No sovereign guarantee payment for new contracts –DOTr

 The Department of Transportation (DOTr) on Thursday assured that no sovereign guarantee will be paid to private companies who will enter into partnership projects with the government.

“The Department of Transportation has adopted a new policy na as far as the PPP (public-private partnership) project is concerned, hindi na po namin papayagan na magkaroon ng sovereign guarantee,” DOTr undersecretary for legal and procurement Raoul Creencia said.

Creencia made the statement at the hearing of the House of Representatives committee on transportation on the bills seeking to grant of emergency powers to President Rodrigo Duterte to address the country’s pressing traffic problems.

During the hearing, Bayan Muna party-list Rep. Carlos Isagani Zarate alleged that most of the PPP contracts that the previous administration entered into are alllegedly laden with controversy as most of them included sovereign guarantee provision.

A sovereign guarantee is form of assurance from the government to private companies who are entering into partnership projects with it.

The government usually pays the sovereign guarantee when its obligations stated under the contract of the project have not been fully met.

“Palpak po kasi itong mga existing PPP projects, nandito ang problema. Marami po sa listahan dito sa PPP naka-embedd yung sovereign guarantee. At the end of the day sasaluhin nanaman ng mamayang Pilipino yung papasuking obligasyon ng private companies,” Zarate said.

Zarate cited as example the controversial report last year about the alleged letter that then Transportation and Communications Secretary Joseph Emilio Abaya has supposedly sent to the Office of the President (OP).

In the supposed letter Abaya was allegedly asking that the government pay the amount of P7.5 billion to Ayala-Metro Pacific consortium Light Rail Manila Corp. (LRMC) as a form of penalty payment for the LRTA’s alleged failure to comply with some provisions and obligations contained in the contract for the operation of LRT 1.

Abaya had denied sending such letter to OP but was mum on the sovereign guarantee provision of the PPP contract with LRMC.

“Ang policy namin is walang exclusivity at walang sovereign guarantee under any new PPP contract that the DOTr will be entering into,” Creencia reiterated before the members of the House panel.

Zarate further asked Creencia if in the DOTr’s proposed emergency powers for Duterte to address traffic problems, there is a provision saying that the president will have power to rescind existing contracts and agreements.

Creencia replied that while there is no provision explicitly stating such authority, there is a provision in the proposed measure saying that existing contracts and agreements cannot hamper the actions to be undertaken by the President.

“Under Section 5 of the proposal, any action that will be undertaken under the emergency powers must not be unhampered by existing laws such as Local Government Code, Government Procurement Act, existing agreements, contracts, council resolutions and court orders,” Creencia said.

“That’s good to hear, dahil sa totoo lang talaga, nandyan ang problema sa mga pinasok na kontrata ng nakaraang administrasyon,” Zarate replied.

In a budget hearing in the House of Representatives last year, then Executive Secretary Paquito Ochoa Jr. confirmed that each year, the government allots P30 billion under the OP Risk Management Program for payment of sovereign guarantee and other obligations. — VVP, GMA News