INFORMATION ON BUILD-OPERATE-TRANSFER : ARRANGEMENTS and PROJECTS

RA 7718, or the amended Build-Operate-Transfer law enables the private sector to participate in the financing, construction, operation and maintenance of government infrastructure projects.


Since its full implementation, the Philippine Infrastructure Privatization Program is regarded as one of the success stories in infrastructure privatization not only by private companies but also by multilateral agencies and other countries.

The sectors open to the BOT scheme are as follows:

Power Plants Land reclamation
Highways Sewerage, drainage, dredging, solid waste
Railroads and railways management
Ports Tourism, education, health services
Airports Industrial and tourism estates
Transport systems Markets, slaughterhouses, warehouses
Telecommunications Housing
Information Technology networks
Canals, dams, irrigation, water supply projects
Government buildings
Other infrastructure development projects

How to Participate in BOT projects
Fiscal Incentives

The Philippines BOT law allows nine (9) variants and other modes subject to the approval of the President:

1. Build-and-Transfer (BT)

- Private proponent finances and constructs the infrastructure facility and turns
over ownership of facility to government after project completion
-Government compensates project proponent at agreed amortization schedule

2. Build-Lease-Transfer (BLT)
- Private proponent finances and constructs facility
- Government compensates proponent for lease of facility at agreed term and schedule
- Ownership of facility is transferred to government after the lease period

3. Build-Operate-Transfer (BOT)
- Private proponent undertakes construction, financing, operation and

maintenance of facility for a fixed term; collect tolls, fees, other charges to
recover investments plus profit

- Ownership of facility is transferred to contracting government entity after BOT term
- Government provides franchise and regulates activities of BOT contractor
- Government may opt to share in the profits of the BOT proponent

4. Build-Own-Operate (BOO)
- Private proponent finances, constructs, owns, operates and maintains facility in perpetuity; collects tolls, fees, rentals and other charges to recover investments and profits
- Government may assign operation and maintenance of project to a facility operator and provides authorization and assistance in securing approval of BOO contract
- Government has the option to buy the output/service provided by the BOO operator

5. Build-Transfer-Operate (BTO)
- Private proponent finances and constructs facility on a turn-key basis (assumes cost overrun, delay, specified performance risk)
- Title of facility is transferred to implementing agency, government assumes ownership after commissioning
- Private proponent operates the facility for implementing agency under an agreement and is allowed to get compensation for the following: proponents investment costs and reasonable return and, operating charges Contract-Add-Operate (CAO)
- Proponent adds to existing facility being rented and operates expanded project for an agreed franchise period
- Government collects rental payment from private proponent under agreed terms and schedule
- Government re-acquires control over rented property/facility at the end of lease term normally including improvements thereon.

6. Develop-Operate-and- Transfer (DOT)
- Private proponent has the right to develop adjoining property of an infrastructure to enjoy external benefits that the primary investments creates e.g. higher property values or commercial development rights
- Government re-acquires ownership of properties turned over to investor after concession period and may opt to share in the financial benefits of the investment

7. Rehabilitate-Operate-and Transfer (ROT)
- Private proponent takes over operation and maintenance of an existing facility for a franchise period and/or imports existing policy for refurbishing, erecting and cost consuming/maintaining it within the host country
- Government provides franchise To ROT company and may opt tos hare in the profits of the ROT company
- After franchising period, ownership of a facility or equipment is transferred to government

8. Rehabilitate-Own-Operate (ROO)
- Private proponent takes over an existing facility to refurbish and operate with no time limitation imposed on ownership, and can continue to operate the facility in perpetuity
- Government provides franchise to operate and may opt to share in the income of ROO company

What are the modes of implementation for BOT projects?
BOT projects may be implemented through public bidding, direct negotiation or unsolicited proposal.

What are the fiscal incentives granted for BOT projects?
-Projects costing P1 billion and above, upon registration with BOI, shall be
entitled to full fiscal incentives under the Omnibus Incentives Code (OIC)
-Projects less than P1 billion, upon registration with BOI, may avail of incentives under the OIC, subject to inclusion of the activity or project in the current Investment Priorities Plan (IPP) of BOI.

What other tax exemption incentives, reliefs are given to BOT projects?
-Tax exemptions/reliefs in cases of natural calamities, civil disturbance or adverse economic conditions
-Tax incentives to new investments in locality