Tuesday, March 3, 2015


MANILA-In a bid to hasten infrastructure development in the country, Senator Sonny Angara has a filed a bill that seeks to promote and authorize public-private partnerships (PPPs) for the financing, construction, operation and maintenance of infrastructure facilities and services.

"For the country to build on its recent economic gains and to ensure the proper investment environment in our country, the private sector must be further encouraged to make investments through a modernized and enhanced PPP law," said Angara, chairman of the Senate ways and means committee.

The lawmaker noted that the government has traditionally been in charge of providing and financing infrastructure in the country, but investment requirements had exceeded the capacities of the government, prompting the public sector to enable private participation in infrastructure development.

In the past two decades, a number of services in utilities, transportation, property development and information technology are provided through contractual arrangements such as the build-operate-transfer (BOT).

"The BOT law has been in existence since the 90s. Gains have been made with the passage of this law and yet, the full potential for the synergy of the public and private sectors in improving and expanding the country’s infrastructure, such as our airports and rail systems and even in the building of schools and hospitals, have not been fully taken advantage of," he added.

Angara's Senate Bill 2672 or the PPP Act provides for more liberalized government regulations and procedures to better address the needs and bureaucratic concerns of PPP investors.

The proposed measure provides for the automatic grant of administrative franchise, license or permit in favor of the winning bidder, subject to the compliance with the requirements of the regulator and payment of appropriate taxes and fees.

SB 2672 likewise aims to protect public interest by ensuring fair and reasonable pricing, timely delivery of quality infrastructure, goods and services, and by requiring full public disclosure of all PPP transactions.

"We must be more transparent and competitive in the process of selecting our private sector partners. We must learn from successful and failed projects in the past, as well as global best practices in PPP," the senator said.

In addition, upon certification and recommendation by the Investment Coordination Committee, and prior consultation with the Department of Interior and Local Government, the President may classify certain projects, such as energy, toll road, mass transit, water, sewerage and such other projects, as "projects of national significance."

All real properties which are directly used for such projects shall be exempt from any and all real property taxes, while all local taxes, fees and charges imposed by a province, city or municipality on the project proponent shall not exceed 50 percent of one percent of gross sales or receipts of the preceding calendar year.

The bill also seeks to institutionalize the PPP Center that will serve as a link between the government and the private sector.

It will be tasked to assist implementing agencies in identifying, developing, promoting, facilitating, monitoring and evaluating PPP projects. It must report to the Office of the President and Congress on the implementation of the PPP programs and projects of the government at the end of each year.

"With the additional incentives provided under our measure, it is our hope that we could attract more potential private investors to help the government fast-track and improve the construction of public infrastructure and services to boost the growth of the Philippine economy," Angara said. 

Senate okays resolution to address power shortage; seeks to amend Bio Fuels Act

MANILA-The Senate has approved on third and final reading a Joint Resolution which would allow President Benigno Aquino III to address any potential power shortage during  the summer.

Senator Serge Osmeña, chair of the Committee on Energy and the sponsor of Senate Joint Resolution 12, said the measure would authorize the President to address the projected imbalance of power supply and demand in the Luzon grid, particularly in the months of April and May of this year.

Senate President Franklin M. Drilon,  author of the resolution, said that it was important for the country to avert a critical electricity situation due to the expected effects of the El Nino phenomenon, the 2015 Malampaya turnaround and continuing outages of power plants, which could affect both businesses and ordinary homes.

     “If we did not act, then it would have been a great inconvenience and grave disservice to our citizens, especially ordinary Filipinos who will have to endure the summer season without electricity,” he said.  

      Apart from bringing a solution to the foreseen summer outages, Drilon said that the resolution was part of efforts “to establish a clear energy agenda and to address the growing concern over the perceived inability of the country's power sector to keep up with the growing demand that is intricately linked to the Philippine economy's immense economic growth."

      While the average electricity demand was projected at 8,700 MW, Osmeña said, the highest demand of power on the hottest day and hour in April and May would peak at 9,000 megawatts (MW).

“Having 9,000 MW guarantees a brownout since a certain number of power plants break down while some go on scheduled maintenance because no power plant could operate continuously the entire year,” he explained.
Osmeña said the resolution proposed “a more efficient way to solve the power crisis in a much cheaper way” than what the executive department earlier recommended.
He said the President would not be given a blanket authority under the resolution nor would it provide exemptions from existing laws such as the Clean Air Act and the Clean Water Act.
“The resolution is not mandatory and would enable productions from hydro and gas plants to be tweaked,” Osmeña said.
The House version of the bill included the suspension of pertinent laws, rules and regulation and made it mandatory for self-generating facilities to participate in the Interruptible Load Program (ILP), a provision not found in the Senate version.
Under the ILP, owners of generating sets would be asked to deload from the Luzon Grid and to use their own gensets at certain hours.
Osmeña said the adoption of the ILP would cost consumers a low P7 to P8 per kilowatt an hour as compared to the P35 per kilowatt an hour under a Department of Energy proposal to lease 300 MW in gensets at a cost of P6 billion for two years or P10 million per MW.
“In this manner, up to 1,400 megawatts may be deloaded for a few peaking hours on certain days,” he said.
He said Mindanao and Cebu had adopted the ILP system since 2010 due to the chronic electricity shortages in the areas.
Meanwhile, the Senate also approved Senate Bill 2622 on third and final reading today. The measure seeks to exempt power plants from the mandatory implementation of Republic Act No. 9367, otherwise known as the Biofuels Act of 2006.
Osmeña said Senate Bill 2622, which would augment power supply when the Malampaya natural gas experiences supply shortages, would allow natural gas plants to use pure or neat diesel as their alternative fuel.
“The Biofuels Act mandates the use of biodiesel. Pure diesel cannot be utilized anymore anywhere in the Philippines, and since the power plants were built before Congress passed the Biofuels Act in 2006, they are not geared to deal efficiently with biodiesel, which clogs their filters,” he explained.
He cited the Korea Electric Power Company (KEPCO), owner of the 1,200 MW Ilijan gas plant, which decreased its production rate from 600 MW to 420 MW, or a difference of 180 MW per power plant, because of its use of biodiesel.
Osmeña said an exemption from the Biofuels Law would allow the Ilijan gas plant to deliver 160 more megawatts.
Osmeña, however, said the exemption has limitations. He said the exemption could only be invoked when (1) there is a supply shortage as determined by the DOE; (2) the pure or neat diesel is an alternative fuel of covered plants; (3)  the use of the pure or neat diesel will solely be for the production of electricity; and (4) the exemption will be only for the duration of the supply shortage.
Osmeña said the Committee on Energy had consulted and coordinated with more than two dozen agencies, groups and parties to come out with alternatives to avert the looming power crisis.
“The intent is to optimize existing assets and to bring down the average cost of electricity for the benefit of the consumers,” he said. (Pilar S. Macrohon)


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