operations and maintenance of five unbundled airport projects, namely, Bacolod-Silay, Davao, Iloilo, Laguindingan and New Bohol (Panglao) under the PPP scheme.

He said these PPP deals look disadvantageous to the government, as winning bidders will operate the airports for 35 years, when most of these have already been built using government funds and need only improvements.

According to Alvarez, in similar airport projects in the past, when winning bidders had to start from zero, the National Economic Development Authority determined that 25 years would be enough for recovery of investments with profit.





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