General frameworki Types of public-private partnership
A wide range of PPP models are possible under existing legal frameworks in Nigeria. Provision is made for traditional models and there is latitude for innovation where needed. The ICRC Act provides that 'any Federal Government ministry, agency, corporation or body involved in the financing, construction, operation or maintenance of infrastructure, by whatever name called, may enter into a contract with or grant concession to any duly pre-qualified project proponent in the private sector'. 'Concession' is broadly defined to include 'a contractual arrangement whereby the project proponent or contractor undertakes the construction, including financing of any infrastructure, facility and the operation and maintenance thereof'.
In clarifying the law, the Supplementary Notes to the National Policy on Public Private Partnership (Supplementary Notes) explains that:
[A] wide range of contract forms – in turn represented by numerous acronyms (BOT, DBFO, BOOT, etc.) falls within the scope of the term 'public private partnership'. It can be said to include: outsourcing and partnering; performance-based contracting; design, build, finance and operate (or build operate transfer) contracts; and sometimes, concessions.
Over the years, governments in Nigeria have undertaken different PPP projects under different models. The Murtala Muhammed Domestic Airport Terminal 2 (MMA2), the domestic terminal of the international airport situated in Lagos and its ancillary facilities, were developed under a build-operate-transfer (BOT) agreement among the federal government, represented by the Minister of Aviation, the Federal Airports Authority of Nigeria and Bi-Courtney Aviation Services Limited, as concessionaire. The Katampe District Infrastructure was undertaken under a design, build, finance and transfer PPP model between the federal government, represented by the Federal Capital Development Authority, and a private partner, Deanshanger Project Ltd.
On its part, the Lagos PPP Law defines a 'concession agreement' as:
[A]ny agreement between the government and any person, firm, company or limited liability partnership for the construction, maintenance, operation or management of public infrastructure, assets and facilities over an agreed period of time including, but not limited to, the following types of agreements – (1) Design, Build, Operate and Transfer (DBOT); (2) Build, Own, Operate and Transfer (BOOT); (3) Rehabilitate, Operate and Transfer (ROT); (4) Joint Development Agreement (JDA); or (5) Operation and Maintenance (OM).
The Lekki-Epe toll road concession was executed on a BOT basis between the Lagos State government (LASG) and a special purpose vehicle specifically established for the project, the Lekki Concession Company (LCC). The Lekki-Epe toll road concession agreement provided for the payment of a toll by users of the road to LCC, the concessionaire.ii The regulators
There have been attempts to establish regulators or agencies with mandates that are specific to PPP. At the federal level, the Commission was established in 2008 pursuant to the ICRC Act as a body empowered to, among other things, 'take custody of every concession agreement made under this Act and monitor compliance with the terms and conditions of such agreement; [and] ensure efficient execution of any concession agreement or contract entered into by the Government'. For states with PPP-specific laws, such laws invariably establish a body with responsibility for PPPs in the state. In Lagos State, for instance, the Office of Public Partnerships (the Office) has the power to grant concessions; negotiate with prospective private partners; inspect and monitor concessionaires to ensure compliance with the terms of any concession agreement; designate a public infrastructure or public asset as a service charge-, user fee- or toll-paying public infrastructure or public asset and specify the condition for the use of such infrastructure or assets. Further, the Office is empowered to approve the amount of money that may be charged by a private or public operator with respect to any public infrastructure, public assets or amenities as toll or user fees, subject to the approval of the Lagos State House of Assembly. Apart from the Office, the Lagos State Public Procurement Agency established by the Lagos State Public Procurement Act 2011, the Lagos State Ministry of Finance, Ministry of Budget and Economic Planning and Ministry of Justice, are also involved in PPPs in Lagos State.
The Bureau of Public Enterprises (BPE), established under the Public Enterprise (Privatisation & Commercialisation) Act 1999 (the PE Act) is charged with the responsibility of effecting the privatisation or commercialisation of government enterprises identified under the First and Second Schedules of the PE Act. The BPE in the performance of this function has been seen to make use of traditional PPP models such as BOT or concessioning in some circumstances. For instance, the Nigerian Ports Authority currently has about 25 terminals operated under concession agreements with private entities, with the concession terms ranging from 10 to 15 years. There are also at least two ports operating on a BOT basis, namely, the Tin Can Island Port Complex and the Rivers Port Complex.
The Supplementary Notes outlines the roles and responsibilities of ministries, departments and agencies (MDAs) and other stakeholders in PPPs to avoid duplication, reduce bureaucracy and promote consistency, clear responsibility and accountability. Apart from the Commission and the BPE, the key MDAs involved in PPPs are the National Planning Commission, the Federal Ministry of Finance, the Debt Management Office, Office of the Accountant-General of the Federation and the Bureau of Public Procurement (the BPP). There are also sector-specific regulators, such as the Nigerian Communications Commission (for telecommunications projects), the Nigerian Electricity Regulatory Commission (for power projects), the Nigerian Maritime Administration and Safety Agency, Nigerian Ports Authority and the National Inland Waterways Authority (for maritime projects) and so on.iii General requirements for PPP contracts
PPPs can be utilised for any project in Nigeria, except those that relate to matters on the 'negative list'. The actual terms of a PPP contract will depend on the negotiation prowess of the parties involved and any special considerations surrounding the project. There is no standardised PPP agreement that must be adopted by the parties. There are, however, certain provisions that must be complied with as stipulated under the ICRC Act or the laws of the relevant states, including provisions for arbitration as the dispute resolution mechanism. Generally, it is required that the project company possess the financial capacity, relevant expertise and experience in undertaking the relevant infrastructure development or maintenance before it can contract with a relevant MDA.
