Legislative Summary: Proposed Public Private Partnership Bill, 2021

Parliament adopted the mediated version of the Public Private Partnership Bill, 2021, on 11th February 2021.

The Bill provides for the participation of the private sector in the financing, construction, development, operation or maintenance of infrastructure or development projects through public private partnerships. It streamlines the regulatory framework for public-private partnerships. The Bill repeals the Public Private Partnership Act, 2013.
Object and purpose of the Bill

The Bill intends to;
a) Prescribe the procedures for the participation of the private sector in the financing, construction, development, operation or maintenance of infrastructure or development projects through public-private partnerships.

b) harmonize the institutional framework for the implementation of public private partnership projects and give effect to Article 227 of the Constitution on procurement relating to public private partnerships.

c) Streamline and rationalize the regulatory, implementation and monitoring mandates of relevant agencies; and provide for a transparent project selection process, clear procurement procedures, reduced regulatory approvals and expanded contractual models in order to promote private sector investment.

The Bill targets every project agreement for the financing, design, construction, rehabilitation, or any provision of a public service in order to raise efficiency in the process and ensuring the provision of high-quality facilities and services.

The Bill excludes the application of the Public Procurement and Asset Disposal Act, 2015 from the agreements entered under public-private partnership. The Bill anticipates being better placed in such matters, such that, in the event of conflict between of any other written law, its provisions shall prevail.

Preliminary
The Bill connotes that “affordability” is the financial commitment to be incurred by a contracting authority that do not impose an unreasonable burden to the contracting authority. It takes into consideration the existing budget as well as burden to the end user.

“Concession” includes a contractual licence validated through an agreement either linked directly or indirectly to an interest to a property. It entitles a person granted the licence to make use of the specified infrastructure or undertake a project and to charge user fees, receive availability payments or both suchfees and payments during the term of the concession.

Administration of the Public Private Partnerships(“PPP”)
The Bill provides for the establishment of the PPP Committee. The committee shall consist of the PSs in-charge of finance, planning, and Industrialization. Others will be, the CS in-charge of infrastructure, the Solicitor General, and a representative of the Council of Governors, among others.

The functions and powers of the Committee include formulating policies on public private partnerships, overseeing the implementation of PPP contracts, and approving negotiated contractual terms.

The Bill further provides for the establishment of the Directorate of Public Private Partnerships, its staff, functions and powers. It provides for the appointment of the Director-General, his or her qualifications and tenure.

The Bill provides for how PPPs are to be undertaken. It states that contracting authority intending to finance, operate, equip or maintain an infrastructure facility or provide a public service may enter into a project agreement with a qualified private party for the financing, construction, operation, equipping or maintenance of the infrastructure facility.

The Bill proposes the preparation and submission of project lists by contracting authorities for approval by the Directorate, the publication of approved projects, the creation of a National List by the Directorate, and the preparation of a list of prioritised projects that may be undertaken.

A contracting Authority has a duty to prioritize project, prepare and appraise each project, provide such technical expertise and to monitor the implementation of a project agreement.

It is also charged with the responsibility of determining the duration of a PPP agreement, in whilst considering factors such as, the economic and financial viability of the project and any such depreciation of the project assets during the life of the public private partnership agreement. An up to-date national list of projects that have been approved shall be kept in a publicly accessible database.

The Bill further proposes that the Government shall support measures to cover various kinds of risks.

Public Private Partnerships Procurement Methods
The proposed Bill outlines the procurement methods for PPPs including direct procurement, privately initiated proposal and competitive bidding.

Direct procurement
This method may be used if: –
 the works or services are only available from a limited number of private parties.
 a particular private party has exclusive rights in respect of the works or services, and no reasonable alternative or substitute is available.
 Direct engagement shall significantly lower the cost of the project.
 Urgent need.

Privately Initiated Proposals
The Bill proposes that this method may be applied subject to the following: –
 the project proposal provides sufficient information for the contracting authority to assess fiscal affordability and the potential contingent liability implications of the proposal.
 the project supports the efficient transfer of risk from the public sector.
 the project is aligned with national infrastructure priorities and meets a demonstrated societal need, and it gives value for money.

Competitive bidding
The Bill provides for the applicable procedure during the prequalification of bidders and provides for the establishment of prequalification committees by a contracting authority for this purpose. It also provides for the constitution of consortiums by bidders and the holding of competitive dialogues.

The Bill provides the manner in which a tender may be cancelled and the publication of information on the results of a tender process. Similarly, upon successful tendering, the contracting authority shall execute the project agreement with the successful bidder.

The Bill further proposes that a county government may enter into a PPP agreement with a private party to undertake a public private partnership project. Where, each county government intending to undertake a public private partnership project shall obtain the approval of the respective county assembly before undertaking the project.

The Bill requires the establishment of project companies by the contracting authorities and private parties to undertake public private partnership projects. It also provides for the preparation and amendment or variation of project agreements entered by parties in relation to a project. It also provides for the implementation and management of a project as well as the establishment of a Petition Committee to determine petitions and complaints in relation to a project.

The Bill proposes to give preference to local contents (services and goods).

Offences and penalties
The Bill proposes the following offences:
i. obstruction of a person carrying out a duty or function or exercising a power under this Act.
ii. misleading a person carrying out a duty or function or exercising a power under this Act.
iii. Delaying the opening of tenders, awarding of tenders without justification.
iv. inappropriately influences tender evaluations.

Upon conviction, a natural person, is liable to a fine not exceeding two million shillings or imprisonment for a term not exceeding five years, or to both. if a body corporate, to a fine not exceeding ten million shillings. A state officer shall be subjected to disciplinary proceedings and shall be liable, on conviction, to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years, or to both.

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For any further information or clarification on this review, please contact Kenya Association of Manufacturers at
info@kam.co.ke.

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