In September 2018, the highly anticipated Public Private Partnership (the PPP Amendment Act), No.9 of 2018 was gazetted. In this article, we set out some of the key amendments that have been made that will encourage investors to propose PPP projects in Tanzania.
The Public Private Partnership Act No. 19 of 2010 is the principal act made for the purpose of providing for institutional framework for the implementation of the Public Private Partnership agreements between public and private sector entities. The Act outlines the rules and procedures of the procurement process and development of Public and Private sector partnerships.
Out of the many amendments that the Public Private Partnership Act, Cap. 19, 2010 has undergone over the years, the most recent is the anticipated Public Private Partnership Amendment Act No. 9 of 2018. This amendment has brought about changes to the other previous amendments of 2013 and 2014, of which these had introduced changes to the main Act, 2010.
The two amendments before the 2018 amendment had incorporated changes on the Principal Act No. 19 of 2010 which included the following:
- the establishment of the new PPP authorities such as Public Private Partnership Unit (PPP Unit) and the Public Private Partnership Technical committee;
- the repealing of section 20 of the Principal Act which required that all amendments and review of the agreement be done by the parties upon approval of the Finance Unit and the Coordination Unit, and introducing a new section 20 that allowed all amendments and review of the agreements to be done by the parties upon the approval of the PPP Technical Committee; and
- the establishment of the Facilitation Fund. This fund is established for the purpose of financing the feasibility studies and to assist PPP projects with limited financial viability and high economic benefits.
The final amendment to the Principal Act, Cap. 19, 2010 the Public Private Partnership Amendment Act No. 9 of 2018 has however introduced further changes to the PPP Act, 2010 as amended (2013 and 2014). These various changes include:
The Minister for Public Private Partnership now has the mandate to oversee the implementation of PPP program and he has been given the power to exempt procurement of unsolicited projects form competitive tendering where it meets the following criteria:
- the project shall be of priority to the Government at the particular time and broadly consistence with the government strategic objectives;
- the private proponents do not require the Government to guarantee or any form of financial support from the government;
- the project shall have unique attributes that justify departing from a competitive tender process and that others could not deliver a similar project with the same value for money outcome;
- the project is of significant size, scope and financing as per conditions provided in the regulations;
- the project shall demonstrate value of money, affordability and shall transfer significant risks to the private proponent;
- the project has wide social economic benefits including improved services, employment and taxation; and
- the proponent commits to bear cost of undertaking a feasibility study.
This means that not only do all PPP agreements have to be approved by the PPP Technical Committee but they will also require to be vetted by the Attorney General.
In addition, all Public Private Partnership projects relating to natural wealth and resources will be required to comply with the National Wealth Laws such as the Natural Wealth and Resources (Permanent Sovereignty) Act and the Natural Wealth and Resources Contracts (Review and Re- Negotiation of Unconscionable Terms) Act which allows the parliament the right to review the PPP agreement at a later point and to modify it if they are deemed to be any unconscionable term.
- In case of the PPP projects requiring funding support from the public, such support shall be granted at the discretion of the Minister.
- The Public Private Partnership Act has also amended other laws such as:
- the Tanzania Investment Act, Cap. 38 by relieving the National Investment Steering Committee from scrutinizing the approved PPP projects. This is so as to reduce the amount of approval organs in Public Private Partnership projects;
- the Public Procurement Act Cap. 410 by giving the Public Procurement Authority the mandate to develop guidelines to regulate procurement of consultants, transaction advisers and private party in relation to Public Private Partnership projects; and
- the Budget Act Cap 439, the aim of the amendments is to require the contracting authorities to consider PPP projects during preparation of the Government budget.
In conclusion, the coming into force of the long anticipated Public Private Partnership Act, Cap. 9 of 2018 will enable to reduce many of the legal challenges that were facing the Public Private Partnership Sector and will enable to produce a smooth development of future projects.