Extending the term of the concession can sometimes improve the financial performance of a marginal project, provided it does not exceed 50 years, which is the maximum agreement period under the BOT Law. However given the strong effect of high discount rates over 20 years or more, the difference to present value is usually small.
Once it has been identified that bundling/unbundling will not suffice, and that a project will definitely require fiscal support, it is still essential (1) to determine whether that support is consistent with the LGU objectives, and (2) to consider the best means of providing that support. It is also important to identify the types of support that the LGU is prepared to consider and incorporate this information into the tender documents, so that bidders have better information when they prepare their bids. Early identification of support mechanisms by the LGU demonstrates to bidders that it has taken care to design a well thought out transaction process, thereby improving investors' confidence and willingness to bid. The ideal package of fiscal support must be well targeted, transparent, share risk most efficiently and at least cost to government as well as provide positive incentives to the bidders.