PNOC explores BOT or JV scheme on $2-B

Published October 17, 2017, 10:01 PM By Myrna M. Velasco

https://business.mb.com.ph/2017/10/17/pnoc-explores-bot-or-jv-scheme-on-2-b-lng-projects/

State-run Philippine National Oil Company (PNOC) is exploring at least two options, either a Build-Operate-Transfer (BOT) scheme or joint venture (JV), on partnership arrangement that it will seal with private sector partners on the planned $2.0-billion integrated liquefied natural gas (LNG) infrastructure projects.

In an interview, PNOC Senior Vice President for Legal Graciela M. Barleta has indicated that they are anticipating proposals from prospective private sector partners being lodged formally either before the end of this year; or the government will formally announce a bidding process by next year.

“It all depends on the partnership proposal that we will get and the modality that they will be propose – whether BOT or JV,” she said.

The PNOC executive further asserted “we are expecting that hopefully, we would be able to receive unsolicited proposal end of this year,” emphasizing that “we already have a verbal approval from Secretary Cusi, but if we will not receive any proposal until year-end, by next year, we are ready for a solicited proposal through bidding.”

Energy Secretary Alfonso G. Cusi is the chairman of the PNOC Board.

Under a BOT arrangement, Barleta explained that PNOC or the government’s involvement would be more on the policy sphere of things and may just wait for the lapse of the contract duration for the LNG facilities to be turned over to its charge.

“If it would be on a BOT mode, the government is generally involved in policies. The operations and maintenance of the facilities would be to the private sector, so at the end of certain number of years, the assets will be turned over to the government,” she reiterated. That investment arrangement though, she qualified, may still warrant an equity take for PNOC if it decides so.

For joint venture deal, she expounded that PNOC would need to comply with the 2013 Revised JV Guidelines being enforced by the National Economic and Development Authority (NEDA).

Under that NEDA edict, a government-run entity like PNOC cannot have majority ownership in a JV arrangement because the State’s procurement processes as well as the restrictive rules of the Commission on Audit (COA) may serve as impediments to viable business processes.

“If the proposal is for a JV, we have to follow the 2013 NEDA guidelines – so that will also be the basis of our evaluation of such proposal,” Barleta said.

She added if it would be a joint venture scheme, PNOC will likely have “equity and will be involved in the financing, building and operations of the facility,” albeit she qualified that as stipulated in the JV guidelines “government should not have majority interest, so we have a limit of up to 49 percent.”

PNOC is the lead entity sanctioned by the Department of Energy (DOE) to advance the country’s LNG projects, including an import facility and related infrastructure assets, electricity generating plant as well as distribution networks.