July 3, 2018

Proposed Changes in the Public Private Partnership (Amendment) Bill 2018

Public Private Partnerships (PPPs) are still at a relatively early stage of development in Tanzania when compared to other countries in the region such as Kenya, Rwanda and Uganda. The Public Private Partnership (Amendment) Bill, No.5 of 2018 (the PPP Amendment Bill) proposes some changes to the legal framework.

This updater will explore:

  • the proposed key changes to the Public Private Partnership Act, No. 19 of 2010 (as amended in 2013 and 2014) (the PPP Act); and
  • changes to other related legislation.

By way of background, Tanzania first enacted the PPP Act in 2010 and subsequent regulations in 2015. Among others, the PPP Act established the PPP Centre and PPP Technical Committee; sets out the roles and responsibilities of the public and private party; lists the contents of PPP agreements and competitive bidding for both solicited and unsolicited proposals.

The PPP Amendment Bill proposes to amend the PPP Act in order to empower the Minister of Finance to manage the implementation of PPP policy, laws and regulations.  The PPP Amendment Bill aims to remove the legal challenges under the existing PPP Act for better implementation of PPPs in Tanzania. 

Key Highlights

  PPP Act PPP Amendment Bill
Section 3: Definitions

"Minister" means the Minister responsible for investment

"Ministry" means the Ministry responsible for investment

"National Investment Steering Committee" means the National Investment Steering Committee established under the Tanzania Investment Act

"small scale PPP project" not defined

"Minister" means the Minister responsible for PPP

"Ministry" means the Ministry responsible for PPP

Definition of National Investment Steering Committee has been deleted

“small scale PPP project” means a PPP project approved  under this Act on the basis of scope, type, value and other conditions as may be prescribed in the regulations

Section 4: PPP Centre

The PPP Centre was vested in the Office of the Prime Minister

PPP Centre shall be under the general supervision of the Ministry responsible for PPP in order to comply with the Ministers (Discharge of Ministerial Functions) Instrument, G.N. No. 144/2016 which empowers the Minister responsible for finance to oversee the management of PPP Policy, Law and Regulations.

The section is further proposed to be amended to make provisions for determination of potential PPP projects by the PPP Centre with the view to aligning the projects with national development plan. 

Section 5: Functions of the PPP Centre

(3) Subject to provisions of subsection (2) the Ministry responsible for finance shall undertake an analysis of fiscal risks, affordability and other financial matters and submit the projects to the PPP Centre within fifteen working days from the date of receiving such projects.

(4) The PPP Centre shall, after receiving recommendation from the Ministry responsible for finance, within seven working days, submit the projects to the Public Private Partnership Technical Committee.

Section 5(3) and 5(4) to be deleted and replaced with provisions to give the PPP Technical Committee mandate to approve the feasibility study reports, selection of preferred bidders and PPP agreements.

Further, the Minister for PPPs together with the Minister responsible for investment shall prepare programmes for development and maintenance of favourable environment for investment through PPPs. 

Section 7: PPP Technical Committee

Composition of the PPP Technical Committee comprised of the Executive Secretary of the President's Office- Planning Commission (the Executive Secretary) among others.

Proposed amendment removes the Executive Secretary from the PPP Technical Committee and replaces them with the authority responsible for National Planning.

Section 7A: Functions of the PPP Technical Committee

Section 7A(c): consider and approve Public Private Partnership projects, agreements and any amendment to the agreements.

Proposed amendment under Section 7A includes an additional function of the PPP Technical Committee’s powers to include approving feasibility study reports, selection of preferred bidders and PPP agreements.

It further extends the period of analysing PPP documents from 15 working days to 21 working days due to the detailed scope and complexity of analysing PPP projects.

The section is further proposed to be amended by adding a new paragraph under subsection (1) so as to give the PPP Technical Committee mandate to oversee the PPP Centre and empowering the Minister to prepare oversight guidelines for PPP Technical Committee to oversee the PPP Centre.

Section 7B: Powers of the Minister

This section highlighted the procedure for submission of projects to the National Investment Steering Committee after the PPP Technical Committee had reviewed them.

Section deleted and replaced with powers of the Minister for PPPs in determining matters of  policy and monitoring fiscal risk and other financial matters relating to the implementation of PPPs. The Minister for PPPs shall determine the requirement of public funding or government support for projects as well as initiate the process where such funding is required. 

Section 10A: Facilitation Fund

Section 10A (2) provides that "the PPP Centre shall open an account with a reputable investment bank into which shall be kept all moneys constituting the Facilitation Fund."

The proposed amendment deletes the words "an account with a reputable investment bank" with the words "a bank account".

