Republic Act No. 6957
AN ACT AUTHORIZING THE FINANCING,
CONSTRUCTION, OPERATION
SECTION 1.
Declaration of Policy. It is the declared policy of the State to
recognize the indispensable role of the private sector as the main engine for
national growth and development and provide the most appropriate favorable
incentives to mobilize private resources for the purpose.
SEC. 2.
Definition of Terms. The following terms use in this Act shall
have the meanings stated below.
(a) Build-operate-and-transfer scheme.
A contractual arrangement whereby the contractor
undertakes the construction, including financing, of a given infrastructure
facility, and the operation and maintenance thereof. The contractor operates the facility over a
fixed term during which it is allowed to charge facility users appropriates
tolls, fees, rentals, and charges sufficient to enable the contractor to
recover its operating and maintenance expenses and its investment in the
project plus a reasonable rate of return thereon. The contractor transfer the facility to the
government agency or local government unit concerned at the end of the fixed term which shall not exceed fifty (50) years. For the construction stage,
the contractor may obtain financing from foreign and/or domestic source and/or
engage the service of a foreign and/or Filipino constructor: Provided, That the ownership structure
of the contractor of an infrastructure facility whose operation requires a
public utility franchise must be in accordance with the Constitution: Provided, however, That, in the case
of corporate investors in the build-operate-and-transfer corporation, the
citizenship of each stockholder in the corporate investors shall be the basis
of the computation of the Filipino equity in the said corporation: Provided, further, That in the case of
foreign constructors, Filipino labor shall be employed or hired in the
different phases of construction where Filipino skills are available: Provided, furthermore, That the
financing of a foreign or foreign-controlled constructor from Philippine
government financing institution shall not exceed twenty percent (20%) of the
total cost of the infrastructure facility or project: Provided, finally, That financing from
foreign sources shall not require a guarantee by the Government or by the
government-owned or controlled corporations. The build-operate-and-transfer scheme shall
include a supply-and-operate situation which is a contractual arrangement
whereby the supplier of equipment and machinery for a given infrastructure
facility, if the interest of the Government so requires, operates the facility
providing in the process technology transfer and training to Filipino nationals.
(b) Build-and-transfer scheme.
A contractual arrangement whereby the contractor undertakes the
construction including financing, of a given infrastructure facility, and its
turnover after completion to the government agency or local government unit
concerned which shall pay the contractor its total investment expended on the
project, plus a reasonable rate of return thereon. This arrangement may be
employed in the construction of any infrastructure project including
critical facilities, which, for security or strategic reasons, must be operated
directly by the Government.
SEC. 3.
Private Initiative in Infrastructure. All concerned infrastructure agencies,
including government- owned and controlled corporations and local government
units, are hereby authorized to enter into contract with any duly pre-qualified
private contractor for the financing, construction, operation and maintenance
of any financially viable infrastructure facilities through the build-
operate-and-transfer or build-and-transfer scheme, subject to the terms and
conditions hereinafter set forth.
SEC. 4.
Priority Projects. All concerned infrastructure agencies,
including government units, shall include in their infrastructure programs
those priority projects that may be financed, constructed, operated
and maintained by the private sector under the provisions of this Act. It shall be the duty of all concerned
infrastructure agencies to give wide publicity to all projects eligible for
financing under this Act, including publication in national newspaper of
general circulation once every six (6) months and official notification of
contractors registered with them. The
lists of all such national projects must be part of the medium term
infrastructure programs of the agencies concerned and must be
duly approved by Congress. Local
projects funded and implemented by the local government units concerned shall be submitted to the local development councils for
confirmation or approval.
SEC. 5.
Public Bidding of Projects. Upon approval of the
projects mentioned in Section 4 of this Act, the concerned head of the
infrastructure agency or local government unit shall forth with cause to be
published, once every week for three (3) consecutive weeks, in at least one (1)
local newspaper which is circulated in the region, province, city or
municipality in which the project is to be constructed a notice inviting all
duly pre-qualified infrastructure contractor to participate in a public bidding
for the projects so approved. In
case of a build-operate-and- transfer arrangement, the contract shall be
awarded to the lowest complying bidder based on the present value of its
proposed tolls, fees, rentals, and charges over a fixed term for the facility
to be constructed, operated, and maintained according to the prescribed minimum
design and performance standards, plans, and specifications. For this purpose, the winning contractor
shall be automatically granted by the infrastructure agency or local government
unit the franchise to operate and maintain the facility, including the
collection of tolls, fees, rentals, and charges in accordance with Section 6
hereof.
