Neda checkpoints in PPPs

Neda checkpoints in PPPs

For public-private partnerships (PPPs) or arrangements between government/implementing agencies (IAs)—national government agencies, government-owned and -controlled corporations (GOCCs), government instrumentalities (GIs) and local government units (LGUs)—and private-sector proponents (PSPs), the role of the National Economic and Development Authority (Neda) depends on the modality, and governing law and regulation.

The relevant laws and rules would be the build-operate-Transfer (BOT) law providing nine modalities; the Neda Joint Venture Guidelines (JV Guidelines); and the Department of the Interior and Local Government Memorandum Circular 120-2016 (DILG MC 120) covering 24 modalities.

The Neda is not a single-level agency. The Neda can refer to the Neda Board chaired by the President, the Neda-Investment Coordination Committee (Neda-ICC) and the Neda-ICC-Technical Board (Neda-ICC-TB).

Neda 4-pass rule. Under the BOT law, for unsolicited proposals (UPs) for national PPP projects, regardless of the project cost, the Neda intercedes at four junctures. After the IA determines the completeness of and accepts the UP, and prior to negotiations, all relevant documents are forwarded to the Neda-ICC for determination of the reasonable rate of return (second pass).

Under Joint Memorandum Circular 2017-01 (MC 2017-01) issued by the Department of Finance and Neda, the Neda-ICC-TB shall first undertake a technical review (first pass) prior to elevation to the Neda-ICC. After Stage Two of the UP process, the Neda-ICC must approve the terms of the negotiations (third pass) and subsequently recommend approval to the Neda-Board (fourth and last pass)

Neda 3-pass rule. Under the BOT Law, for solicited national projects with a total project cost of more than P300 million, the project must be approved by the Neda Board (third and last pass) upon the recommendation of the Neda-ICC (second pass). Under MC 2017-01, the Neda-ICC-TB shall undertake a technical review (first pass) prior to elevation to the Neda-ICC.

Neda 2-pass rule. Under the same law, for solicited national projects with a total project cost of up to P300 million, the Neda-ICC approves the project (second pass) after the technical review by the Neda-ICC-TB (first pass). This is the same procedure for local PPP projects with a total project cost of more than P200 million.

This would be the same setup for JVs under the JV Guidelines if the contribution of the government-owned and-controlled corporation or GI is P150 million or more. The Neda-ICC-TB-to-Neda-ICC takes place after the terms have been agreed upon during negotiations prior to subjecting the terms to a competitive challenge.

Neda 1-pass scenario. This could only happen if the outcome of the technical review by the Neda-ICC-TB is to reject the PPP project.

Neda 0-pass rule. Not all PPP projects are subject to Neda involvement. For: (1) local BOT law projects, where the total project cost is P200 million or less;  (2) local JVs, regardless of the project cost under DILG MC 120 and several local ordinances;  (3) GOCC/GI JVs, where government contribution is less than P150 million; (4) JVs by the Bases Conversion Development Authority under its own JV regulation; and (5) other PPP modalities not covered by the above laws and regulations, such as concessions, leases, corporatization, disposition, the Neda has no role.

These are the Neda checkpoints. Failure to pass these checkpoints are PPP nonstarters.

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