However, in the summary of objectives provided in the PPP Amendment Bill, the proposal refers to the PPP Centre to open a bank account for PPP Facilitation Fund with the Bank of Tanzania (BoT) instead of opening it in a reputable investment bank. Further clarification is required in relation to whether the bank account for the Facilitation Fund will be at the BoT or any reputable bank in Tanzania. 

Section 15: Procurement Process

All PPP projects, whether solicited or unsolicited, shall be procured through competitive bidding process.

A new subsection has been proposed to empower the Minister for PPPs to exempt some unique unsolicited projects from being subjected to the competitive tendering process subject to conditions such as:

  • the project being of priority to the Government strategy;
  • private party does not require Government guarantee or funding;
  • unique nature of project to warrant departure from competitive bidding;
  • project is of significant size, scope and financing;
  • a value for money and affordable project which transfers significant risk to private party;
  • social economic element of the project including employment, improved services and taxation; and
  • the private party undertakes cost of a feasibility study.

The objective of the proposed amendment is to increase the magnitude of unique projects proposed by private sector which have value for money to the Government including projects that do not require government guarantee or financial support from the Government. Competitive bidding for unsolicited projects had been criticised as discouraging private parties from initiating such projects.

The section is proposed to be amended by adding a new subsection which provides for local content matters to be considered in the procurement process. This is in line with the ongoing Government drive to promote local content in Tanzania.

Section 20: Amendments of Agreements

This section provides that "an agreement may be reviewed and amended by the parties if the review or amendment is consented to by the PPP Technical Committee."

The proposed amendment provides that in addition to the PPP Technical Committee, the Attorney General (AG) will also be involved in reviewing any amendments to the PPP agreements.

Section 23A: Periodic Performance Reports 

Section did not exist.

This new section requires the accounting officers of the contracting authorities to submit quarterly performance reports to the PPP Centre. The section further requires the PPP performance reports submitted by the contracting authorities and submit them to the Minister Centre to consolidate the quarterly.

The proposed amendment aims at improving efficiency and accountability of the implementing agencies.

Section 25A: Projects relating to natural wealth and resources Acts No. 5 of 2017 and No. 6 of 2017

Section 25A did not exist.

The new section makes provision for PPP projects relating to natural wealth and resources to recognise the provisions under the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 and the Natural Wealth and Resources (Review and Re-Negotiation of Unconscionable Terms) Act, 2017. These provisions may include only arbitration under Tanzanian law will be recognised as well as the right for Parliament to review any agreements in relation to, but not limited to, natural wealth and resources.

Both were enacted in a bid to safeguard against the misappropriation of natural wealth and resources in Tanzania.

Section 27: General Penalty

Any person who commits an offence under this Act to which no specific penalty is prescribed shall be liable to a fine not exceeding five million shillings or to imprisonment for a term not exceeding three years.

The penalty has increased from five million Tanzanian Shillings to fifty million Tanzanian Shillings. The penalty can also be both the fine and imprisonment.

The objective of this amendment is to improve efficiency and accountability of public officers in enforcing PPP laws and regulations.

Section 28: Regulations  

Section 28 (2) is amended by adding a new paragraph (g) with the view to empower the Minister to make Regulations on the empowerment of citizens including the provision of goods and services by Tanzanian entrepreneurs, training and technology transfer, employment of Tanzanians and taking part in corporate social responsibility. 

Amendments to other laws

The PPP Amendment Bill has also provided for the amendment of the following laws:

  • Section 5(4)(c) of Tanzania Investment Act, Cap 38 is proposed to be amended by relieving the National Investment Steering Committee of the mandate to review approved PPP projects. The objective of the proposed amendment is to minimise the approval organs in the implementation of PPP projects.
  • Section 9(1)(c) of Public Procurement Act, Cap.410 is proposed to be amended to give Public Procurement Regulatory Authority the mandate to develop guidelines to regulate procurement of consultants, transaction advisors and private party in relation to PPP projects.
  • Section 7(3) of Budget Act, Cap.439 is proposed to be amended so as to include PPP projects in the Government budget. The objective of the proposed amendment is to require the contracting authorities to consider PPP projects during preparation of Government budget so as to enhance implementation of PPP projects.
  • Section 9(2) of Petroleum Act, Cap.392 is proposed to be amended for the purpose of differentiating projects implemented through joint venture approach and projects implemented under PPP arrangement.

Conclusion 

Notably, a key highlight on the part of private investors is the exemption to competitive bidding for unsolicited projects subject to fulfilment of specific prescribed conditions.

The changes highlighted above are only provisional and may not appear in the same manner in the final form. We will update you accordingly once the final PPP Amendment Act has been passed.

Please do not hesitate to contact us should you have any queries.