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.

PPP is not procurement

When government enters into a public-private partnership (PPP) arrangement, is it “procuring”? When government procures, is it entering into a PPP? What is the difference between a PPP arrangement and a procurement contract?

Some consider PPPs as procurement contracts and vice versa. To some extent, this is true. For those who define PPPs as any relationship between the government and the private-sector proponent (PSP), then all procurement contracts, save agency-to-agency agreements, are PPPs. In the selection of the PSP for PPP contracts, some refer to this as a “procurement process.”

Management and service contracts whereby public funds are used are PPP arrangements governed under the Government Procurement Reform Act (GPRA). The overlaps between these two approaches are confined there. However, there are at least seven differences between the two.

Governing laws. Procurement of goods, services and infrastructure is governed by the GPRA, or RA 9184, while build-operate-and-transfer (BOT) or build-transfer-and-operate (BTO) arrangements are governed by the BOT law, or RA 6957, as amended by RA 7718. Joint ventures (JV) by government corporations and instrumentalities are regulated by the 2013 guidelines issued by the National Economic and Development Authority (JV Guidelines).

Go Cordova! Go BHAGs (Big-Hairy-Audacious-Goals) via PPP

What are the three big-hairy-audacious-goals (BHAGs) of Cordova, Cebu? How can public-private partnerships (PPPs) achieve these BHAGs?

Collins and Poras in Built to Last describe a BHAG as a “commitment to challenging, audacious—and often risky—goals and projects toward which a visionary company channels its efforts” to stimulate progress. This small municipality wants to do big and high-impact projects, and innovate and engage the market.

BY pursuing PPP projects, Cordova breaks away from smallness to greatness when its three PPP projects come on stream. From being a third-class town dependent on the internal revenue allotment, Cordova envisions to be a first-class self-reliant city.

This is the “moon” or “big mountain” Cordova has to climb. And it has started its ascent. Under the leadership of its former mayor, now Presidential Adviser on Legislative Affairs, Atty. Adelino Sitoy, Cordova adopted its PPP Ordinance in April 2014. It was one of the first municipalities to have its PPP framework. Cordova, to date, has awarded two big-ticket PPP projects and it is planning a third.

7 habits of highly effective public-sector proponents

HOW can we apply Stephen  R. Covey’s 7 Habits of Highly Effective People in public-private partnerships (PPPs)? Why should public-sector proponents or implementing agencies (IAs), desiring to be involved or are already involved in PPPs, adopt the seven habits?

This columnist was reminded about the seven habits as he was about to give a briefing on PPPs to professionals enrolled in the Sixth Diploma Program in Corporate Finance organized by the Ateneo Center for Continuing Education. This is his attempt to apply the seven  habits of highly effective people to organizations, particularly, IAs involved in PPPs.

Habit 1: Be proactive. PPPs involve choices and even the choice of PPP among other development strategies entails the exercise of freedom and discretion. Proactive IAs are accountable and responsible for decisions they make and their responses to the needs of the people, even for their inaction. Pursuing a monorail project through a PPP based on a needs assessment shows proactivity.

Habit 2: Begin with the end in mind. The destination of all PPP projects is better quality of life for all Filipinos. The purpose of a PPP project is to complete the project and to operate it. Reclaiming land for an airport and seaport starts with a vision, a plan and a mental creation.

‘Building islands on water’ through PPPs

CAN land reclamation be pursued through public-private partnerships (PPPs)? What are the roles of the Philippine Reclamation Authority (PRA), other government-owned and -controlled corporations (GOCCs) and government instrumentalities (GIs), local government units (LGUs) and private-sector proponents (PSPs)?

Classification of reclaimed land. Simply put, reclamation is “building islands on water”. The lands reclaimed from foreshore and submerged areas form part of the public domain and therefore owned by the state. These islands can only be disposed pursuant to a presidential proclamation classifying these as alienable and disposable. A special patent will be issued thereafter confirming the grant by the state of a parcel of public land in favor of the grantee.

The transformational and transactional PPP challenge

In pursuing Public-Private Partnerships (PPPs), must the orientation and approach be transformational or transactional? Are PPP arrangements simply about specific transactions and projects? What is the transformative value and aspect of PPPs? What is the proper orientation towards PPPs?

PPPs are transformational. PPPs must be viewed as a strategy that is geared towards change. Better quality of life for Filipinos, inclusive growth felt and enjoyed even by the poorest sectors of society and general welfare beyond rhetoric is the core and end of PPPs. These are the deep and real changes that propel and anchor PPPs.

PPP add-ons

What are the possible add-ons to government projects and existing Public-Private Partnership (PPP) contracts and projects? What are the benefits to add-on arrangements? Will adding-on components and contractual obligations require another round of competition?

There is room for improvement and dynamism. This is the rationale behind add-on schemes. An old and poorly maintained or even existing and kempt government or PPP projects can still benefit from enhancements. There could have been supervening events that were not contemplated at the beginning. Occurrence of risks is another reason. Government may, likewise, be impelled to do more.

The add-ons can take different forms.

(1) Rehabilitating existing facilities. Under the BOT law and concession laws, like the National Water Crisis Act and the Electric Power Industry Reform Act, rehabilitation and improvement of existing facilities may be introduced. High incidence of nonrevenue water or transmission losses, in the case of the water and transmission concessions, respectively, poor management and dilapidated systems may have prompted the add-ons.