Promoting Private Sector Engagement in Local Governance through PPPs in Zambia
This presentation outlines the promotion of private sector engagement in local governance in Zambia through Public-Private Partnerships (PPPs). It covers the legal and institutional frameworks, processes, sub-national level PPP projects, current initiatives, lessons learned, and conclusions. The overview defines PPPs as agreements between private and public entities for infrastructure projects or social service delivery, highlighting the financial and operational risks involved. It also discusses PPP legal and institutional frameworks in Zambia, including the PPP Policy, Acts, and responsibilities of various entities in PPP implementation.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
Presentation Transcript
PPPS IN ZAMBIA PROMOTING PRIVATE SECTOR ENGAGEMENT IN LOCAL GOVERNANCE MARCH 2024
OUTLINE OF THE PRESENTATION PART I : OVERVIEW UNDERSTANDING PUBLIC PRIVATE PARTNERSHIP PPP LEGAL AND INSTITUTIONAL FRAMEWORK PPP PROCESSES SOLICITED PROPOSAL UNSOLICITED PROPOSAL PART II: SUB NATIONAL LEVEL PPPS; SUB-NATIONAL PPP PROJECTS SUB-NATIONAL PPP PROJECTS CURRENTLY BEING UNDERTAKEN AS PPPS PART III LESSONS LEARNED FROM PREVIOUS EXPERIENCE CONCLUSION
PART I: OVERVIEW WHAT IS PUBLIC PRIVATE PARTNERSHIP? AN INVESTMENT INFRASTRUCTURE PROJECT OR EFFECTIVE SOCIAL SERVICE DELIVERY THROUGH PRIVATE SECTOR PARTICIPATION IN AN A PPP AGREEMENT A CONTRACT BETWEEN A PRIVATE PARTY AND PUBLIC PARTY IN WHICH THE PRIVATE OBTAINS UNDERTAKES TO PERFORM OR UNDERTAKE ANY INFRASTRUCTURE PROJECT OR INFRASTRUCTURE FACILITY; UNDERTAKES TO PROVIDE OR PROVIDES SUCH SOCIAL SECTOR SERVICES; ASSUMES SUBSTANTIAL FINANCIAL, TECHNICAL AND OPERATIONAL RISKS
A PPP AGREEMENT RECEIVES CONSIDERATION FOR PERFORMING A PUBLIC FUNCTION OR UTILIZING STATE PROPERTY, EITHER BY WAY OF (I) A FEE FROM ANY REVENUE FUND OR A MINISTRY S BUDGETARY FUNDS; (II) USER LEVIES COLLECTED BY THE CONCESSIONAIRE FROM USERS OR CUSTOMERS FOR A SERVICE PROVIDED BY THE CONCESSIONAIRE; OR (III) A COMBINATION OF THE CONSIDERATION PAID UNDER SUBPARAGRAPHS (I) AND (II);
PPP LEGAL FRAMEWORK THE IMPLEMENTATION OF PUBLIC PRIVATE PARTNERSHIP (PPP) IN ZAMBIA IS ANCHORED ON THE PPP LEGAL FRAMEWORK PPP POLICY -2008 SET OUT GOVERNMENT GOALS AND OBJECTIVES; PPP ACT NO. 14 OF 2009 AS AMENDED REPEALED AND REPLACED; AND PPP ACT NO. 18 OF 2023 DEFINES HOW AND WHEN PPPS CAN BE USED TO DELIVER PUBLIC SERVICES. IT INCLUDES THE INSTITUTIONAL RESPONSIBILITIES, RULES AND PROCEDURES FOR DEVELOPING AND IMPLEMENTING PPPS.