In case of a
build-and-transfer arrangement, the contract shall be awarded to the lowest
complying bidder based on the present value of its proposed schedule of
amortization payments for the facility to be constructed according to the
prescribed minimum design and performance standards plans and specification: Provided, however, That a Filipino
constructor who submits an equally advantageous bid shall be given preference.
A copy of each
build-operate-and-transfer or build-and-transfer contract shall
forthwith be submitted to Congress for its information.
SEC. 6.
Repayment Scheme. For the financing,
construction, operation, and maintenance of any infrastructure project
undertaken pursuant to the provisions of this Act, the constructor shall be
entitled to a reasonable return of its investment and operating and maintenance
costs in accordance with its bid proposal as accepted be the concerned
contracting infrastructure agency or local government unit and incorporated in
the contracts terms and conditions.
In the case of a build-operate-and-transfer
arrangement, this repayment scheme is to be affected by authorizing the
contractor to charge for the use of the project facility not exceeding those
proposed in the bid and incorporated in the contract: Provided, That the government
infrastructure agency or local government unit concerned shall approve the
fairness and equity of the tolls, fees, rentals and charges except in case of
tolls for national highways, roads, bridges and public thoroughfares which
shall be approved by the Toll Regulatory Board: Provided, further, That the imposition
and collection of tolls, fees, rentals and charges shall be for a fixed term as
proposed in the bid and incorporated in the contract but in no case shall this
term exceed fifty (50) years: Provided,
finally, That during the lifetime of the franchise, the contractor shall
undertake the necessary maintenance and repair of the facility in accordance
with standards prescribed in the bidding documents and in the contract. In the case of a build-and transfer
arrangements, the repayment scheme is to be affected
through amortization payments by the government unit concerned to the
contractor according to the scheme proposed in the bid and incorporated in the
contract.
In the case of land reclamation or the
building of industrial estates, the repayment scheme may consist of the grant
of a portion of percentage of the reclaimed land or industrial estate built,
subject to the constitutional requirements with respect to the ownership of
lands.
SEC. 7.
Contract Termination and Adjustment. In the event that a project is revoked, cancelled or terminated
by the Government, through no fault of the contractor or by mutual agreement,
the government shall compensate the said contractor for its actual expenses
incurred in the project plus a reasonable rate of return thereon not exceeding
that stated in the bidding documents and in the contract as of the date of such
revocation, cancellation or termination:
Provided, That the interest of the Government in these instances
shall be duly insured with the Government Insurance system or any other
insurance entity duly accredited by the
Office
of the Insurance Commissioner: Provided,
finally, That, the cost of the insurance coverage shall be included in the
terms and conditions of the bidding referred to above. The tolls, fees, rentals and charges on the
facility are subject to adjustment according to a formula related to official
government price indices which shall be defined before the bidding, through the
bidding documents, and, and incorporated in contract.
SEC. 8.
Toll Regulatory Board. The
Toll Regulatory Board is hereby attached to the
Department of Public Works and Highways with
the Secretary of Public Works and Highways as Chairman.
SEC. 9.
Project Supervision. Every infrastructure project undertaken
under the provisions of this Act shall be constructed, operated, and maintained
by the contractor concerned in accordance with the plans, specifications,
standards, and costs approved by the concerned government infrastructure agency
and under the technical supervision of the said agency.
SEC. 10.
Implementing Rules and Regulations. A committee composed of
representatives from the
Department of Public
Works and Highways, the
Department of
Finance, the
Department of Local
Government, the
National Economic and
Development Authority, and duly accredited organizations representing the
private Philippine construction industry shall formulate and prescribe, after
public hearing and publication as required by law, the implementing rules and
regulations, including, among others, the criteria and guidelines for
evaluation of bid proposals, provisions to subject the facility collections to
audit by the
Commission on Audit, and
conditions for the cancellation of contracts, in order to carry out the
provisions of this Act.
SEC. 11.
Repealing Clause. All laws or parts of any law inconsistent
with the provisions of this Act are hereby repealed or
modified accordingly.
SEC. 12.
Separability Clause. If any provision of this Act is held invalid, the other provisions not affected thereby
shall continue in operation.
SEC. 13.
Effectivity. This Act shall take effect fifteen (15)
days after its publication in at least two (2) newspaper of general
circulation.
Approved, July 9, 1990
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