Yes, mining is ‘PPP-able’

  • December 19, 2016

Yes, mining is ‘PPP-able’

CAN mining be pursued through public-private partnerships (PPP)? What laws permit mining PPPs? Who can be the government implementing agencies? Are the build-operate-transfer (BOT) law and joint-venture guidelines issued by the National Economic and Development Authority (JV Guidelines) relevant?

Mining is principally governed by the Philippine Mining Act and the Small-Scale Mining Act.  Mining entails the extraction or removal of minerals or all naturally occurring inorganic substance in solid, gas, liquid, or any intermediate state.

Are mineral agreements (MAs) PPPs?

Applying the broad concept of a public-private partnership (PPP), i.e., an agreement between government and the private-sector proponent (PSP) or contractor for infrastructure and/or social services, MAs are considered PPPs. Under those two laws, mineral production-sharing, coproduction or joint-venture agreements are PPPs.

A mineral production-sharing agreement is an agreement where government grants to the contractor the exclusive right to conduct mining operations within a contract area and shares in the gross output. A coproduction agreement is an agreement between government and the contractor wherein government shall provide inputs to the mining operations other than the mineral resource. A JV agreement is an agreement where a JV company is organized by government and the contractor with both parties having equity shares.

Who are the public proponents?

ON the part of government, various administrative agencies, at three levels of the bureaucracy, can enter into PPPs on mining. The Department of Environment and Natural Resources (DENR), government corporations or instrumentalities, like the Philippine Mining Development Corp., Natural Resources Development Corp. and the North Davao Mining Corp., and local government units (LGUs) can enter into PPPs on mining. These agencies can collaborate with PSPs through mining or PPP agreements and/or regulate through the issuances of permits.

Are the BOT law and the Neda JV guidelines applicable?

For these public proponents, mining, arguably, is an infrastructure or development project that is “normally financed and operated by the public sector.” The build-operate-transfer (BOT) law, arguably again, may be utilized even if the two special mining laws do not make express mention of the variants under the BOT law. It must also be noted that mining is not one of the projects enumerated under the BOT law and its rules.

The public proponents, except the DENR, may enter into JVs under the JV guidelines. A JV is expressly permitted under the Philippine Mining Act and the Small-Scale Mining Act. A JV can be undertaken for mining since it is an “investment activity”.

How will government select the PSP?

If under the BOT law, the PSP may be selected either through competitive selection or challenge. Under the JV guidelines, the PSP can only be chosen through competitive public bidding, not through an unsolicited proposal. However, this restriction does not extend to LGUs since the JV guidelines excludes LGUs. The PPP ordinances of LGUs shall be the governing laws for the selection of the PSP.

So, friends, mining, subject to regulatory approvals and requirements, is “PPP-able”.

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