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.

There could be more JV frameworks. Both frameworks were not intended to be the only ones. The 2013 Neda JV Guidelines itself listed the arrangements excepted from its breadth, i.e., (1) transactions of GFIs in the ordinary course of business as part of their normal and ordinary banking, financial or portfolio-management operations; 
(2) JV activities of GCEs in the exercise of their primary mandate to dispose government assets or properties; and (3)
JV activities or undertakings of the LGUs.

One such GCE excepted from said Guidelines is the Bases Conversion Development Authority (BCDA). As opined by the Office of the Government Corporate Counsel, the BCDA falls under the second cluster. Thus, the BCDA may use the Neda JV Guidelines or apply the 2008 Neda JV Guidelines, write its own or pattern its guidelines from the template ordinance annexed to the DILG MC.

On September 13, the BCDA issued its own procedures for its JVs. A perusal of the same will reveal that the BCDA lifted from all possible options. Contrasted from the 2013 Neda JV Guidelines, there is no Neda approval regardless of the total contribution of the GCE. The BCDA Guidelines is the same as the template ordinance as to this aspect.

What is unique to the BCDA Guidelines is the right given to the original proponent  insofar as countering proposals of challengers, if any. It provides for a right to outbid. Under the 2013 Neda JV Guidelines, the original proponent is given the option to submit a second/better financial offer. Distinguished from the 2008 Neda JV Guidelines, the template ordinance and build-operate-transfer law, the original proponent is given the right to match. The BCDA Guidelines, like the 2008 Neda JV Guidelines and template ordinance, also has less or no red tape or regulatory approvals.

The 2013 Neda JV Guidelines and the BCDA Guidelines, however, only confer upon the private-sector proponent (PSP), who submits the unsolicited proposal, original proponent status, that will exclude from consideration by the GCE all proposals for the same project, after negotiations is completed. Under the 2008 Neda JV Guidelines and template ordinance, the PSP becomes the original proponent after issuance of the certificate of acceptance, which is the end of stage 1 of the three-stage process.

A trend has been set. This columnist extends his appreciation to the BCDA, led by its President and CEO Vince Dizon, for being innovative, for not being run-of-the-mill and for being promotive of JVs. We need more of this type of GCE and public servant-leader.

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