PPP Regulations, 2014

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Welcome Message

The Public Private Partnership Unit (PPPU) is established under Section 8 of the Public Private Partnership (PPP) Act, 2013 as a Special Purpose Unit within the National Treasury of the Government of Kenya (GOK).

The PPP Unit's focus is to serve as the secretariat and technical arm of the PPP Committee, which is mandated with assessing and approving PPP projects in the country.

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PPP Regulations

What are PPP Regulations?

While the PPP Act, 2013 provides a broad legal and regulatory framework for PPPs, the regulations aim to provide:

  1. Operational details on how PPP projects will be prepared, tendered, approved and implemented; and
  2. Operational details on the roles and responsibilities of the parties involved in the PPP transactions.
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PPP Act 2013

PPPs Before the PPP Act, 2013:

Before the enactment of the PPP Act 2013, PPPs had been undertaken in Kenya under various frameworks:

All PPP transactions before 2013 were undertaken without a clear government policy on PPPs. Furthermore, the various legal frameworks that supported PPPs during that period were historically not well-suited to the specialized nature of procuring PPPs, and instead applied traditional systems of procurement for works, goods and services. The effect was unstable contractual arrangements that precluded strong project screening and identification standards, and which consequently led to frequent renegotiation of undertakings by private sector partners. The outcome was a historically weak to negative project performance under PPP contracts, an experience that increasingly drove a negative track record to PPPs in Kenya.

PPPs After the PPP Act, 2013:

Public Private Partnership (PPP) Act, 2013:

In order to strengthen the legal and regulatory framework for PPPs, the Public Private Partnership (PPP) Act, 2013 was enacted into law in December 2012 and became effective on 8th February 2013.

Additionally,  to remove duplication and overlap, the PPP Act, 2013 amended the Privatization Act, 2005, The Public Roads Toll Act Cap.407 and the Public Procurement and Disposal Act, 2005.

Key highlights of the PPP Law:

  • The object of the PPP Act is to regulate the process of engagement between the private and public parties in order to deliver long term public facilities and services;
  • It provides for the definition of a Public Private Partnership, the scope and type of PPP arrangement;
  • It provides for the establishment of  institutions and clearly defines their roles in dealing with PPP projects;
  • It provides a process of PPP projects identification, prioritization, conceptualization, preparation, tendering, negotiations, award, approval, implementation, monitoring and evaluation, and finally how they are handed over to GoK where applicable;
  • Financial security instruments such as political risk guarantees and letters of support;
  • The key elements of project agreement; and
  • Establishment of a Facilitation Fund to cover Viability Gap Fund, Government subsidies, contingent liabilities when they crystallize, project preparation funds. This is aimed at making the projects bankable and attractive to the private sector.

The PPP Act 2013 also establishes a Petition Committee mandated to consider all petitions and complaints submitted by a private party during the process of tendering and entering into a project agreement.

Currently, a number of actions are on-going to operationalize the PPP Law including:

  •   Development of Regulations and their gazetment by the Cabinet Secretary;
  •   Development of Regulations for undertaking PPPs in the County Government;
  •   Setting up a Project Facilitation Fund (PFF);
  •   Preparation of guidelines and tool kit for PPP project implementation;
  •   Carrying out administrative actions to operationalize the PPP Law including staffing, remuneration, business plan, etc.; and
  •   Reviewing the regulatory regimes in the various sectors – water, health, education, energy, etc.

Click here for a copy of the PPP Act 2013.

 

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PPP Policy

In April 2012, the GOK issued a policy statement to articulate its commitment to Public Private Partnerships (PPP) and to provide a basis for the enactment of a PPP Law.

