PPP Ugandan Experience September 5 th 2011 Speaker : Beatrice Florah Ikilai Team Leader: Privatisation Unit Ministry of Finance
Prior to PPPs- Infrastructure Investments Funding From Capex Budget Limited Resource Envelope Projects Selected & Procured on Adhoc Basis Maintenance Weak Deterioration of the Assets
PPP Experience Tourism Kampala Serena Hotel Transport - Railway Concession (RVR) Business Infrastructure - KIBP Health Mulago Hospital ward 6 Energy Sector - Hydro power Generation -Distribution - IPPs -Heavy Fuel Generators, Mini Hydros
PPP Agreements o Lease and Assignment Agreement Direct Agreements Support Agreements Shareholders/ Lenders Agreements Limited Recourse Agreements Escrow Agreement s Sub- Contracts -Insurance -Facilities -Builders -Services
Legal Obligations An Exclusive Right to Occupy, Posses, Construct, Finance, Operate, Maintain the Assets for the Contract Duration Return Control Operate the Assets, including all New Investments, to Govt at the Contract End Payments by the Consortium. Upfront Transaction & Concession Fees A monthly Concession Fee for the use of the Assets,
Legal Obligations Grants the Concessionaire/ SPV the Obligation to Undertake Business Transactions with Leased Assets SPV to Make Defined Investments as per the Agreements SPV to Deliver Specific Services as per the Agreement in a Specific Period of Time
Other Support Gov t support to the Concessionaire (not an Obligation) Reasonable Efforts to Expedite Any Approvals Conversion of Foreign currency and Repatriation Additional Security Protection Required in Protection of the Assets Expeditious Clearance of Imported Equipment via Customs Provided all Taxes paid Agency Loans and other Financial Instruments at Concessionary Rates from WB, IFC etc
Legal Implications Compliance Achievement of PPP Fundamental Principles Monitoring Team to Monitor PPP Compliance Construction (Independent Certifier) Operations (Independent Monitor) Non Compliance: Invocation of Contract Penalty deductions - Withholding or Reduction of Payment, Waiver of Rights Warning Notices
Legal Implications Non Compliance Ctn d: Step Rights invoked by other partners to the Agreement; -Lenders -shareholders Contract Re-Negotiation and Re-Structuring Termination of the Contract & Termination the PPP Consequences -The Unfulfilled Legal Obligations, -Conflict Resolution; Arbitration; Damages -International Treaties and or Treaties with International or World Bodies eg IMF, )
Auditing of PPPs To be done by: The User Departments In Terms of Good Practice The Privatisation Unit PPP Framework (in process) The Auditor General's Office In Line with Provisions in the National Audit Act 2008 In Line with the International Standards of Auditing (ISAs) Professional Auditing Standards
Lessons Learnt Policy legal and Institutional framework not in place leading to: Uncoordinated Approach to PPPs. Selection of PPP Projects & Procurement Process Adhoc. High Expectations and Perception of the Private Sector Services Lack of Capacity to Structure and Manage Complex Projects
Lessons learnt Ltd Public Awareness of Govt Intentions. Weak Enforcement of the Legal and Regulatory Framework. Government Commitment to Finance PPP Infrastructure Projects; the Political Will to Support and Sustain the Infrastructure Unclear Communication Strategy
Way Forward A Policy Legal and Institutional Framework has been Developed PPP Policy Approved and Provides For: Fundamental Principles Central in PPP Dev t Phases for PPP Project Development Stakeholder Consultation Public Awareness Roles and Responsibilities Monitoring and Evaluation Regulation of PPP Programs
Way Forward PPP Process a Robust Way to Deliver Infrastructure and Support Service Delivery Robust Feasibility for the Project required Poorly Developed Concepts Found Not Viable Unsustainable Projects Not Viable Projects Not Meeting National Objectives NV Costs and Funding Rigorously Tested Decision to Proceed Based on Sound Information Open, Competitive Procurement Process Limited Opportunity For Corruption
Way Forward -PPP Bill Still to be Enacted Contents: Preliminary Application of the Act- to all PPPs esp DCMO of Infrastructure or Services Principles to Govern PPP Implementation -Accountability -VFM -Competition -Transparency -Protection of Intellectual Property Interpretation- Provided in the Act
PPP Bill Management of PPPs- Role of; Contracting Authority -Identify and appraise PPPs -May provide financing -Participate in the project operation/exploitation -Appointment of PPP Experts Accounting Officer -Appoint key personnel -Sign Agreements after cabinet approval -Effective and Efficient Execution of Agreements
PPP Management Ctn d Project Officer -Project Management -Monitoring of Private Party Project Team - Project Development - Procurement of PPP Partner - Provide Tech Support to Accounting Officer Evaluation Committee -Bid Evaluation Private Party: -Finance and Risk Management
PPP Management Ctn d Contract Administrator Take Over Full Responsibility For the Process From the Project Officer and Transaction Advisory Team Manage the Design and Construction Process Manage the Completion of Construction Manage the Start up of Operations Manage the Early Operations Phase Manage the Contract through to Expiry DRIVE Value Out of the Process
PPP Processes Project Inception Feasibility Study Procurement of a Private Sector partner Disqualification of Bidders Bid Evaluation PPP Agreements Monitoring of PPP projects
PPP Procurement Rules and Methods Competitive Bidding methods -Open Bidding -Restricted Bidding Non Competitive Bidding methods (to be resisted) -Direct Procurement -Unsolicited proposals -Competitive Dialogue -Negotiated Procedure Alternative procurement Agreements (BOO, O&M, BOOT etc. Government funded; PPP is Private Sector funded)
PPP Unit To be Established by the PPP Act under MOFPED Directly Supervised by Permanent Secretary Ministry of Finance Bill Provides for the Functions of the PPP Unit PPP Unit will be the Infrastructure procurement Regulator for PPPs
Key Success Factors (KSF) Political Commitment. Economic and Political Stability. Enabling Policy; Instructional; Legal and Regulatory Environment with: -Enactment of PPP Act -Establishment of a PPP Unit Dev t of Technical/Management Capacity 22
Importance of PPPs Provides: Alternative Financing for Projects that Would Otherwise be Unavailable shortage of funds for new projects Better Integration of Design, Operation and Maintenance Optimal Sharing of Risks between Public and Private Sector Whole Life approach to Service Delivery (whole Life Costing / better 23 Value for Money)
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