Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
IV.
LEGAL FRAMEWORK
In order to encourage private sector participation in the provision of services needed by its
populace, and to reduce the fiscal burdens on government for such service provision, the
Government of Malawi has implemented a Privatization Program.
In order to encourage private sector participation in the provision of services needed by its
populace, and to maximize “value for money” in its fiscal expenditures for provision of such
services, Government will implement a Public-Private Partnership Program.
Malawi is moving toward a situation that is becoming increasingly common around the world:
privatization programs are winding down toward conclusion, leaving relatively few divestment
activities that remain to be conducted by government. IP3 is consulted by many countries as
those programs approach this stage in their privatization activity, seeking guidance on how to
make the transition from privatization to PPP.
PPP is indeed the next “wave” after Privatization. As the first two paragraphs of this section
indicate above, the unifying theme is Private Sector Participation (PSP). When it is necessary to
divest of government-owned assets in order to enable the private sector to participate in the
provision of services previously provided by government, it is the Privatization methodology
that is used.
As a Privatization Program starts nearing the end of its useful life, i.e. as the inventory of
government-owned assets suitable for divestment starts to wind down, it is in a natural course
of events that PPP emerges as the next phase in PSP because when there are no more existing
service provision facilities to hand over to private operation; then it is necessary to build new
service provision facilities that will be operated by the private sector. Such new facilities
projects are commonly known by their contractual aspects of Build-Own-Operate (BOO), Build-
Own-Operate-Transfer (BOOT) and their variants. Such arrangements require a transition from
privatization to PPP because the relations between public and private sectors change from seller
and buyer to long-term partners.
In designing and implementing a PPP legal framework, the challenges are:
‣ How can we implement the transition from privatization to PPP without taking away
the privatization program’s ability to complete its mission;
‣ How do we provide the legal basis for conducting privatization and PPP at the same
time, until the privatization program completes its mission;
‣ If the legal authority to conduct privatization and legal authority to conduct PPP are to
exist simultaneously, until the privatization program completes its mission, how do
we harmonize the two sets of laws and regulations;
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 23