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NEDA issues guidelines on joint venture agreements with the private sector

The National Economic and Development Authority (NEDA) has released the revised guidelines on joint venture arrangements between the government and the private sector. The guidelines, which were approved on March 9, 2023, and came into effect on April 25, 2023, will be for joint venture infrastructure or development projects in transportation, energy, water, information and communications technology, social infrastructure, as well as land reclamation, dredging, and agricultural commodity production, among others.

“The amendments have been designed to enhance competition for projects under joint ventures, enhance the performance of private sector participants, and strengthen checks and balances to ensure the technical and financial viability of government projects. These changes aim to address recurring issues that have been observed in past JV projects,” said NEDA Secretary Arsenio M. Balisacan in a statement.

Under the revised guidelines, joint venture projects between the government and the private sector will allow for the sharing of profits and losses between the government and the private sector partner. It will also allow the private sector partner to take over the infrastructure or development project after the government divests itself of any interest.

For joint venture projects costing at least P2.5 billion or if the government’s contribution will amount to P150 million and if the government’s contribution will be over 50% of its assets, the approval of the NEDA Board-Investment Coordination Committee will be required, and the committee can update the threshold amount as necessary.

The guidelines include the timelines and responsibilities of different government bodies and put a cap on the fees that prospective private sector participants will be required to pay to be considered for the project. The 32-page guideline has a provision for an appeals mechanism on the competitive selection process. It also requires the inclusion of alternative dispute mechanisms in the joint venture agreement and includes an appeals mechanism.

The NEDA said the revised guidelines are aligned with the amended Implementing Rules and Regulations of the Build-Operate-Transfer (BOT) Law and the proposed amendments to the BOT Law or PPP Act.

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