Republic Act No. 6957
AN ACT AUTHORIZING THE
FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS
BY THE PRIVATE SECTOR, AND FOR THE OTHER PURPOSES
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.
Section
2
Definition
of Terms
The following terms used 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 appropriate 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 transfers 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 sources and/or
engage the services 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 for the computation of 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 the construction where Filipino skills are available: provided, furthermore,
that the financing of a foreign or foreign-controlled contractor from
Philippine government financing institutions shall not exceed twenty percent
(20%) of the total cost of the infrastructure facility of project: provided,
finally, that financing from foreign sources shall not require a guarantee by
the Government or by 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.
Section
3
Private
Initiative in Infrastructure
All government infrastructure agencies,
including government-owned and controlled corporations and local government
units, are hereby authorized to enter into contract with any duly prequalified
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.
Section
4
Priority
Projects
All concerned infrastructure agencies,
including government-owned and controlled corporations and local 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 newspapers 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.
Section
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 forthwith cause to be published, once every week for
three (3) consecutive weeks, in at least two (2) newspapers of general
circulation and 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 prequalified infrastructure contractors
to participate in a public bidding for the projects so approved. In the 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 or 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 tools, fees, rentals, and charges in accordance with Section
6 hereof.
In the case of 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 specifications: 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.
Section
6
Repayment
Scheme
For the financing, construction, operation,
and maintenance of any infrastructure project undertaken pursuant to the
provisions of this Act, the contractor shall be entitled to a reasonable return
of its investment and operating and maintenance costs in accordance with its
bid proposal as accepted by the concerned contracting infrastructure agency or
local government unit and incorporated in the contract's terms and conditions.
In the case of a build-operate-and-transfer arrangement, this repayment scheme
is to be effected by authorizing the contractor to charge and collect
reasonable tools, fees, rentals, and charges 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 arrangement, the repayment scheme
is to be effected through amortization payments by the government
infrastructure agency or local 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 or percentage of the reclaimed land or industrial estate built,
subject to the constitutional requirements with respect to the ownership of
lands.
Section
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 Service 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 incorporated in the contract.
Section
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.
Section
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.
Section
10
Implementing
Rules and Regulations
A committee composed and 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.
Section
11
Repealing
Clause
All laws or parts of any law inconsistent
with the provisions of this Act are hereby repealed or modified accordingly.
Section
12
Separability
Clause
If any provision of this Act is held
invalid, the other provisions not affected thereby shall continue in operation.
Section
13
Effectivity
This Act shall take effect fifteen (15)
days after its publication in at least two (2) newspapers of general
circulation.
Approved:
July 9, 1990
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