Kenya on right path to undertaking projects under PPP framework

Governments around the world have in the recent past embraced the private sector in major infrastructural development that they are undertaking.

The private sector has proved to be a solid partner that has enabled the government to concentrate on offering important services to her citizens. The Kenyan Government has not been left behind

Private Public Partnership (PPP) prospers where there is a stable regulatory and institutional framework that establishes, guides and controls the PPP agreements.

The government implemented into law the PPP Act of 2013 and the PPP regulations of 2014 that established the framework for identification, selection, evaluation and monitoring PPP projects.

This has given the potential investors some confidence and attracted bidders for projects in the pipeline. Other key regulations and guidelines that will improve the framework include Project Facilitation Fund Regulation 2017, draft PPP (Amendment) Bill 2016, Draft County PPP Regulations 2015, and Draft Petition Regulations 2015.

However, there is need to improve the law so as to make it accommodative of new developments for instance, when only one bid is received, unsolicited proposals, and participation by county governments in PPP projects.

According to the Benchmarking PPP Procurement report of 2017 conducted by the World Bank, Kenya lagged behind Tanzania in a survey to evaluate the effectiveness of governments in managing the PPP projects.

Kenya has made strides in ensuring that the public are informed of the prospective projects that are going to be implemented jointly with the private sector.

In June 2018, the PPP Disclosure Portal was launched. The portal which was meant to improve transparency and accountability has significantly improved the Kenya’s standing in the global space. As such, potential investors are able to keep track of the progress made by the PPP Unit.

The PPP Unit is a specialised team within the National Treasury that is mandated by the PPP Act of 2013 to coordinate the PPP engagements in the country. It provides advisory services to Treasury and various governmental contracting authorities on the identification, procurement and management of PPP engagements.

The PPP Unit which became operational in 2010 has been strengthened with technical, legal and financial expertise necessary to undertake their mandate. The Unit is fundamental in shortening the turnaround time for uptake of PPP projects.

A number of projects have not been able to take off because the project sponsors have not been able to meet the preparatory costs. Most of the lenders of PPP projects will start injecting debt once the project reaches financial close.

Expenses like transaction advisory, legal fees can be substantial. Consequently, the government operationalized the project facilitation fund under the Project Facilitation Fund Regulations of 2017.

This fund is a big relief as it provides the required cash flow to fund any preparatory expenditure which can be subsequently recovered from the project’s special purpose vehicle in later cycles.

JOHNSON KILANGI, Lead consultant, project finance, Lean Africa Consultants Limited.