PROPOSED REPEAL AND REPLACEMENT OF THE PUBLIC PRIVATE PARTNERSHIPS ACT OF 2009

Agency Ministry of Finance & National Development Planning
Period Sep 09 2022 TO Oct 31 2022
Status Closed
Industry Electricity, Gas, Steam and Air conditioning supply
PROPOSED REPEAL AND REPLACEMENT OF THE PUBLIC PRIVATE PARTNERSHIPS ACT OF 2009

BACKGROUND

In 2008, the Government of the Republic of Zambia approved a Policy Framework for the development and implementation of Public-Private Partnerships. To promote efficient use of resources of the private sector in infrastructure development and management, and delivery of services, Parliament enacted the Public Private Partnership (PPP) Act in 2009, whose objective was to promote and facilitate the implementation of privately financed infrastructure projects and to enhance the delivery of social services.

In 2013 Cabinet approved the recommendation to review the PPP Act and in 2016 Cabinet approved a recommendation to transform the PPP Department into a Unit The 2009 Act created a PPP Unit under the Ministry of Finance as a body tasked to facilitate undertaking of PPPs.

This notwithstanding, the current PPP legal framework falls short of addressing weaknesses in the legal framework. This has resulted in poor performance of PPPs in the country with a marginal contribution to the economy. The need to strengthen the PPP legislative has been re- emphasized in the recent past for the country to leverage on Public Private Partnership investments to deliver a balanced and integrated infrastructure development and service delivery.

In aligning to the emphasis by the Presidential policy directive, the National Assembly approved the PPP unit as a statutory body to ensure effective delivery of sustainable PPP projects. This therefore, calls for the realignment of the PPP Act to the policy directive as well as resolve the weakness in the current PPP framework.

PROBLEM STATEMENT

The PPP Department at Ministry of Finance is responsible for facilitating, advising and monitoring the undertaking of PPP projects. The 2018 amendment to the PPP Act was done in order to increase efficiency and effectiveness of the PPP framework. However, the amendment limited the core functions of the Department and eroded its ability to perform effectively. Functions such as the collaboration in conceptualisation and identification of projects; promoting investments in public-private partnerships, facilitating internal and external audits of PPP projects; assessing and advising on financial support and allocation of fiscal commitments and contingent liabilities for PPP projects; including having oversight responsibility for the implementation, management, enforcement and sanctions, and monitoring of agreements were removed.

The limitations of these core functions means that the Department can no longer identify and conceptualise PPP projects. This function now lies with contracting authorities, who at times fail to conform with the tenets of PPPs.

On the other hand, the Act does not clearly define the roles and responsibilities of the various institutions and actors involved in the PPP process. This leads to a lack of proper understanding of the PPP process which may expose the Government to several risks. It has also resulted in duplication of functions among the key players in the PPP process. In addition, despite the PPP Council being the apex body for PPPs, the 2018 amendment removed the requirement to submit any amendments to a draft or signed agreement to the Council for mandatory final approval before it is finally signed. This poses the risk of arbitrary amendment and extension of contracts by the Contracting Authorities.

 inconsistencies in the Act, have created ambiguities in the project governance process. For example, the approval of projects, in section 7(b) and (c) of the Act stipulate that the Council must approve all projects and award of agreements.  A similar provision for the Council to approve is also found in Section 19 of the Act.  However, under section 38(3)(a), the Department also has authority to approve and award projects.

 

PPP projects are complex in nature and require substantial investment of resources and highly skilled expertise in the public sector, as well as, transaction advisors especially during the early development phase of the project. The budgetary constraints of contracting authorities have negatively impacted on the ability to effectively undertake and fund certain core activities during the preparation phase of the project such as project identification, selection, feasibility studies (which should be mandatory), appraisal, and project procurement amongst others.  The lack of a project development facilitation fund has further compounded the inability of the Department to effectively support Contracting Authorities especially during the development phase of the projects.

In addition, the contracting authority faces challenges to conduct feasibility studies because they are expensive. Further, Section 19 of the Act only allows contracting authorities to conduct feasibility studies and not the private party, whereas, Section 42 of the Act does not make it mandatory to undertake a feasibility study for unsolicited proposals. This has contributed to poorly structured projects, as well as allowing for skewed contract amendments to the advantage of the private party.

The Act has no enforcement mechanisms and does not stipulate any sanctions for violation of provisions of the Act. This has contributed to ineffective adherence to the provisions of the legal framework coupled with partial fulfilment of contractual obligations. 

There has been limited participation by local players in PPPs, as there is no mechanism put in place to encourage and promote Small Medium Enterprises participation in PPPs.

OBJECTIVES

General objective

To enhance the delivery of sustainable public-private partnership projects in order improve infrastructure development and services. 

Specific objectives

  1. To strengthen the institutional mandate of PPP Department in order to provide technical advisory and regulatory role for PPPs in Zambia by December 2022;
  2. To undertake 15 PPP feasibility studies in order to efficiently and effectively deliver PPP projects by December 2026;
  3. To promote the use of PPPs for socio-economic development in order to increase private sector participation in PPPs by 2026; and
  4. To facilitate the participation of 30 small and medium scale enterprises in order to boost local participation in public-private partnerships by 2026

The Ministry of Finance intends to repeal and replace the Public Private Partnerships Act in order to resolve the challenges discussed above. The Ministry now invites comments from stakeholders on the proposed new piece of legislation. 

Electricity, Gas, Steam and Air conditioning supply

All sectors of the economy.

Stakeholders are advised to contact the Department of Public Private Partnerships for further information. This a preliminary call for submissions. A draft Regulatory Impact Assessment Report will be made available on this portal in due course. 

You may contact Ms. Nukwase Chunga, Assistant Director - Legal at the Public Private Partnerships Department on cell No. 0955 700 008

Kindly contact the Department of Public Private Partnerships for further information. Provisional date for stakeholder consultative meetings is 28th - 30th March, 2022 at a venue to be advised. 

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