PPP INSTITUTIONAL FRAMEWORK PPP Institutional framework PPP Council Provides oversights & policy guidance/decisions PPP Technical Committee Provides an advisory role to the PPP Council & PPP Department Public Private Partnership Department Contracting Authorities Facilitates, advise & Monitor Initiates & implement PPP projects Concessionaire /Special Purpose Vehicle Implements, operates & Manage the projects
UNDERSTANDING PUBLIC PRIVATE PARTNERSHIP Affordability Is a pre-requisite for value for money Entails public entity is able meet any financial commitment under the contract within their budgets End users are able to afford Basic PPP Principles Benefit to the Public The facility/service must be beneficial to the public at minimal cost
UNDERSTANDING PUBLIC PRIVATE PARTNERSHIP Means for leveraging on expertise and financial resources Higher return on investment Risk sharing BENEFITS OF PPPS Increased accountability, efficiency and effectiveness; efficient provision of public asset or service; Quick delivery of projects and services enhancement Innovations/ Technology
PPP PROCESSES PPP path and Process: Two pathway for Private Sector participation in PPPs. Solicited way : projects are initiated by public or government entity. Unsolicited way : initiated by the private sector. MAY BE A COMPANY, COOPERATIVE, CONSORTIUM OR AN INDIVIDUAL. THE PRIVATE PARTY MUST SUBMIT A PROPOSAL WITHOUT SUPERVISION FROM THE CONTRACTING AUTHORITY AND THE PPP OFFICE
PPP PROCESSES PPP Project Cycle Project identification Contract Management/ Monitoring and Evaluation feasibility study Contract Award Procurement Negotiations Contract Agreement is approved by PPP council, Clearance obtained from attorney general by CA CA signed Notice contract Negotiating of the contract (terms and conditions implementation of project, Tendering stage for the partners EOI DUE DILIGENCE RFP Monitoring of performance Identification/ selection of a project. Critical assessing the viability of the project. for project for Preparation of exit plan of
Unsolicited Proposal A PROPOSAL INITIATED BY THE PRIVATE SECTOR THE PROPOSAL SHOULD BE INNOVATIVE, INDEPENDENTLY ORIGINATED AND BENEFICIAL TO THE PUBLIC; AND INCLUDES THE FOLLOWING SUFFICIENT INFORMATION FOR A CONTRACTING AUTHORITY TO EVALUATE THE PROPOSAL IN AN OBJECTIVE AND TIMELY MANNER BUSINESS CASE REGARDING A PROPOSED PROJECT TO INCLUDE THE PROJECT COST AND HOW THE CONCESSIONAIRE SHALL RECOUP THEIR INVESTMENT; TECHNICAL REQUIREMENTS IN THE FORM OF SCOPE OF WORK OF A PROJECT; LEGAL REQUIREMENTS TO BE MET BY THE PARTIES TO THE PROJECT;
Unsolicited Proposal SOCIAL ECONOMIC AND ENVIRONMENTAL IMPACT OF THE PROJECT; AFFORDABILITY AND VALUE FOR MONEY PROPOSITION IN THE PROJECT; FINANCIAL MODEL AND KEY FINANCIAL INDICATORS; PROJECTS LAND REQUIREMENTS, IF ANY; AND TYPE OF PUBLIC-PRIVATE PARTNERSHIP MODEL A CONTRACTING AUTHORITY AND THE PUBLIC-PRIVATE PARTNERSHIP OFFICE SHALL MAINTAIN A RECORD OF UNSOLICITED PROPOSALS RECEIVED ON A FIRST-COME-FIRST-SERVE BASIS, IN ORDER TO IDENTIFY THE INITIAL BIDDER OF THE PROPOSED PROJECT;
PART II: SUB NATIONAL LEVEL PPPS LARGE INFRASTRUCTURE PROJECTS GRAB THE ATTENTION OF CENTRAL GOVERNMENT, INFRASTRUCTURE INVESTMENT IS IMPORTANT ALSO AT THE SUB-NATIONAL LEVEL CITIES ARE ALSO FACED WITH CHALLENGES SUCH AS FINANCIAL CHALLENGES AND HIGH DEMAND FOR INFRASTRUCTURE AND SERVICE DELIVERY TO ADDRESS THESE CHALLENGES: THE GOVERNMENT IS OPTING TO USE HYBRID SOLUTIONS SUCH AS PUBLIC PRIVATE PARTNERSHIPS (PPP) TO FINANCE THE MUCH-NEEDED PUBLIC INFRASTRUCTURE AND SERVICES THAT SUPPORT ECONOMIC DEVELOPMENT. REPEALED AND REPLACED THE PPP ACT TO INCLUDE SMALL AND MEDIUM PPPS BROADEN THE DEFINITION OF CONTRACTING AUTHORITY )
SUB-NATIONAL PPP PROJECTS THE SCOPE FOR SUB-NATIONAL PPP PROJECTS IS VAST AND DEPENDS ON THE MANDATE OF SUB NATIONAL GOVERNMENT . SOME OF THE PROJECTS WHICH CAN BE UNDERTAKEN BY SUB NATIONAL GOVERNMENT ARE AS FOLLOWS: HOUSING, SOLID WASTE MANAGEMENT, WATER SUPPLY, URBAN PASSENGER TRANSPORT, MARKETS, TRUCK PARKS, WASTE TO ENERGY TOURISM (HOTELS, LODGES, PARKS)
