The PPP Act came into effect in 2010 with the PPP Regulations, and there have been various subsequent amendments to the legislation, the latest taking place in 2018. Although the PPP Act was revised in October 2018, the PPP Regulations 2015 are still in the review process.
The PPP Act and PPP Regulations provide for the institutional framework for the implementation of PPP agreements between public- and private-sector entities, and set rules, guidelines and procedures governing, inter alia, PPP procurement, development and implementation. Under the amended PPP Act:
- the PPP Centre administers PPPs as a one-stop centre and, for effective discharge of its functions, seek recommendations from the ministries responsible for investment, finance, planning or any other ministry, department or agency; and
- the PPP Steering Committee considers and approves PPP projects and agreements.
The Minister of Finance and Planning creates regulations to aid carrying out the provisions of the PPP Act, prescribing:
- levying of fees and charges;
- investment opportunities and promotion;
- functions of local government authorities under the PPP Act and clear linkages of roles between the implementing ministries and appropriate bodies at the local government;
- evaluation, operation and management of projects under the PPP Act;
- the management of, and terms and conditions for, accessing the Facilitation Fund;
- procedures for procurement of private parties and matters incidental thereto;
- the manner in which the empowerment of citizens of Tanzania may be implemented including provision of goods and services by Tanzanian entrepreneurs, training and technology transfer, employment of Tanzanians and corporate social responsibility;
- process and procedure for scrutiny and analysis of projects that require provision of government support; and
- any other matter in the promotion and furtherance of objectives of this Act.
In addition to the above powers, the Minister of Finance and Planning may also make rules and guidelines for the better implementation of the PPP Act.
Each project requires a feasibility study to demonstrate the PPP shall, among others, be affordable to the contracting authority, provide value for money, and transfer appropriate technical, operational or financial risks to the private party.
The Public Procurement Act and Regulations do not apply to PPPs. The PPP Act and Regulations govern the procurement procedures of the PPPs. PPP projects that relate to natural wealth and resources shall take into account the provisions of the Natural Wealth and Resources (Permanent Sovereignty) Act 2017 and Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act 2017. A Facilitation Fund shall also be set up (see Section VI.i). The PPP Centre functions include:
- mobilising resources;
- ensuring that government departments integrate PPP plans;
- implementing a fair, transparent, competitive and cost-effective procurement process;
- dealing with fiscal risk allocation;
- monitoring and evaluate the performance of the PPP projects; and
- undertaking research on PPP matters.
The PPP Steering Committee functions include:
- reviewing policy, legislation, plans and strategies pertaining to the promotion, facilitation and development of PPPs and to advise the Minister of Finance and Planning accordingly;
- advising the Minister of Finance and Planning on matters relating to implementation of the PPP Programme;
- considering and approving detailed projects report, selection of preferred bidders, agreements and any amendment to the agreements;
- approving allocation of project development funds from the Facilitation Fund or the Treasury;
- assigning to the contracting authority's terms and conditions for utilisation of the Facilitation Fund; and
- subject to the recommendation made by the PPP Centre, approving feasibility studies, selection of preferred bidder agreements and amendment to agreements.
Both solicited projects (i.e., competitively tendered initiated by the public sector) and unsolicited projects (i.e., initiated by a written proposal from a private party to a contracting authority) are permitted.
PPPs in the energy sector have additional requirements that are set out in more detail in Section IV.
PPPs must endeavour to provide opportunity for empowerment of the citizens of Tanzania. The government has resolved to take measures designed to promote and facilitate economic initiatives aimed at empowering Tanzanians; and has agreed in terms of the National Economic Empowerment Policy 2004 and the National Economic Empowerment Act 2004 that natural resources, trade, agriculture, industry and other economic opportunities must generate wealth, and boost the small and medium enterprise sector, to bring about a sustainable affirmative action and facilitate genuine and positive economic empowerment to the population of Tanzania. It has also stated that economic empowerment is a central means for bringing about economic growth and social justice among Tanzanians that is necessary for the promotion of peace, tranquillity and social stability.
Bidding and award procedure
All PPP projects shall be procured through an open and competitive bidding process except for unsolicited projects exempted by the Minister of Finance and Planning having met the following criteria:
- the project shall be of priority to the government at the particular time and broadly consistent with the government's strategic objectives;
- the private proponent does not require government guarantee or any form of financial support from the government;
- the project shall have unique attributes that justify departing from a competitive tender process;
- the project is of significant size, scope and requires substantial financing as per conditions provided in the regulations;
- the project shall demonstrate value for money, affordability and shall transfer significant risks to the private proponent;
- the project has wide social economic benefits including improved services, employment and taxation; and
- the proponent commits to bear the cost of undertaking a feasibility study.
All solicited and unsolicited projects shall be procured through an open and competitive bidding process and in a manner prescribed in the PPP Regulations. The current PPP Regulations 2015 specify that for solicited projects, at least two months before the beginning of the budget cycle, each contracting authority will submit to the PPP Centre a list of potential projects to be undertaken in partnership with the private sector. Based on the recommendation of the PPP Centre, the contracting authority may then proceed to conduct a full feasibility study of the project.
For unsolicited projects, upon approval of project concept, the private proponent shall make a commitment to undertake the project by depositing a refundable amount of not exceeding 3 per cent of the estimated cost of the project to be conducted. The private party is required to put forward a project concept to the proposed contracting authority, which may then be forwarded to the PPP Centre for review.
The PPP Regulations 2015 provide for the involvement of local government authorities in small-scale PPPs, these being PPPs whose total project value does not exceed US$20 million (as per the PPP Amendment Act 2018, which reduced this from US$70 million) and that entail an agreement not exceeding a maximum duration of 15 years.
There are additional requirements in respect of PPPs in the energy sector, which include:
- the electricity utility, TANESCO, must obtain approval first of the regulator, the Energy and Water Utilities Regulatory Authority (EWURA), before initiation of procurement of any power project;
- the application to EWURA must be made for solicited proposals, before releasing the tender and for unsolicited proposals, after TANESCO has accepted the proposer's project concept but before commencing any formal negotiations for a power purchase agreement;
- EWURA will evaluate compliance with all required legislation, including the PPP legislation; and
- EWURA may nominate a representative to observe the procurement process to be followed by TANESCO.
There are special regulations and a standard power purchase agreement (SPPA) for energy projects of less than 10MW under the recently enacted Electricity (Development of Small Power Projects) Rules 2018.
Wind and solar projects must be solicited proposals (i.e., competitively bid) approved by EWURA. Hydro and biomass projects shall be procured through a letter of intent with an SPPA power buyer.
There are further special rules for projects of less than 1MW (very small power projects), such as no requirement for EWURA approval of the retail tariff, but EWURA may review the tariff if petitioned to do so by 15 per cent of affected households.