Republic of the Philippines
Congress of the Philippines
Metro ManilaEighth Congress
Republic Act No. 6957 July 9, 1990
AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR THE OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
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...
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Republic Acts
AN ACT AUTHORIZING THE FINANCING
Republic Act No. 6957
Republic Act No. 6957 - An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector
Declaration of Policy (Section 1)
• Recognizes the indispensable role of the private sector as the main engine for national growth and development.
• Provides favorable incentives to mobilize private resources for infrastructure projects.
Definition of Terms (Section 2)
• Build-Operate-and-Transfer (BOT) Scheme:
- Contractor constructs and finances an infrastructure facility.
- Contractor operates and maintains the facility for a fixed term not exceeding 50 years.
- Contractor charges tolls, fees, rentals, and charges to recover investment and reasonable return.
- Contractor transfers the facility to the government agency or local government unit at the end of the term.
- Financing from foreign sources shall not require a government guarantee.
- Filipino labor shall be employed where skills are available.
- Financing from Philippine government institutions for foreign contractors shall not exceed 20% of the total cost.
• Build-and-Transfer (BT) Scheme:
- Contractor constructs and finances an infrastructure facility.
- Contractor transfers the facility to the government agency or local government unit after completion.
- Government agency or local government unit pays the contractor's total investment plus a reasonable return.
Private Initiative in Infrastructure (Section 3)
• Government infrastructure agencies, including government-owned and controlled corporations and local government units, are authorized to enter into contracts with private contractors for financing, construction, operation, and maintenance of infrastructure facilities through BOT or BT schemes.
Priority Projects (Section 4)
• Infrastructure agencies shall include priority projects eligible for private sector financing in their infrastructure programs.
• Agencies shall give wide publicity to eligible projects, including publication in national newspapers every six months and official notification to registered contractors.
• Lists of national projects must be part of the agencies' medium-term infrastructure programs and approved by Congress.
• Local projects shall be submitted to local development councils for approval.
Public Bidding of Projects (Section 5)
• Approved projects shall be published in newspapers for three consecutive weeks, inviting prequalified infrastructure contractors to participate in public bidding.
• For BOT, the contract shall be awarded to the lowest complying bidder based on the present value of proposed tolls, fees, rentals, and charges over the fixed term.
• For BT, the contract shall be awarded to the lowest complying bidder based on the present value of the proposed schedule of amortization payments.
• A Filipino constructor who submits an equally advantageous bid shall be given preference for BT.
• Copies of BOT and BT contracts shall be submitted to Congress.
Repayment Scheme (Section 6)
• For BOT, the contractor is entitled to charge and collect reasonable tolls, fees, rentals, and charges for the use of the facility, not exceeding those proposed in the bid and incorporated in the contract.
• Tolls, fees, rentals, and charges shall be approved by the government agency or local government unit, except for national highways, roads, bridges, and public thoroughfares, which shall be approved by the Toll Regulatory Board.
• The term for collecting tolls, fees, rentals, and charges shall not exceed 50 years.
• For BT, the repayment scheme is through amortization payments by the government agency or local government unit according to the bid and contract.
• For land reclamation or industrial estates, the repayment scheme may consist of granting a portion or percentage of the reclaimed land or industrial estate, subject to constitutional requirements.
Contract Termination and Adjustment (Section 7)
• If 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 contractor for actual expenses incurred plus a reasonable rate of return, not exceeding that stated in the bidding documents and contract.
• The government's interest shall be insured with the Government Service Insurance System or an accredited insurance entity.
• The cost of insurance coverage shall be included in the bidding terms and conditions.
• Tolls, fees, rentals, and charges are subject to adjustment according to a formula related to official government price indices, defined in the bidding documents and incorporated in the contract.
Toll Regulatory Board (Section 8)
• The Toll Regulatory Board is attached to the Department of Public Works and Highways, with the Secretary of Public Works and Highways as Chairman.
Project Supervision (Section 9)
• Infrastructure projects shall be constructed, operated, and maintained by the contractor in accordance with approved plans, specifications, standards, and costs, under the technical supervision of the concerned government infrastructure agency.
Implementing Rules and Regulations (Section 10)
• A committee composed of representatives from various government agencies and the private Philippine construction industry shall formulate and prescribe the implementing rules and regulations, including criteria for bid evaluation, provisions for audit by the Commission on Audit, and conditions for contract cancellation.
Repealing Clause (Section 11)
• All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.
Separability Clause (Section 12)
• If any provision of this Act is held invalid, the other provisions shall continue in operation.
