PE2 recommends inclusion of EE in NEDA’s JV guidelines

  • PE2 president Alexander Ablaza (rightmost) listens as NEDA officials led by Usec. Jonathan L. Uy (2nd from left) and Asec. Roderick M. Planta (3rd from left) open the public consultations on amended guidelines for joint ventures between government and private entities on 23 August 2019 (PE2 photo by Luigi Eusebio)
    PE2 president Alexander Ablaza (rightmost) listens as NEDA officials led by Usec. Jonathan L. Uy (2nd from left) and Asec. Roderick M. Planta (3rd from left) open the public consultations on amended guidelines for joint ventures between government and private entities on 23 August 2019 (PE2 photo by Luigi Eusebio)

MAKATI CITY, 30 August 2019 – The Philippine Energy Efficiency Alliance (PE2) submitted earlier today to Socioeconomic Planning Secretary Ernesto M. Pernia of the National Economic and Development Authority (NEDA) its recommendations and comments on the proposed amendments to guidelines governing joint venture (JV) agreements between government and private entities. PE2’s comments on the draft JV guidelines were prepared in response to NEDA’s request during the public consultation held on 23 August 2019 and to the 16 August 2019 letter of NEDA Assistant Secretary Roderick M. Planta to PE2 president Alexander Ablaza.

The PE2 letter to NEDA of 30 August 2019 forwards 3 recommendations: [1] Energy efficiency (EE) projects should be explicitly included among eligible infrastructure and development project types; [2] The Implementing Rules and Regulations of the EE&C Law should be harmonized with the proposed JV Guidelines for the mobilization of private capital toward Government Energy Efficiency Projects, whether by JV, by ESCO contract procurement under RA 9184 (GPRA), by PPP/BOT transactions or similar modalities; and, [3] Energy service companies (ESCOs) are not public utilities which require 60% Filipino ownership. The PE2 position paper also suggests that, due to the relatively smaller sizes of energy efficiency projects, simplified approval procedures and shorter approval timelines should be adopted.

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.

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.

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