NEDA seeks PE2 comments on amended JV guidelines
PASIG CITY, 23 August 2019 – The National Economic and Development Authority (NEDA) formally invited the Philippine Energy Efficiency Alliance (PE2) to participate in a public consultation held earlier today specifically to gather comments on the proposed amendments to guidelines governing joint venture (JV) agreements between government and private entities.
In the 16 August 2019 letter of NEDA Assistant Secretary Roderick N. Planta to PE2 president Alexander Ablaza, NEDA identified the need to amend the 2013 Revised JV Guidelines in order to eliminate ambiguities in its application/implementation and promote transparency and competitiveness in JV transactions. NEDA deemed it necessary to conduct a public consultation to discuss the subject amendments with relevant stakeholders prior to approval of the same by the Socioeconomic Planning Secretary. Said consultation activity was envisioned to enable well-informed participation and decision-making based on inputs of the relevant stakeholders, with due regard to those who stand to be affected by the proposed reform.
Ablaza said during the public consultation that while PE2 was in the process of preparing official comments, the Alliance would like to see these JV Guidelines and the Implementing Rules and Regulations on Government Energy Efficiency Projects under Republic Act 11285 harmonized, and consistent with the objective of effectively mobilizing private capital toward energy efficiency projects in the public sector. Energy efficiency should be articulated among types of "Infrastructure or Development Projects" listed in Section 5.10 of the Revised Guidelines. Ablaza explained also that energy efficiency projects are typically smaller than normal infrastructure projects, with most energy service company (ESCO) contracts with projects costs below P 150 million. PE2 seeks simplified procedures and requirements (e.g. relaxing of ICC approval requirement) and shorter approval timelines for energy efficiency projects.
NEDA clearly differentiated JV Agreements from projects procured under Official Development Assistance (ODA), Government Procurement Reform Act (GPRA), and Build-Operate-and-Transfer (BOT) Law, except for the Build-Operate-and-Own (BOO) scheme and similar schemes under the BOT Law, where generally ownership of the asset/business will stay with the Government.
NEDA’s amendments include a clarification that JV Agreements allow sharing of profits and losses between the government entity and the private sector partner and taking over by the private sector partner of the projects after the government divests itself of any interest in the JV. These Guidelines shall apply to all government-owned and/or -controlled corporations (GOCCs), water districts (WDs), government corporate entities (GCEs), government instrumentalities with corporate powers (GICPs), government financial institutions (GFIs) and state universities and colleges (SUCs).
NEDA defines a JV as an arrangement whereby a private sector entity or a group of private sector entities on one hand, and a government entity or a group of government entities on the other hand, provide contribution to the JV to undertake an investment activity. The investment activity shall be for the purpose of accomplishing a specific, limited, or special goal with the end view of facilitating private sector initiative in a particular industry or sector, and eventually transfer the activity to either the private sector entity under competitive market conditions or to the government. The JV involves a community or pooling of interests in the performance/implementation of the investment activity, and each party shall have the right to direct and govern the policies in connection therewith with the intention to share both profits and, risks and losses subject to agreement by the parties. A JV may be a contractual JV or a JV company.
