Grishon Ng’ang’a Thuo June 19 2012 New bill to govern public-private partnerships Njoroge Regeru & Company | Projects, Construction & Infrastructure - Kenya Grishon Ng’ang’a Thuo Projects, Construction & Infrastructure BackgroundKey provisionsCommentOn April 5 2012 the minister for finance published the Public-Private Partnerships Bill 2012. The bill is to be submitted to Parliament, which will debate it and may pass it with or without amendments. If passed, it will be presented to the president for assent, after which it will become law.BackgroundOver the years, Kenyans have expressed frustration at the perceived inefficiency of government departments and public bodies in delivering services. These concerns are especially prevalent in cases where such public bodies enjoy a monopoly. It has been suggested that, given a chance, private bodies could deliver more efficient services, sometimes at a cheaper cost. This rationale has led the Kenyan government to privatise key institutions. However, it is generally accepted that not all institutions can be privatised – hence the calls for public-private partnerships (PPPs) in areas where full privatisation may not be realistic and where it is felt that private bodies could help to deliver better services. The bill is aimed at providing a framework by which PPPs will be governed.Key provisionsThe bill emphasises that PPP projects should meet the following three key criteria:value for money;affordability for the contracting government department and the end user; andappropriate transfer of risk to the private party.The bill establishes elaborate structures for determining whether a project is eligible for a PPP. For a project to qualify, it would have to be considered and approved by:a PPP committee – consisting of the principal secretaries of the relevant ministries;a PPP unit – established under the Ministry of Finance;PPP nodes – to be established by the contracting public bodies; andthe Cabinet.The mechanism for entering into PPPs is elaborate but clear, and includes the following mandatory steps:feasibility studies;competitive pre-qualification;competitive tendering; anddisclosure of the benefits of the project through electronic media.The bill allows post-tender negotiations with the winning bidder, but with a strict caveat that such negotiations cannot lead to an increase in price.The key terms of PPP agreements are stipulated. PPP agreements are to be governed by the laws of Kenya and any provision in such agreements that attempts to oust the laws of Kenya is void. Among other things, this provision has the effect of ensuring that disputes arising out of the agreements are resolved in accordance with the laws of Kenya.CommentIt is hoped that, once passed, the bill will spur the growth of PPPs and ensure the efficient delivery of services to the people of Kenya.For further information on this topic please contact Grishon Ng'ang'a Thuo at Njoroge Regeru & Company by telephone (+254 20 271 8482), fax (+254 20 271 8485) or email ([email protected]).