Update on The Public Private Partnership (Amendment) Act of 2023 and a Comparison of the Amendments to the Public Private Partnership Act, Cap. 103 in Tanzania.
Public-Private Partnerships (PPPs) play a crucial role in fostering economic growth, infrastructure development, and efficient service delivery in Tanzania. To further enhance the PPP framework, the Government of Tanzania recently passed amendments to the Public Private Partnership Act, Cap. 103 (the “Act”) through the Public Private Partnership (Amendment) Act of 2023 (the “Amendments”) . These amendments, which became effective on July 5, 2023, introduce significant changes to the PPP landscape. In this article, we compare the Amendments with the previous version of the Act to understand the key changes and their implications.
- Special Arrangements for Strategic Projects:
The Act did not address the issue of special arrangements for strategic projects approved by the Cabinet whereas the Amendments include a provision that restricts the PPP Act’s applicability in cases where special arrangements for strategic projects have been approved by the Cabinet, subject to vetting by the Attorney General.
- Immovable Property
The Act only allowed the PPP centre to hold moveable property, however the Amendments extend powers to the PPP centre to not only acquire and hold movable property but also immovable property.
- Pre-feasibility Studies and Ministerial Approval:
The Act previously required contracting authorities to submit pre-feasibility studies to the PPP centre however the Amendments now mandate contracting authorities to submit pre-feasibility studies to the Minister at the beginning of each budget cycle, promoting better alignment of PPP projects with national development priorities.
- Analysis and Notification Procedures:
The Amendments introduce clear timelines for the Minister to forward pre-feasibility studies to the PPP Centre and require the PPP Centre to analyze and forward the studies to the PPP Steering Committee within set working days including that the Minister within seven working days, upon receipt of prefeasibility study on the PPP project, to cause the said study to be forwarded to the PPP Centre for analysis. Also, adding subsection 6B requiring the PPP Centre within twenty-one working days, to analyse the prefeasibility study of PPP project and forward the same to the PPP Steering Committee for notification.
The Amendment provides without prejudice, that the PPP Centre shall within thirty working days from the date of receiving the prefeasibility study, request for proposal, evaluation reports for selection of preferred bidder and PPP agreements submitted by contracting authorities, analyse them. This bestows more powers upon them as compared to under their authority under the Act.
- Responsibility of the Contracting Authority
The Act only required that the contracting authority identify, appraise, develop, manage and monitor a project, undertake a feasibility study and submit both documents. The Amendments have added an additional reporting requirement for the submission after every three months to the PPP Centre. This is an implementation report of the recommendation issued by the PPP Centre.
- Exemption Criteria for Competitive Bidding:
The Act allowed for the Minister responsible for PPPs to exempt solicited projects from the competitive bidding process under certain conditions. However the Amendments now extend those powers to solicited projects based on a certain criterion such as urgent need, intellectual property rights, and exclusivity of a particular private party. Upon an exemption of unsolicited project from the competitive biding process, the Government and the party involved shall commence negotiations of the terms of the agreement.
- Special Purpose Vehicle (SPV) Requirements:
The Act did not require private parties to establish a special purpose vehicle before signing the PPP agreement whereas now the Amendments require a private party to establish a special purpose vehicle before signing of the PPP agreement. The special purpose vehicle may include a public entity as minority shareholder provided that the public entity shall hold shares not exceeding 25 percent of equity contribution in the special purpose vehicle; demonstrate financial capacity on contribution of equity in special purpose vehicle and demonstrate capacity to bear and mitigate risk associated with the implementation of the project.
- Dispute Settlement Procedures:
The Act requires that disputes be resolved through negotiation and in the case of mediation or arbitration, be adjudicated by judicial bodies or other organs established in the United Republic of Tanzania and in accordance with laws of Tanzania. The Amendments provide for the procedures for settling disputes arising during implementation of PPP agreements to include; parties making efforts for amicable settlement through negotiations, failure of which, by mutual agreement by parties, the same should be submitted to arbitration in accordance with the Arbitration laws of Tanzania, the rules of procedure for arbitration of the International Centre for Settlement of Investment Disputes or within the framework of any bilateral or multilateral agreement on investment protection entered into by the Government of United Republic and the Government of the country where the investor originates.
In conclusion, the amendments to the Public Private Partnership Act, Cap. 103 , mark a significant step towards strengthening the PPP framework in Tanzania. By introducing clear definitions, streamlined procedures, and dispute settlement mechanisms. The Amendments aim to enhance transparency, attract investments, and facilitate sustainable development. The inclusion of provisions for special arrangements, exemption criteria, and SPV requirements reflects the Government of Tanzania’s commitment to fostering strategic projects and creating a conducive environment for public-private collaboration. With these amendments now in effect, Tanzania is poised to embark on a renewed journey of PPP-driven growth and progress.