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No ifs, buts on financial musts for PPP projects

A PARTY-LIST lawmaker on Sunday lauded the National Economic Development Authority (NEDA) for thoroughly reminding the Department of Transportation (DoTr) and other government agencies to only push for unsolicited proposals under the Public-Private Partnership (PPP) program backed by the required financial capacity, otherwise it would be tantamount to graft and corruption.

Citing a letter sent by NEDA Undersecretary Jonathan Uy to DoTr Undersecretary Ruben Reinoso, Puwersa ng Bayaning Atleta (PBA) party-list Rep. Jericho “Koko” Nograles said the NEDA had clearly declared that there are “no if and buts” when it comes to the financial requirements of all PPP projects.

Nograles said the NEDA letter to the DoTr clarified that unsolicited proposals under the PPP program must have the financial capacity “greater than or equal to the required equity including equity requirements for future capital investments” and that “the equity to be contributed to a project is whole” and “will not share with the proponent’s other projects, and well within its audited net worth.”

“The position of NEDA affirms the arguments raised during the budget deliberations of the Department of Transportation. It should be recognized that the net financial capacity to contract under Republic Act 9184 or the Government Procurement Reform Act should be automatically adopted by PPP projects. Otherwise, contractors who are undercapitalized to win bidding projects will abuse the PPP system,” Nograles said.

Nograles said Republic Act (RA) No. 6957 or the Build-Operate-Transfer Law, and its implementing rules and regulations states that sufficient equity of a company is the minimum standard for a government project covered under unsolicited projects.

However, Nograles claims that the more recent law, which is RA 9184 raised the standard of minimum requirements for a government contract. Instead of just minimum equity, NEDA sustained that the PPP proponents must sufficient financial capacity to contract.

“The law requires not only a minimum equity but also a net financial capacity to contract. This should be recognized and not simply set aside. The letter of NEDA proves that the DoTr’s position during the budget hearing is legally infirm,” Nograles said.