PPA eyes new rules on port contract renewal

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PPA eyes new rules on port contract renewal
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  • The Philippine Ports Authority is proposing new guidelines on the renewal of port contracts
  • Among proposals is the payment of a non-refundable application fee of P1 million upon filing of the application
  • The proposals are in keeping with changes under the Amended Public Service Act
  • The Act transferred powers and duties of the Public Service Commission to some agencies, including PPA
  • Stakeholders have until September 20 to submit their position papers on the proposed guidelines

The Philippine Ports Authority (PPA) is proposing new guidelines on the renewal of contracts on seaport terminal management services.

The proposal includes a non-refundable application fee of P1 million to cover administrative cost of renewal.

During a public consultation on September 14, PPA Legal Services Department manager Rigel Caabay said the proposals are in keeping with changes under Republic Act (RA) No. 11659, or the Amended Public Service Act, and its implementing rules and regulations (IRR).

RELATED READ: Duterte signs amended Public Service Act

The law opens 100% foreign ownership in certain industries that are classified as a public service.

Seaports are not one of them, and remain classified as public utilities, thus not open to full foreign ownership.

RA 11659 was signed into law in March 2022 and transferred the powers and duties of the Public Service Commission to identified administrative agencies, including PPA.

The IRR, issued on April 4, 2023, mandates identified administrative agencies, including PPA, to revise its rules, guidelines and other issuances in accordance with the IRR.

The proposed PPA guidelines will form part of the mechanism to determine qualifications and establish procedures for evaluation of applications for contract renewals in all government seaports within PPA jurisdiction.

Under the proposal, the concessionaire must:

  • qualify for the nationality requirement;
  • have exhibited exemplary record in delivery of services at the subject seaport terminal in accordance with its current contract and latest relevant performance audit. PPA Commercial Services Department manager Mark Jon Palomar, during the public consultation, said the guidelines for evaluation of exemplary record are still being finalized by PPA. He added the investment per port will be evaluated independently; and
  • have made substantial investments on infrastructure, technology or equipment for its operations under its existing contract.

The concessionaire must also:

  • be compliant with revenue commitments under the current contract, and does not have any outstanding obligations, financial or otherwise, with PPA;
  • should not have a pending case against the PPA or any of its directors or officers, in their official capacity, in any court of law or administrative body. Caabay said this is a standard requirement by PPA in all applications for permits. He noted that while this is the general rule, the Committee on Seaport Terminal Management Contract Renewal may still evaluate the nature or the circumstances of the pending case, noting that not all pending cases affect the relationship of the parties or the capacity of the applicant.

The contract or agreement should be valid and existing at the time of filing of the application. It does not cover holdover authorities since they do not have an existing contract.

The Committee on Seaport Terminal Management Contract Renewal, chaired by the PPA assistant general manager for finance, legal and administration, will evaluate whether or not the concessionaire is qualified for a renewal of its contract or agreement in accordance with the proposed guidelines. The Committee may recommend either returning the application if the concessionaire is found to be unqualified for renewal, or commence with the negotiation of the terms and conditions of the renewal of contract if the concessionaire is found to be qualified.

In case the recommendation is to return the application, it will be endorsed to the PPA Board of Directors for confirmation. The return of the application will not preclude subsequent filing of a new application for renewal by the concessionaire in accordance with the proposed guidelines.

In case the concessionaire is qualified, the negotiation for the terms and conditions for the renewal of contract within 60 days will commence from the day of approval of the general manager.

Upon conclusion of negotiations, the contract renewal will be for approval of the general manager, then will be endorsed for evaluation and approval by the Office of the Government Corporate Counsel, before being endorsed to the PPA Board.

If the Board disapproves, and the Committee and the concessionaire fail to agree on mutually acceptable terms and conditions one year prior to the expiration of the existing contract, all negotiations will automatically cease and PPA will start the process for the bidding of the contract in accordance with its Port Terminal Management Regulatory Framework under Administrative Order (AO) No. 03-2016, as amended.

The current concessionaire will continue with the concession on a holdover capacity during the pendency of its application for renewal or extension.

PPA will only conduct bidding of the contract in accordance AO 03-2016, as amended, or process any offer to finance, construct, manage, or operate and/or maintain a seaport terminal, among others, after the resolution of application.

Seaport terminal management contracts or agreements expiring less than three years from the effectivity of the proposed guidelines will be qualified to apply for renewal, provided that the application for renewal of contract is filed within 60 days from the effectivity of the proposed guidelines.

The proposed guidelines will modify or repeal all other inconsistent issuances, orders, rules and regulations.

Stakeholders have until September 20 to submit their position papers on the proposed guidelines. – Roumina Pablo