The PPP Policy addresses three principal parameters of PPPs in Kenya:

  1. Firstly, it provides a contextual statement on the status of PPPs in Kenya, while at the same time articulating the goals and benefits of PPPs in Kenya under the current policy and legal arrangements.
  2. Secondly, it provides a foundation for:
    1. The establishment of institutions to champion the PPP agenda;
    2. The mobilization of domestic and international private sector investments; and
    3. The range of Government support for PPP projects in Kenya.
  3. Thirdly, the PPP Policy provides a clear and transparent process for project development – including through clarifying the project development process, project implementation structures, procurement approaches as well as systems for stakeholder participation.

The Government has furthermore included a clear policy implementation framework in the PPP Policy Statement, signalling a firm commitment to its intention to fully implement the policy priorities embedded therein.

Click here for a copy of the PPP Policy.

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Background

The provision of public infrastructure (including power, roads, rail, sea and airports) and services (including water, health and sanitation) is a key mandate of governments the world over. These public goods are a fundamental prerequisite for economic growth and development.

Fiscal constraints experienced by countries, however, have resulted in the development of new and innovative approaches to the provision and financing of public infrastructure and services, gradually supplementing the traditional role of government as the primary provider of such infrastructure and services. In Kenya, therefore, the adoption of a Public Private Partnership (PPP) framework reflects the Government’s desire to improve the quality, quantity, cost-effectiveness and timely provision of much needed public infrastructure and services in Kenya.

The private provision of public infrastructure and services has the potential to offer enhanced value for money and enables the Government to use the private sector’s delivery and project completion expertise and capability for the benefit of the people.

Since 1996, Kenya has attracted private investments into the country’s economic infrastructure sectors including telecommunications, energy, transport, water and sewerage.

These investments have demonstrated both the commitments of Government of Kenya (GOK) to PPPs and the interest by private investors, lenders and operators in these sectors. However, these infrastructure investments occurred without a specific policy, legal and regulatory framework for PPP. 

Therefore, the GoK's first step was to strengthen the legal and regulatory framework for carrying out PPPs in Kenya as part of a wider agenda of increasing private sector investments in infrastructure development:

  1. In March, 2009 the Government of Kenya established an institutional framework through Regulations issued under the Public Procurement Disposal (Public Private Partnership) Regulations 2009;
  2. In 2010, a review of Kenya’s legal and regulatory framework recommended the enactment of a PPP Law to address the identified gaps, inconsistencies, conflicts and overlaps;
  3. In December 2011, the GOK approved a PPP Policy statement on PPPs;
  4. On 5th December 2012, the GOK received a credit from the World Bank for the Infrastructure Finance and Public Private Partnership (IFPPP) Project. The overall objective of the IFPPP project is to increase private sector investment in the Kenyan infrastructure market and to improve the enabling environment so as to generate a pipeline of bankable PPP projects.
  5. The PPP Bill was approved by Parliament in December 2012, received Presidential Assent on 14th January 2013, and was published as the Public Private Partnership Act, No. 15 of 2013 in the Kenya gazette supplement No. 27 on 25th January 2013. The PPP Act came into effect on 8th February 2013.

 

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Reserved

© 2013 PPPU Kenya

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Workshops & Seminars

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  • Past PPP Workshops & Seminars
  • Upcoming PPP Workshops & Seminars
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Contacts

Public Private Partnership (PPP) Unit
National Treasury
P.O BOX 30007 - 00100 
Nairobi, KENYA.
Tel: 020 - 2252299
Email: info@pppunit.go.ke

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PPPU's Mandate

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Under the PPP Act 2013, the PPP Unit is mandated to articulate the PPP policy so that its objectives and mechanisms are understood by Contracting Authorities and State agencies, funders, contractors, the press and the general public.

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PPPU Director’s Message

Director

In nearly every country adopting PPPs as a broad instrument of policy, the need has been recognized for a “Centre of PPP expertise” which is the Vision vested with our Mission “To introduce and communicate the PPP policy...

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Principal Secretary's Message

Cabinate Secretary

Vision 2030, the country’s development blueprint, aims to create a globally competitive and prosperous nation, with a high quality of life, by the year 2030. To achieve this feat, there needs to be a deliberate...

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