PPP Code: Consolidating legal, regulatory

PPP Code: Consolidating legal, regulatory | Daily Tribune

The Philippines had enacted a new law to unify its legal framework for all national and local public-private partnership (PPP) projects. Republic Act No. 11966, otherwise known as the PPP Code of the Philippines, was signed into law on 5 December 2023 and took effect on 23 December 2023.

Prior to the PPP Code, the legal and regulatory framework of the Philippines was fragmented into different legislations and regulations, which included, among others, Republic Act No. 6957 or An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for other Purposes, and which was also known as the BOT Law of 1990; the Joint Venture Guidelines issued by the National Economic and Development Authority (NEDA); and the PPP Codes or joint venture guidelines adopted by local government units and other government-owned and controlled corporations (GOCCs). The implementing rules and regulations were recently promulgated. This column will walk you through the salient provisions of the PPP Code

The PPP Code now governs all contractual arrangements between the government and the private sector to finance, design, construct, operate, and maintain infrastructure or development projects and services typically provided by the public sector. The PPP Code expressly provides that it covers:

1. Joint ventures;

2. Toll operation agreements;

3. Lease agreements providing for rehabilitation, operation and/or maintenance, including provision of working capital and/or improvements to, by the private partner of an existing land or facility owned by the government for more than one year;

4. Lease agreements if a component of a PPP project; and

5. All other contractual arrangements which possess characteristics or elements of a PPP.

However, the PPP Code does not apply to infrastructure projects under the Government Procurement Reform Act, management contracts, service contracts, divestments or dispositions, corporatization, incorporation of subsidiaries with private sector equity, onerous donations, gratuitous donations, and joint venture agreements involving purely commercial arrangements that neither provide nor include public infrastructure or development services.

The PPP Code grants additional powers and functions to the PPP Center, the centralized agency primarily tasked with monitoring PPPs. Among other things, the PPP Center is mandated to review PPP contracts, provide regular monitoring of the implementation of PPP projects, and serve as the central repository of all PPP project information. All unsolicited proposals shall also be initially submitted to the PPP Center for determination of completeness and the appropriate approving body.

The law also updates and streamlines the thresholds and processes for approval. The NEDA Board shall approve national PPP projects with a project cost of at least P15 billion upon favorable recommendation of the NEDA Board–Investment Coordination Committee. National PPP projects with project costs not reaching P15 billion shall generally be approved by the head of the implementing agency.

Local PPP projects shall be approved by the respective local Sanggunians for local government units (LGUs) or by the boards, in the case of local universities and colleges. PPP projects covering two or more LGUs may be implemented by the National Government subject to the approval process for national PPP projects or by the next higher LGU level subject to the approval process for local PPP projects.

To facilitate the expedient processing of projects, the PPP Code mandates that the approving body render its decision in writing within 120 calendar days of receiving the complete requirements.

Otherwise, the PPP project shall be deemed approved and the implementing agency may proceed with the procurement of the PPP project. This is, however, subject to any liability that the erring or negligent officials or employees may incur under the PPP Code and other existing laws.

(To be continued)

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For more of Dean Nilo Divina’s legal tidbits, please visit www. divinalaw.com. For comments and questions, please send an email to cabdo@divinalaw.com.