Effectivity (Section 13)
• This Act shall take effect 15 days after its publication in at least two newspapers of general circulation.
Declaration of Policy (Section 1)
• Recognizes the indispensable role of the private sector as the main engine for national growth and development.
• Provides favorable incentives to mobilize private resources for infrastructure projects.
Definition of Terms (Section 2)
• Build-Operate-and-Transfer (BOT) Scheme:
- Contractor constructs and finances an infrastructure facility.
- Contractor operates and maintains the facility for a fixed term not exceeding 50 years.
- Contractor charges tolls, fees, rentals, and charges to recover investment and reasonable return.
- Contractor transfers the facility to the government agency or local government unit at the end of the term.
- Financing from foreign sources shall not require a government guarantee.
- Filipino labor shall be employed where skills are available.
- Financing from Philippine government institutions for foreign contractors shall not exceed 20% of the total cost.
• Build-and-Transfer (BT) Scheme:
- Contractor constructs and finances an infrastructure facility.
- Contractor transfers the facility to the government agency or local government unit after completion.
- Government agency or local government unit pays the contractor's total investment plus a reasonable return.
Private Initiative in Infrastructure (Section 3)
• Government infrastructure agencies, including government-owned and controlled corporations and local government units, are authorized to enter into contracts with private contractors for financing, construction, operation, and maintenance of infrastructure facilities through BOT or BT schemes.
Priority Projects (Section 4)
• Infrastructure agencies shall include priority projects eligible for private sector financing in their infrastructure programs.
• Agencies shall give wide publicity to eligible projects, including publication in national newspapers every six months and official notification to registered contractors.
• Lists of national projects must be part of the agencies' medium-term infrastructure programs and approved by Congress.
• Local projects shall be submitted to local development councils for approval.
Public Bidding of Projects (Section 5)
• Approved projects shall be published in newspapers for three consecutive weeks, inviting prequalified infrastructure contractors to participate in public bidding.
• For BOT, the contract shall be awarded to the lowest complying bidder based on the present value of proposed tolls, fees, rentals, and charges over the fixed term.
• For BT, the contract shall be awarded to the lowest complying bidder based on the present value of the proposed schedule of amortization payments.
• A Filipino constructor who submits an equally advantageous bid shall be given preference for BT.
• Copies of BOT and BT contracts shall be submitted to Congress.
Repayment Scheme (Section 6)
• For BOT, the contractor is entitled to charge and collect reasonable tolls, fees, rentals, and charges for the use of the facility, not exceeding those proposed in the bid and incorporated in the contract.
• Tolls, fees, rentals, and charges shall be approved by the government agency or local government unit, except for national highways, roads, bridges, and public thoroughfares, which shall be approved by the Toll Regulatory Board.
• The term for collecting tolls, fees, rentals, and charges shall not exceed 50 years.
• For BT, the repayment scheme is through amortization payments by the government agency or local government unit according to the bid and contract.
• For land reclamation or industrial estates, the repayment scheme may consist of granting a portion or percentage of the reclaimed land or industrial estate, subject to constitutional requirements.
Contract Termination and Adjustment (Section 7)
• If 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 contractor for actual expenses incurred plus a reasonable rate of return, not exceeding that stated in the bidding documents and contract.
• The government's interest shall be insured with the Government Service Insurance System or an accredited insurance entity.
• The cost of insurance coverage shall be included in the bidding terms and conditions.
• Tolls, fees, rentals, and charges are subject to adjustment according to a formula related to official government price indices, defined in the bidding documents and incorporated in the contract.
Toll Regulatory Board (Section 8)
• The Toll Regulatory Board is attached to the Department of Public Works and Highways, with the Secretary of Public Works and Highways as Chairman.
Project Supervision (Section 9)
• Infrastructure projects shall be constructed, operated, and maintained by the contractor in accordance with approved plans, specifications, standards, and costs, under the technical supervision of the concerned government infrastructure agency.
Implementing Rules and Regulations (Section 10)
• A committee composed of representatives from various government agencies and the private Philippine construction industry shall formulate and prescribe the implementing rules and regulations, including criteria for bid evaluation, provisions for audit by the Commission on Audit, and conditions for contract cancellation.
Repealing Clause (Section 11)
• All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.
Separability Clause (Section 12)
• If any provision of this Act is held invalid, the other provisions shall continue in operation.
Effectivity (Section 13)
• This Act shall take effect 15 days after its publication in at least two newspapers of general circulation.