The public private partnership (PPP) proclamation faces revision on the aim to award projects through a direct negotiation manner besides the current open bidding process.
On its 10th regular session, the Council of Ministers approved the amendment for the PPP 1076/2018 proclamation which was issued in 2018.
On the aim to expand the development path through different instruments and on the objective to expand public service activities, to reduce project delays and cost overrun and to increase the utilization of resources from the private sector on public services; the government issued the first PPP policy in August 2017 which was followed by the proclamation.
The proclamation that was ratified about four years ago was issued after massive studies and legal document development through the Ministry of Finance (MoF), which is the higher body to follow up on the PPP Directorate General which was formed under the proclamation to carry out the day to day activities of PPP which is to formalize private sector involvement through public projects for the benefit of both sides.
Under the PPP; efficiency on project handling, innovation, and knowledge transfer and using alternative financing to reduce government project financing has been stated as the pillars.
On its preamble, the proclamation stated that it is desirable to establish a favorable legislative framework to promote and facilitate the implementation of privately financed infrastructure projects by enhancing transparency, fairness and long-term sustainability, to improve quality of public service activity, and to maintain macroeconomic stability by reducing growth in public debt.
It added that it has become necessary to further develop the general principles of transparency, economy and fairness in the award of contracts by public entities through the establishment of specific procedures for the award of infrastructure projects.
At the cabinet session held on Saturday August 6, PPP was stated as a vital instrument for developmental projects since it is one of the ways out to elevate challenges that are observed on the macro-economy particularly on foreign currency supply for projects.
And now, it is said that to attain the stated goals, projects shall be implemented on direct negotiation which shall be created via economic diplomacy with states or foreign investors.
However, the current directive does not support to approve projects in direct negotiation approach. According to the cabinet, that is why the amended proclamation has been drafted for approval that will be ratified by the parliament.
The existing proclamation article 19, sub article one, stated that except as otherwise provided for under this proclamation; all projects shall be procured through an open bidding process with prequalification.
“In procuring and awarding a Public Private Partnership Agreement to a Private Party, the Directorate General shall be guided by the principles of transparency, free and fair competition and equal opportunity,” sub article two of the same article added.
Under the new revision, the government shall award projects for interested parties on negotiation or direct approach.
Recently, the PPP has garnered investment interested for parties to be involved in health sector development; for an integrated diagnostic center (IDC).
Experts who know the area said that there are demands from the private sector to invest on projects through PPP on direct handling scheme.
So far until last year, 23 projects have been identified under PPP from over 100 proposals, while from the selected project some shall not be executed under PPP as per the recommendation that came from detailed studies. Roads, energy, housing, and health are included on the selected projects.
Capital’s effort to get further information from the PPP DG or MoF was unfruitful.