Public Policy/Regulatory developments in Zimbabwe

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[co-author: Josephine Mbuya]

The Public Private Partnership Act No. 19 of 2010 (the Act) is the principal act made for the purpose of providing an institutional framework for the implementation of public private partnership (PPP) agreements. The Act outlines the rules and procedures of the procurement process and development of public and private sector partnerships.

The Act, like any other law, has undergone several amendments, the most recent one being the amendments of 2018 through the Public Private Partnership (Amendment) Act No. 9 of 2018.

The last two amendments before the 2018 amendments had incorporated changes in the Act to include:

  • the establishment of the new PPP authorities, the Public Private Partnership Unit and the Public Private Partnership Technical Committee;
  • the repealing of section 20 of the Act, which required that all amendments and review of agreements be performed by the parties upon approval by the Finance Unit and the Coordination Unit, and replacing it with a new section 20 that allowed all amendments and review of agreements to be performed by the parties upon the approval of the PPP Technical Committee; and
  • the establishment of the Facilitation Fund. This fund was established for the purpose of financing feasibility studies and to assist PPP projects with limited financial viability and high economic benefits. In case of the PPP projects requiring funding support from the public, such support shall be granted at the discretion of the Minister.

The current amendments to the Act, through the Public Private Partnership (Amendment) Act No. 9 of 2018, have further introduced changes to include the following:

  • The Minister responsible for PPP now has the mandate to oversee the implementation of PPP programmes and he has been given the power to exempt procurement of an unsolicited project from competitive tendering where it meets the following criteria:
    • the project is of priority to the government at the particular time and broadly consistent with the government’s strategic objectives;
    • the private proponents do not require the government to guarantee or provide any form of financial support for the project;
    • the project has unique attributes that justify departing from a competitive tender process and others could not deliver a similar project with the same value for money;
    • the project is of a size, scope and financing that comply with the conditions provided in the regulations;
    • the project demonstrates value for money and affordability and transfers significant risks to the private proponent;
    • the project offers wide social economic benefits including improved services, employment and taxation; and
    • the proponent commits to bear the cost of undertaking a feasibility study.

This means that not only will all PPP agreements have to be approved by the PPP Technical Committee but they will also need to be vetted by the Attorney General.

  • A further amendment is in relation to natural resources management. All PPP projects relating to natural wealth and resources will be required to comply with the natural 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. This gives Parliament the right to review the PPP agreements at a later point and to modify them, where necessary.
  • One notable change is the reduction of the threshold for small-scale projects from US$70 million to US$20 million.
  • In addition, PPP agreements will be made subject to local arbitration under the arbitration laws of Tanzania. Therefore, in the event of a dispute, the parties will be subjected to a local arbitral forum i.e. the National Construction Council or the Tanzania Institute of Arbitrators.
  • The Public Private Partnership (Amendment) Act has also amended other laws such as:
    • the Tanzania Investment Act Cap. 38, by relieving the National Investment Steering Committee from scrutinising the approved PPP projects. This is so as to reduce the number of approval organs in PPP 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 parties in relation to PPP 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.

Conclusion

Generally, the amendments are likely to encourage more international investors to propose PPP projects as there will be more efficiency in the review process and obtaining approvals of PPP projects.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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