In July 2015, Uganda joined the list of African countries that have implemented Public Private Partnerships laws.
On 1st July 2015, the parliament of the Republic of Uganda passed the highly anticipated Public Private Partnerships (hereinafter referred to as PPPs) Bill, it was later assented to by the President of Uganda on 12th August 2015. The new law filled the gaping void for a legal framework to regulate the development and implementation of PPPs in the country.
Before the passing of the new PPP's law, Uganda lacked a formative regulatory framework tailored to Public Private Partnerships arrangements. Stakeholders would refer to the 2010 National PPP Framework policy in conducting their operations.
The new law's objective is to regulate the procurement, implementation, maintenance, operation, management and monitoring of PPPs from project conception to conclusion. It elucidates on the core infrastructure areas for which PPP arrangements may be engaged, including but not limited to, transportation, water management, oil and gas pipelines, tourist infrastructure, sports and recreational facilities, mining, energy related facilities, social infrastructure etc.
The Act requires a private party to be incorporated in Uganda as a special purpose company for the purposes of implementing a specific PPP. The Act further limits any share capital and shareholding alterations to the company without the express approval of the Minister of Finance, Planning and Economic Development and the respective ministry under which the project falls. There is no specific time frame within which such an approval may be obtained.
The scope of the Act is limited to government ministries, departments and the contracting authorities; local governments are expressly excluded.
There is a requirement that prior to the commencement of a PPP project, the contracting authority must conduct a cost benefit analysis of the project. Once the project is given a green light, it must be registered with the relevant line Ministry. After the said registration, the line ministry conducts a feasibility study of the project and gives an approval (if any required). Once the approval is obtained, the procurement of the private party can be initiated.
In instances where the Ugandan Government is the financial sponsor of the project, there must be ministerial confirmation of availability of funds for the implementation of the PPP project before the procurement process commences. It is noteworthy that the Government is expressly prohibited from borrowing, guaranteeing or raising a loan for a PPP project except with approval by Parliament as provided by the Constitution of Uganda. Further, projects above a certain monetary value threshold require a Cabinet approval. However, the extent to which parties can modify the terms and conditions after this approval is unclear; thus the rationale for stakeholders to be involved in the process from conception before an approval is secured.
The Act requires all PPP projects to have specified manpower requirements and permits the appointment of personnel, presumably, from the private sector.
The procurement laws in the PPPs Act differ from the mainstream procurement laws under the Public Procurement and Disposal of Public Assets (PPDA) Act (as amended). Under the PPDA Act, the government can shortlist and appraise a PPP private partner through a tailor-made PPP procurement process which can involve either competitive (through open or restricted bidding) or non-competitive procurement methods (direct procurement or private initiatives through unsolicited proposals; though once approved, this is subject to a competitive bidding, where ‘all interested parties' may participate).
An evaluation committee is required to evaluate bids applying the lowest price criteria, factoring in the technical, professional and financial capacity of the bidder. The successful bid must be fair equitable, transparent and competitive and the most economically advantageous. In analyzing the source of the bidder’s funds, the capital they have secured in the form of loans, guarantees or assurances required are looked at cumulatively.
The grounds for disqualification of bidders are spelt out in the Act including, but not limited to, a bidder or their representative’s conviction of a criminal offence punishable by a minimum sentence of three months, conviction of an offense related to professional misconduct, tax evasion, non-fulfillment of obligations relating to payment of social security contributions, declaration of bankruptcy, or ordered into liquidation.
The nature and form of a PPP agreement is provided for under seven models, these are: a concession, operation and maintenance agreement, lease develop and operate agreement, build, own and maintain agreement, build own operate and transfer agreement, design build finance and operate agreement and the build own and operate agreement.
Regardless of the model adopted, all PPP agreements must include clear and detailed terms such as the type of PPP, descriptions of rights and obligations of the parties, the project specifications, sums to be paid to the private party, financing of the project, risk and profit allocation between the parties, insurance policies for the project to mention but a few.
All PPP projects are to be audited every financial year from the year of project inception to conclusion by the Auditor General or such other auditor that that office appoints.
An illustration of one of the major PPP projects in the pipeline that will benefit from this law is the Kampala – Jinja Expressway PPP project. It is a very ambitious project, but once completed will be a PPP success story.
In a nutshell, the PPP Act is a progressive statute aimed at helping to unlock Uganda’s economic potential and giving stakeholders a certain degree of certainty over their projects.
Alice Namuli and Joanne Katende