SUB-NATIONAL PPP PROJECTS CURRENTLY BEING UNDERTAKEN AS PPPS Hand-back: 31th October, 2047 Financial Close: No Deliverables: 583 low, medium and high cost housing units, filling station, shopping mall, modern bus terminus and market Project: Kalumbila Town Council Mixed Use Project, Kalumbila, North Western Province Model: Build, Operate, and Transfer Sector: Real Estate Party: Trans Engineering Construction Ltd Investment: $52 M 25 years Contract Authority: Kalumbila Town Council-MLGRD Signed: 31st October, 2022
SUB-NATIONAL PPP PROJECTS CURRENTLY BEING UNDERTAKEN AS PPPS WASTE TO ENERGY - LUSAKA CITY COUNCIL LUSAKA WEST WATER SUPPLY PROJECT - LUSAKA WATER SANITATION COMPANY MANSA HOTEL - MANSA MUNICIPAL COUNCIL CHILILABOMBWE TRUCK PARK - CHILILABOMBWE MUNICIPAL COUNCIL A NUMBER OF PROJECTS (MOSTLY MIXED USED DEVELOPMENT) AT INITIAL DEVELOPMENT STAGE
PART III CHALLENGES LIMITED CAPACITIES IN PPPS LACK OF FEASIBILITY STUDIES FOR THE PROJECTS HIGH STAFF TURN OVER IN CONTRACTING AUTHORITIES LIMITED RESOURCES TO SUPPORT INITIAL PROJECT DEVELOPMENT FAILURE BY THE PRIVATE PARTY TO REACH FINANCIAL CLOSE
LESSONS LEARNED LEGAL AND REGULATORY FRAMEWORK: STRENGTHENING THE LEGAL AND REGULATORY FRAMEWORK FOR PPPS IS ESSENTIAL TO PROVIDE CLARITY, TRANSPARENCY, AND LEGAL CERTAINTY FOR INVESTORS CAPACITY BUILDING: BUILDING INSTITUTIONAL CAPACITY WITHIN CONTRACTING AUTHORITIES(CA) IS CRUCIAL FOR EFFECTIVE PPP IMPLEMENTATION AND MANAGEMENT. CAPACITY BUILDING WILL ENHANCE CA S CAPACITY TO DESIGN, NEGOTIATE, AND OVERSEE PPP PROJECTS RISK ALLOCATION AND MANAGEMENT: PROPER RISK ALLOCATION AND MANAGEMENT ARE ESSENTIAL FOR THE SUCCESS OF PPP PROJECTS. THE IMPORTANCE OF IDENTIFYING, ASSESSING, AND MITIGATING RISKS THROUGH CLEAR CONTRACTUAL ARRANGEMENTS, RISK-SHARING MECHANISMS, AND CONTINGENCY PLANS
LESSONS LEARNED TRANSPARENCY AND ACCOUNTABILITY: ENSURING TRANSPARENCY AND ACCOUNTABILITY THROUGHOUT THE PPP LIFECYCLE IS CRITICAL TO BUILDING PUBLIC TRUST AND CONFIDENCE. FINANCIAL VIABILITY: ENSURING THE FINANCIAL VIABILITY OF PPP PROJECTS REQUIRING CAREFUL FINANCIAL PLANNING, COST-BENEFIT ANALYSIS, AND REALISTIC REVENUE PROJECTIONS. CONDUCTING THOROUGH FEASIBILITY STUDIES, ASSESSING MARKET DEMAND, AND SECURING SUSTAINABLE FINANCING ARRANGEMENTS TO MITIGATE FINANCIAL RISKS AND ENSURE PROJECT SUSTAINABILITY
LESSONS LEARNED FINANCIAL CLOSE/FINANCING MECHANISMS: ACCESSING FINANCING REMAINS A CHALLENGE FOR SOME PROJECTS, PARTICULARLY THOSE PROJECT BEING UNDERTAKEN BY LOCAL INVESTORS STAKEHOLDER ENGAGEMENT, SUPPORT AND ADVOCACY : MEANINGFUL ENGAGEMENT WITH STAKEHOLDERS IS VITAL FOR IDENTIFYING NEEDS, ADDRESSING CONCERNS, AND FOSTERING OWNERSHIP OF PPP PROJECTS, POLITICAL CHAMPIONING CAN PROVIDE CRUCIAL SUPPORT AND ADVOCACY FOR PPP PROJECTS.
LESSONS LEARNED ALL PROJECTS DIFFER; ONE PROJECT DOES NOT SUIT ALL. NO COPY AND PASTE FOR EXAMPLE, A PROJECT IN THE WATER SECTOR CANNOT DEPEND ON THE SUCCESS OF A PROJECT IN THE ROAD. A WATER SECTOR PROJECT MIGHT NEED GOVERNMENT SUPPORT TO MAKE IT AFFORD AND BANKABLE. . LACK OF FEASIBILITY: NOT WELL STRUCTURED PPP PROJECTS; AND FREQUENT AMENDMENTS OF CONCESSION AGREEMENTS MARKET SOUND: TESTING OF THE MARKET BEFORE ENTERING INTO PROCUREMENT PROCESS TO AVOID NO RESPONSE AT EXPRESSION OF INTEREST AND REQUEST FOR PROPOSAL STAGE.
PART IV: CONCLUSION PPPS IN ZAMBIA HOLD SIGNIFICANT POTENTIAL: TO DRIVE INFRASTRUCTURE DEVELOPMENT; AND IMPROVE SERVICE DELIVERY, AND FOSTER ECONOMIC GROWTH. BY LEARNING FROM PAST EXPERIENCES AND ADDRESSING CHALLENGES: ZAMBIA CAN ENHANCE THE EFFECTIVENESS AND SUSTAINABILITY OF FUTURE PPP INITIATIVES, UNLOCKING OPPORTUNITIES FOR PRIVATE SECTOR INVESTMENT, INNOVATION, AND PARTNERSHIP IN ADVANCING THE COUNTRY'S DEVELOPMENT GOALS.
