PPP Menu No. 1: To bundle or unbundle

PPP Menu No. 1: To bundle or unbundle

 

Public-Private Partnership (PPP) involves a lot of choices. In the PPP Menu, the government implementing agency (IA) orders the strategy, project, PPP modality, selection procedure and form and amount of the contribution, among other “viands.”

One important viand is the constitution of the components of the PPP project—single component or unbundled project, or a bundled or multipurpose project. Examples of the first option would be a joint venture on bulk water supply, a management contract for the radiology department of a hospital, build-transfer- and-operate for power generation or a build-and-transfer of an evacuation center.

The reasons to unbundle projects, and not to bundle, are varied. One, the project may involve large capitalization and splitting the components would be more acceptable. Two, the market may be ready or is untested. Three, combining with other components may be unattractive for private-sector proponents (PSPs) or there might a dearth of qualified PSPs. Four, the IA has a limited mandate. Five, there could be political, human resource and social sensitivities if other components are included at the onset. Six, the law requires unbundling, like in the power sector.

A bundled project presents a combination or integration of several components or projects into one. There shall be multiple parts, embodied in one contract, offering several benefits to the public and more gains to the government, whereby one PSP, or a consortium, is selected through a competitive process. This presupposes that the IA has the mandate to pursue all the components/projects, and the PSP is eligible to undertake all the parts.

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My 100th Column: PPP Rights or Faux Rights. Special mention about Team AgraPPP conversations No. 11 with PNOC President Lista

PPP conversations No. 11 with PNOC President Lista

One of the government agencies undergoing transformation in order to be more relevant and truly developmental is the Philippine National Oil Co. (PNOC). From a holding or “passive” company, it is now reengineering itself to be an operating or “active” company.

Recognizing its limitations while capitalizing on its resources and assets and furthering the programs of the Department of Energy (DOE), the Philippine National Oil Co. (PNOC) is poised to enter into public-private partnerships (PPPs) for liquefied natural gas (LNG) and real-estate development.

PPP lead chats with PNOC President Reuben S. Lista to know where PNOC is headed.

  • What is your concept of PPP?

PPP is a tool that harnesses the strengths of the private sector in attaining developmental objectives of the government. It capitalizes on the expertise of the private sector as it lessens the financial exposure of PNOC while limiting its business risks but provides a way for the private sector to recoup its investment.

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My 100th Column: PPP Rights or Faux Rights. Special mention about Team Agra

My 100th: ‘Right(s) or faux right(s)?’

 

What greater joy is there than sharing one’s interests and passions with your core? In my case, this is Team Agra—Jean, a financial advisor with a heart…who is the heart of the team; Jessie, a former junior tennis champion…who is completing her law studies while dabbling in coaching; and Noel, a fellow obstacle-course enthusiast…who will soon become a fit-chef-restaurateur.

This 100th column is dedicated to them, without whom this columnist will not have the drive and dedication to do more for a purpose. This column is a testament that yours truly is willing to learn-unlearn-relearn, even from students of law. This columnist takes pride and feels a deep sense of happiness when his daughter writes about public-private partnership (PPP)-related topics.

The title of this column is partially lifted from the thesis submitted by Jessie to the Ateneo Law School. The future partner of Agra & Agra wrote about the Right of First Refusal—Right or Faux Right? Defining Favorable Private Sector Rights in Government Contracts.

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Availing of availability payments

Availing of availability payments

How can a project undertaken through a public-private partnership (PPP) arrangement, whereby the investment and rate of return are not recoverable from end-users, become viable? How can a project undertaken through a public-private partnership (PPP) arrangement, whereby the investment and rate of return are not recoverable from end-users, become viable?

Such a scenario is particularly true for public good-oriented or “soft” projects where the  government, not the consumers, pay. Examples of socially aimed projects are schools, rehabilitation and evacuation centers, prisons, irrigation systems and agriculture development. Sports facilities and railways, while considered “hard,” may not be that feasible or “PPP-able” if implemented without “add on” or “value added” mechanisms.

One such mechanism is “availability payments (AP).” AP is a long-term agreement with fixed periodic payments by a government agency or sponsor to the private-sector proponent (PSP) when the facility is completed and delivered to government. When the facility or service becomes available, the government or the sponsor pays, hence the name. Simply put—no facility, no AP.

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PPP for Marawi City and Tacloban City

PPP for Marawi City and Tacloban City

How does a city reel from the devastation of war, like Marawi City, and from a calamity, like Tacloban City? After combat operations in Marawi have been declared terminated and, after four years since Supertyphoon Yolanda lashed its fury on Tacloban, how can the government reconstruct and rehabilitate, and provide, in an expeditious manner, more and better, yet affordable, services? Who will finance and build the destroyed homes, hospitals, markets, roads, bridges, irrigation systems, schools and water-supply facilities?

One Way. Using government resources, appropriated or donated, and building facilities, either through procurement or by administration, Marawi can be “modernized” and Tacloban rebuilt. For Marawi and Tacloban then, P5 billion and P26 billion have been initially earmarked, respectively.However, this is not the only approach available.

The alternative. The other way, which can be undertaken with the first, is to pursue public-private partnerships (PPPs). “Build, Build, Build” can also happen through this alternative developmental approach whereby the private sector can codesign, cofinance, codevelop, co-implement, coconstruct, comanage and coown a project.

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Dissecting PPP contracts #9: The party clause and assignment of rights

Dissecting PPP contracts #9: The party clause and assignment of rights

Who pays attention to the party clause and assignment of rights provisions of a public-private partnership (PPP) arrangement? For those who want to make the parties accountable—those here means us—we should. The parties are the ones entrusted by law and contract to serve the public through this development strategy. We should know who to point our fingers at and exact performance from.

When a government/implementing agency enters into a project-based arrangement with a private sector proponent (PSP), the transaction is embodied in a binding and legally enforceable contract. Like any other contract, the party clause captures the who of the PPP.

The first party, the one awarding the contract, can only validly undertake the PPP Project if empowered to do under its charter or enabling law. The implementing agency is the party that is vested with law, let us say to supply water, lease out a parcel of land or provide basic services, to perform the task but could not do so completely, efficiently and/or expeditiously, on its own. That implementing agency, after choosing from other development strategies, opts to partner with a PSP using the PPP approach.

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News flash: ‘3rd’ joint-venture guidelines

News flash: ‘3rd’ joint-venture guidelines

In the same way that there is no single law or regulation governing all public-private partnership (PPP) modalities in the country, there are also no universal joint-venture (JV) guidelines that must be followed by all government agencies.

On October 2 this columnist contrasted two JV frameworks. These are the 2013 JV Guidelines issued by the National Economic and Development Authority (2013 Neda JV Guidelines), which covers government-owned and -controlled corporations, government instrumentalities, government corporate entities (GCEs), state universities and colleges and government financing institutions (GFIs); and the template PPP and JV ordinances for local government units (LGUs) developed by this columnist.

This template ordinance is now the official template of the Department of Interior and Local Government (DILG) under Memorandum Circular 2016—120 (DILG MC). Some 100 LGUs have already adopted their respective PPP and JV ordinances.

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