PPA issues guidelines for terminal contract renewals

• The Philippine Ports Authority issued new guidelines on the renewal of contracts for seaport terminal management services

• PPA Administrative Order No. 07-2023 is pursuant to changes under the Amended Public Service Act, which transferred the powers and duties of the Public Service Commission to identified administrative agencies, including PPA

• AO 07-2023 takes effect on October 19

The Philippine Ports Authority (PPA) has issued new guidelines on the renewal of contracts for government seaport terminal management services.

The rules, contained in PPA Administrative Order (AO) No. 07-2023, was published on October 4 and will take effect on October 19. The issuance of the new policy comes after PPA held a public consultation on the proposed guidelines on September 14.

The guidelines are pursuant to changes under Republic Act (RA) No. 11659, or the Amended Public Service Act, and its implementing rules and regulations (IRR).

RA 11659, which was signed into law in March 2022, transferred the responsibilities of the Public Service Commission to certain government agencies, including PPA. This law made it easier for foreign ownership in some industries, but seaports remain public utilities.

RA 11659’s IRR, which was issued on April 4, also mandates identified administrative agencies, including PPA, to revise its rules, guidelines, and other issuances in accordance with the IRR.

Under AO 07-2023, a holder of a valid and existing contract or agreement for the provision of seaport terminal management services in a particular seaport terminal may apply for renewal of the contract, provided all the 11 criteria are met.

The criteria includes:

• meeting the nationality requirement;
• having a track record of doing a good job at the seaport terminal they manage;
• having made significant investments in infrastructure, technology, or equipment for operations under their current contract;
• compliance with revenue or remittance commitments under the current contract or agreement and should not owe any money or other obligations to PPA; and
• not having a pending case against the PPA or any of its directors or officers in any court of law or administrative body;

Mark Jon Palomar, who manages the PPA Commercial Services Department, at the September 14 public meeting said the rules for checking excellent records are not yet complete, adding they will assess investments for each port separately.

Another criterion for renewal is whether the contract is still in effect upon renewal. It does not cover holdover authorities since they do not have an existing contract.

In applying for renewal of the contract, AO 07-2023 said the concessionaire pays a non-refundable application fee of P1 million, exclusive of value-added tax, upon the filing of the application.

Palomar said PPA previously did not have a provision for the renewal of contracts.

He said the P1 million application fee includes the cost of processing the renewal and makes sure the concessionaire is eligible to apply.

The Committee on Seaport Terminal Management Contract Renewal, chaired by the PPA assistant general manager for finance, legal, and administration, will check if the concessionaire can renew its contract following the new rules. If the concessionaire does not meet the requirements, they may send back the application. The concessionaire can still apply again later, following the new rules.

If the concessionaire qualifies, they will start discussing the contract’s terms and conditions within 60 days after the general manager approves it. After concluding the talks, the general manager will approve the contract renewal, and the Office of the Government Corporate Counsel will review it before the PPA Board grants final approval.

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 while waiting for their renewal or extension application to get sorted out.

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

Seaport terminal management contracts or agreements expiring less than three years from the effectivity of AO 07-2023 will be qualified to apply for renewal, provided the application for renewal of the contract is filed within 60 days from the effectivity of the guidelines. – Roumina Pablo