December 5th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked President Marcos for signing today the Public-Private Partnership or PPP Code, the draft of which was written by a technical working group Salceda chaired.
“The PPP code moves is towards a rules-based, transparent, and efficient PPP framework that will help cover the P23 trillion infrastructure investment gap of the country,” Salceda said.
“This measure also makes the PPP framework as open as possible. We expressly empowered any and all government agencies and instrumentalities to undertake PPPs. We raised the threshold for NEDA-ICC approval to P15 billion, and for local government units whose PPPs do not require any national government undertaking, the sky is the limit,” Salceda added.
Salceda also emphasized that the PPP regime is now “more rules-based and orderly.”
“The new PPP Code does not suffer from longstanding defects of ambiguity. It is clearly specified which undertakings are not allowed. The process is outlined. The comparative challenge process is simple. There is Original Proponent Status, good for only one year upon acceptance by agency, and a comparative challenge within 90 days to one year, with 30 days right to match,” Salceda said.
Joint Ventures have also been expressly defined and allowed as a PPP modality, “ending decades of uncertainty and a kind of anything-goes attitude in the use of JVs for PPPs.”
“We have also established clearer timelines and simpler, more competitive process for solicited proposals. The winning bid is the most responsive bid, and that is clearly defined in the Code as well,” Salceda said.
Salceda also introduced “policy innovations to encourage green financing, allowing commercial involvement in Official Development Assistance for PPP projects, and boosting the returns of government in PPP projects by allowing internal rate of return as a basis for bidding and negotiation of PPP projects.”
“With my amendments, the Code explicitly allows projects involving green growth, low-carbon, carbon avoidance and sustainable development, and the use of alternative assets such as carbon credits, such as those pursuant to Article VI of the Paris Agreement, or ecosystem services. This opens the door to PPPs involving the generation and trading of carbon credits and other innovative climate finance mechanisms.”
“We have a lot of potential in the market for carbon credits, because we are a low per-capita emissions country with moral ascendancy and experience in disaster risk reduction and climate change adaptation and mitigation.
Salceda also introduced a provision allowing a maximum rate of return for private PPP partners as a bidding parameter or a negotiation term in crafting PPPs.
“Anything in excess is remitted to the National Treasury, like San Miguel Aerocity’s franchise, which allows a 12% internal rate of return. The Public Service Act amendments also provide for this.”
Salceda also brought up additional amendments, such as allowing local water districts in PPPs to combine to maximize efficiency and reduce consumer bills.
Salceda also pushed to elevate the PPP Law into a Code “so that future amendments will be made to the Code instead of in a scattered way. We need one common set of rules to strengthen investor certainty and confidence.”
Salceda also pointed out that President Marcos has worked on the measure for much of his Senate career.
“I was governor then, so I was not in Congress at the time, but then-Senator Marcos in fact chaired the Committee on Public Works, and discussed his own version of the PPP Law.”
Salceda also quoted Marcos then who said “There is great promise if we can actually get the system to implement large national projects on PPP bases, where we can transfer the costs of capital to the private sector and even the financial risks to the private sector, whilst giving the private sector to gain profit.”
“It’s a vision he has held onto for much of his political career, so I am very glad that we now have it in law.”