In addition, while the concession agreement might only be executed between the relevant government ministry or agency and the private entity, such an agreement would have been subjected to numerous consent requirements, depending on the peculiarities of the project. For instance, for prioritised projects under the ICRC Act, the approval of the Federal Executive Council is required before the relevant ministry or agency can enter into a PPP agreement. Also, the approval of the Federal Executive Council is required for a government ministry, agency or corporation to give any form of guarantee, letter of comfort or undertaking in a concession agreement.
The Executive Council and the governor are the approving authorities in Lagos State. However, the Lagos PPP Law further provides that 'any Concession Agreement to be entered into by the Office must be presented before the House of Assembly for ratification before implementation'. This provision is peculiar to the Lagos PPP Law. There is no such consent requirement under the PPP laws of Ekiti and Rivers States, for example. The Ekiti State PPP Law provides instead that 'the award of a Concession by the Ekiti State Public Procurement Board is subject to the approval of the Governor as the approving authority'. Finally, where a consortium is undertaking the project under a PPP, members would be jointly and severally liable under the contract and the withdrawal of any member of the consortium before or during the implementation of the project may be grounds for review or possible cancellation of the contract.
The duration of a PPP agreement will depend on the nature of the project. The ICRC Act does not limit the duration of PPP agreements.
Bidding and award procedurei The federal government of Nigeria
In addition to the ICRC Act, the Public Procurement Act 2007 (PPA) also plays a central role in the award of concessions at the level of the federal government. The PPA established the BPP and makes due process provisions applicable to procurements by the federal government and its agencies. Essentially, the PPA requires every procurement entity to maintain a record of a comprehensive procurement procedure. Nevertheless, while the actual procurement process may differ from one entity to another, all procurement must comply with the principles and general framework laid down by the PPA. The principal feature of the PPA is that all procurement entities must obtain a 'Certificate of “No Objection” to Contract Award' from the BPP for every procurement to be formalised. The PPA establishes different procedures for the procurement of goods and works on one hand, and the procurement of services on the other hand. Central to both regimes is the general need for public advertisement of invitation for bids in respect of the procurement with a view to encouraging 'open competitive bidding'.
Also noteworthy is that the PPA expressly permits preferential treatment for domestic or local bidders in situations where an invitation to bid for goods and works is also extended to foreign bidders. Section 34(1) of the PPA states that 'a procuring entity may grant a margin of preference in the evaluation of tenders, when comparing tenders from domestic bidders with those from foreign bidders or when comparing tenders from domestic suppliers offering goods manufactured locally with those offering goods manufactured abroad'. The parameters of such domestic preference must be disclosed in the bidding document.
Finally, in determining the successful bid, the procurement entity must be mindful of the bid offering the most value for money with regard to the requirements of the proposal for bid.ii The state governments
The bid and award process will differ from state to state depending on the specific regulatory framework in place. For Lagos State, the extant legislation on procurement applies to PPPs. The Lagos PPP Law expressly provides that 'the Office shall be a procuring entity for the purpose of the Lagos State Public Procurement Law and shall comply with the intendment of that Law'. The provisions of the Lagos State Public Procurement Law 2011 (the Lagos Procurement Law) are very similar to that of the PPA. A significant difference is that under the Lagos Procurement Law, there is no provision for the issuance of a Certificate of No-Objection by the Office. Moreover, unlike the PPA, the Lagos State Procurement Law makes provision for e-procurement. Nevertheless, procurement by any procuring entity is governed by the same principles of open competitive bidding, promotion of competition and system of accountability, among others.iii Unsolicited bids
The Commission's Guidance Notes on Unsolicited Proposals govern unsolicited proposals at the level of the federal government. The Commission's Guidance Notes encourage unsolicited proposals on the premise that they might contribute to the infrastructural development of the country. Unsolicited proposals are to be submitted directly to the relevant MDA. MDAs on their part are to review submitted unsolicited proposals against the following laid down criteria:
- Does the project serve a credible public interest?
- Is the project in line with the national development goals of the relevant MDA?
- Does the project fall under the category of critical infrastructure?
- Is the project viable without need for viability gap funding?
- Does the project proponent possess the requisite competence and profile to implement the project?
Upon completion of the MDA's review, the proposal is forwarded to the Commission for its review and issuance of 'no objection' after a favourable technical and financial due diligence exercise. Thereafter, ministerial approval is sought, and if obtained, the project proponent is issued a formal acknowledgement as the project author and the project proceeds to a competitive bidding stage. At the bidding stage, the Swiss Challenge System will be applied to allow for submission of competing bids by other potential proponents via a transparent process. However, the investments made by the project proponent in preparing the proposal to the requisite OBC standard is taken into consideration, and as such, the original proponent is granted the right to counter-match the best offer and secure the contract. The successful bidder is determined on the basis of the most economically and financially viable submission.
For unsolicited bids, the approach of the Office in Lagos State is similar to that of the Commission outlined above. The Lagos State PPP Manual (the Manual) provides that 'in select cases, the project could be initiated by the private sector as an Unsolicited Proposal under a transparent, competitive process which will also be managed by a MDA'. It appears, however, that Lagos State is less disposed to pursuing unsolicited proposals, as the Manual further provides that 'while all proposals will be treated on a case-by-case basis, consideration of unsolicited proposals will be the exception rather than the rule, limited mainly to projects that demonstrate genuine innovation and/or use of proprietary technology.'