The latest version of the Build Operate Transfer (BOT) Law’s Implementing Rules and Regulations (IRR) is expected to entice more private sector players to participate in public infrastructure projects, according to the National Economic and Development Authority (Neda).
One of the major changes is on the definition of the Material Adverse Government Action (MAGA), which now covers all government actions and not just the Executive branch.
If these government actions discriminate against the proponent and have adverse effect on its ability to undertake the project, the contract can be terminated and termination payment will be due to private proponents.
“Based on the feedback about the previous version of the BOT IRR we got from the private sector and other stakeholders, we revised the provision on the MAGA to make the risk allocation more fair,” Socioeconomic Planning Secretary Arsenio M. Balisacan told the BusinessMirror on Tuesday. “The revised provisions are standard across markets, which should give comfort to international investors and lenders.”
Under the previous BOT IRR revision, the MAGA only referred to “any act of the Executive branch” and that acts of agencies, local government units (LGUs) as well as the legislative and judicial branches of government are not covered.
However, this was removed in the latest version leading MAGA to apply to all acts by the government, including all three branches of government, line agencies and LGUs.
The MAGA provision also now covers approved contracts as opposed to the old version which only states that the provision applies to “obligations under the contract.”
“It has cured a number of perceived defects of the old IRR. Think the new IRR is more responsive and clearer to potential investors,” Finance Secretary Benjamin Diokno told reporters via Viber on Tuesday.
Last week, the Cabinet-level Committee on the BOT-IRR approved the proposed amendments to the 2022 IRR of the BOT law.
The committee took into consideration the inputs solicited from stakeholders during the face-to-face public consultation held on September 13.
The BOT IRR Committee acknowledged receipt of 91 comments during the public consultation proper and 213 written comments in total.
Balisacan underscored the importance of approving the proposed amendments, as the IRR would bolster the government’s capabilities in addressing pressing issues such as inflation, poverty, and prolonged socioeconomic scarring from Covid-19 through public private partnerships (PPP).
The BOT IRR Committee is chaired by the Neda and co-chaired by the Department of Finance. Committee and members include the Departments of Agriculture, Energy, Environment and Natural Resources, and Information and Communications Technology.
Other members include the Departments of the Interior and Local Government, Public Works and Highways, Trade and Industry, and Transportation, as well as the Public-Private Partnership (PPP) Center, which serves as member of and secretariat to the Committee.