s dn 7 7 7 7 7 a l s i 0 0 0 7

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Privatization, involving the sale or lease of government assets power companies, banks, water companies etc. and in the infrastructure sector, can be achieved through various means in a public/private partnership. These can be Joint Venture: If the government wants to participate as an equity holder or investor in a financially viable project that would give a good return.
Own Conceive Design Build Operation and maintenance Financial Responsibility Public

Built-OperateTransfer( BOT) Built-OwnOperate (BOO)

Public

Public

Private by fee contract

Private

Public or Private

Private by contract (concession)

There are many reasons why countries choose a specific program for Privatization:

It may be because a country wants to take advantage of the private sector s efficiency and to save money in implementing infrastructure projects. It may be out of a budgetary concern or part of an economic development program. Or perhaps privatization is seen as a global trend and therefore the in thing to do at that time.

Privatization in the Philippines has taken place in three waves:The first wave The first wave started in 1986-1987 during a time of great political change in the country and involved the disposition of nonperforming assets owned by the Government. The second wave The second wave started in 1990 with the power sector and the success experienced there was then replicated through an expanded BOT law in other areas of infrastructure, such as roads, airports, seaports, water, and even information technology. The third wave This is the Philippines present stage and involves services such as housing, health, postal services, and pension funds.

In the early 1990s, the Government of the Philippines found itself facing a predicament of declining financial resources and absorptive capacity vis--vis the rising demand for more and more infrastructure services and facilities. And true to the dictum that necessity is the father of invention , it was because of rising needs that the Government ventured into an innovative approach of tapping private sector resources in bridging the infrastructure gap in the country. Subsequently in 1991, Republic Act No. 6957, otherwise known as the Build-Operate-Transfer (BOT) Law, was enacted. Two projects were implemented under this law: The Light Rail Transit (LRT) Line 3, an overhead railroad along a key route, EDSA; and a public market in Mandaluyong City, in the north of Manila.

BOT law is a Contractual arrangement between the government and the private sector whereby the latter finances, constructs and in some cases operates and maintains a facility or project . The private sector is allowed to charge user fees to recover its investments. Both government and private sector share project risks .

Three years after it was passed, Congress introduced amendments to the BOT Law through Republic Act No. 7718 (the Amended BOT Law). An Act Amending Certain Sections of RA 6957, Entitled An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for Other Purposes. Declaration of Policy Recognition of private sector s role in development Provision of incentives to mobilize private resources Climate of minimum government intervention Specific GOP undertakings to support private sector

The original BOT law was amended to make it more flexible, allowing nine types of scheme not only BOT including bill transfer, bill lease transfer, and BOO. A new provision was included called the Unsolicited Proposal, which allows private sector initiatives to propose projects to the Government, but subject to certain Conditions:

Unsolicited Proposals from the private sector must not require direct government equity, meaning the Government will not be a part of the project company that will finance the project; the Government will not provide a direct guarantee, meaning the Government will not repay loans incurred by the private sector; and the Government will not provide direct subsidy and will not be the source of revenue, so projects initiated by the private sector should be already financially viable. However, the Government will give support to make the project financially viable by providing credit enhancements. These could be incentives provided by the Board of Investments, such as income tax holidays for six years, or imposing duties as low as 3 percent on importation of capital equipment. This law allows a 50-year concession period.

Solicited Proposal 1. wherein the private sector is allowed to submit BOT project proposals to the implementing agencies.

Unsolicited Proposal 1. Wherein the implementing agency prepares the feasibility study and other appurtenant documents and solicits bids from prospective proponents.

2. The resulting project is usually not eligible for direct government guarantees, subsidies or equities.

2. The Government is able to provide support that maybe required simply because of the fact that such support has actually been established by government itself.

The Government of the Philippines continues to pursue its policy of encouraging the private sector to participate in the financing, construction, management and operation of infrastructure services and facilities in the country. Through the BOT Law, (Republic Act No. 7718), the Government has put together a portfolio of approximately US$ 25 billion in infrastructure projects involving private sector investments. To ensure the steady promotion of infrastructure projects that are ready for private sector investments, the Government established the Build-Operate- Transfer Center (BOT Center), whose mandate is to find technical, legal, financial, economic and institutional solutions to help government implementing agencies to make BOT projects work.

From the early 1990 s until December 2008, the Philippine BOT Program has generated capital investment of more than US$19 billion broken down as follows:
US$17,692.92 20 Projects US$17,692.92 6 Projects

Status Power Transport Environment IT (National & LGU) Social Infrastructure Property Development TOTAL

US$17,692.92 37 Projects

No. of Projects 38 8 5 8 1 9 63

Project Cost (US$M) 8,701.36 2,25.00 7,839.40 290.72 1.00 453.86 19,511.34

Awarded Concluded

Operational

DaangHari SLEX Link Project

   

Implementing Agency: DPWH Estimated Project Cost: US$ 35.5M Proposed Scheme: Solicited BOT Expected Bidding Bid Date: First half of the year

NAIA Expressway Phase 2 Project

   

Implementing Agency: DPWH Estimated Project Cost: US$ 235.33 Proposed Scheme: Solicited BOT Expected Bid Date: First half of the year

NLEX-SLEX Connector Project

   

Implementing Agency: DPWH Estimated Project Cost: US$ 477.77M Proposed Scheme: Unsolicited PPP Expected Bidding Bid Date: First half of the year

CALA-Manila Side Expressway Project

   

Implementing Agency: DPWH Estimated Project Cost: US$ 233.33M Proposed Scheme: Solicited PPP Expected Bid Date: Second half of the year

LRT Line 2 East Extension Project

   

Implementing Agency: DOTC Estimated Project Cost: US$ 251.11M Proposed Scheme: Solicited PPP Expected Bidding Bid Date: Second half of the year

LRT Line 1 South Extension Project

   

Implementing Agency: DOTC Estimated Project Cost: US$ 1,555.55M Proposed Scheme: Solicited PPP Expected Bid Date: Second half of the yea

The BOT Law, as the framework for pursuing BOT projects in the Philippines, provides not only the legal basis for that but also provides a transparent and competitive procurement process for BOT. With the BOT Law and the BOT Center in place, the prospect of keeping a steady flow of BOT projects to continually meet the growing demand for infrastructure services and facilities in the country is bright.