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

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
In Category I, the highest-scoring option was the one below:
Option / Number Pros Cons International Models
No legislation (1)
Issue Standards and
Guidelines instead of
PPP regulations or Act.
The PPP Unit does only
dissemination of
information, setting of
standards/procedures
and PPP standard or
model documents for
transactions, provides one
stop access for private
sector, and builds capacity
in line ministries and local
governments. PC staff
selected by Gov’t and
donor could move to the
PPP Unit.
PPP is already
underway in many
sectors, and capacity
of line ministries and
local government to
contract with the
private sector is
already in place, so
no need to press for
new legislation at the
national level. Just
issue an operations
guideline manual for
the national and
regional PPP
stakeholders to
provide guidelines
and standards.
Limits the MOF’s role
to information
dissemination,
capacity building,
guidance regarding
how to apply the
principles of
affordability, risk
allocation, and value
for money. Authority
for an investment
decision has to be
vested in separate
MOF framework
and/or separate legal
body with mandate
for viability gap
funding.
India: Ministry of
Finance sets Operation
Guidelines Manuals for
a National PPP Node &
PPP Nodes.
Malaysia: PPP Unit in
the Min of Economic
Planning, reports to
Prime Minister.
USA: Long-standing
decentralized PPP at all
levels of government.
The attractive feature of this option is that there is no need to enact any legislation at all, no
laws, no regulations, and no decrees. The PPP Unit is established in the Ministry of Finance,
because that is where decisions such as Affordability, Risk Allocation, and Value for Money are
made at the national level. It prepares and distributes information on the PPP program and
how to do PPP projects. It provides capacity building for the various spheres of government
involved with PPP project identification, assessment, structuring, and contracting. This kind of
PPP Unit is a coordinating body, not a decision making body. A Unit of this sort is
appropriate for a country in which either: (a) the political culture will not accept what they
would perceive as just another layer of bureaucracy, and would resist any attempt by the Unit
to impose any decision-making authority over projects being developed by other government
agencies; or (b) the business orientation of the economy is so well developed that PPP has
already become routine, government and business are already accustomed to doing joint
ventures with one another, and a wide variety of generally accepted PPP practices has evolved,
with which stakeholders in the PPP process are already comfortable and need no further
guidance, regulation, or motivation.
In the case of India, the political culture was not expected to be tolerant of a PPP Unit that
exercised decision-making authority over line ministries and local government units developing
PPP projects. There is also a vibrant economy, with a multitude of business activities involving
joint working with government bodies already having been in place for many years. The legal
environment presents little challenges to PPP activity. Maybe one of the more important factors
was the GOI’s decision to place decision-making for government investment into a different
body than the PPP Unit. They term investing of the type normally involved in a PPP
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 33