Law 228 has defined privatization as transferring the ownership or management of a public project, totally or partially, to the private sector, including the concession structure or similar modern structures designed to develop and manage economic projects for a certain period. While Law 228 has granted the HCP the authority to tender projects under the concession or similar modern structures, it has not defined a specific tendering mechanism. For this reason, the HCP’s Secretariat General has worked since 2007 on the public private partnership (PPP) law which aims at defining a detailed and coherent tendering mechanism for PPP projects based on international best practice, while ensuring transparency and professionalism.
The PPP Law 48, enacted on September 7, 2017, governs all PPP projects including power and telecommunication PPP projects, and makes it optional for municipalities to subject their projects to the provisions of this law. As per the law, a PPP project is defined as any public benefit project in which the private sector contributes financing and management and at least one of the following activities: design, installation, construction, development, restoration, equipment, maintenance, rehabilitation and operation.
The law guarantees transparency by involving all stakeholders in the tendering process. The law calls for a three level decision making process:
– the Council of Ministers,
– the HCP whose inter-ministerial structure also ensures the involvement of all relevant ministers,
– the project committee, chaired by the the HCP general secretary and where the relevant ministry and the ministry of finance and the sector regulatory authority are represented. The project committee is assisted by a working team which includes the retained consulting team as well as representatives of all relevant stakeholders and any experts of specific competence.
The role of each entity in the tendering process is represented below
One of the law’s main features is that it outlines the key provisions of the Partnership agreement, which constitutes an integral part of the tender document and which ensures that the rights of the private partner and the government are safeguarded.
The PPP law also establishes the HCP as the PPP Unit and tasks its operational work to the HCP Secretariat General (hyperlink to our team), which is headed by the Secretary General, and which would grow to become a melting pot for the accumulation of expertise to cooperate with the public sector on future PPP projects. The size and complications of PPP transactions and their difference from traditional procurement deals require the existence of skills which are of a financial, technical, legal and regulatory nature, and allow risk management, contract management, and tender execution. The PPP unit will be composed of experts who are specialized in partnerships with the private sector, speak the banks’ and private companies’ language and acquire possess the necessary expertise in the fields of financing, negotiation and contracting. This would ensure the design of PPP agreements that guarantee the public interest and respect the investors’ rights.
The PPP Unit is also responsible for formulating the PPP Program, which would establish credibility and commitment to a PPP pipeline and provide as such comfort to investors.