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

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Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi Final Report Contents I. EXECUTIVE SUMMARY ................................................................................................................. 1 I.A. PPP Unit Human and Financial Resources ........................................................................ 6 II. INTRODUCTION ............................................................................................................................ 13 III. POLICY FRAMEWORK – DRAFT NATIONAL PPP POLICY ...................................................... 19 III.A. Definition of Public-Private Partnership ............................................................................ 19 III.B. Principles of Public-Private Partnerships .......................................................................... 20 III.C. Role of the National PPP Unit and PPP Nodes in PPP Projects ...................................... 21 III.D. Role of the Project Development Facility (PDF) ............................................................... 22 IV. LEGAL FRAMEWORK .................................................................................................................. 23 IV.A. Legal Framework Options Analysis .................................................................................. 24 V. INSTITUTIONAL FRAMEWORK .................................................................................................. 38 V.A. Phases of PPP Institutional Setup .................................................................................... 38 V.B. Segregation of Duties and Prevention of Conflicts of Interest .......................................... 41 V.C. Organizational Structure of the PPP Unit .......................................................................... 44 V.D. PPP Unit Structure and Activities ...................................................................................... 44 V.E. Phases of PPP Program Evolution ................................................................................... 45 V.F. Terms of Reference for PPP Unit Staff Positions ............................................................. 47 V.G. Project Development Facility (PDF) .................................................................................. 48 V.H. Organizational Structure and Profile of PPP Unit Staff Positions ..................................... 53 V.I. Relationship of PPP Unit to Other Government Departments and Agencies ................... 58 V.J. Human Resource Implementation Plan ............................................................................ 63 VI. ROAD MAP FOR PPP PROGRAM IMPLEMENTATION ............................................................. 69 VI.A. Conduct Phase I PPP Activity in Privatisation Commission ............................................. 69 VI.B. Prepare PPP Standards & Procedures Manuals for PPP Unit and PPP Nodes .............. 70 VI.C. Prepare Standard PPP Procurement Documents & Model Contracts .............................. 71 VI.D. Key Ministries Sponsor Cabinet Paper on PPP ................................................................ 71 VI.E. Enact and Publish an Official National PPP Policy ........................................................... 72 VI.F. Conduct Stakeholder Consultation on PPP Policy ........................................................... 72 VI.G. Finalize and Enact PPP Regulations ................................................................................ 72 VI.H. Select and Create Legal Structure for PPP Unit ............................................................... 73 VI.I. Finalize Institutional and Reporting Relationships ............................................................ 75 VI.J. Transfer Selected PC Staff to PPP Unit and Recruit for Gaps ......................................... 77 VI.K. Commence PPP Unit Operations and Build Capacity in PPP Nodes ............................... 77 VI.L. Phase II Unit Builds Deal Flow for Transition to Phase III Unit ......................................... 80 VI.M. When Deal Pipeline is Sufficient Establish Phase III Unit ................................................. 81 VI.N. Timeline for Implementation of the National PPP Program .............................................. 81 ANNEX A. LEGAL FRAMEWORK ..................................................................................................... 84 ANNEX B. DRAFT REGULATIONS ................................................................................................. 132 ANNEX C. SCHEDULES TO REGULATIONS ................................................................................. 148 ANNEX D. DETAILED JOB DESCRIPTIONS .................................................................................. 228 THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS
Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi Final Report I. EXECUTIVE SUMMARY Over the past several months, the IP3 team has conducted extensive field research, interviews, and reviews of existing reports in order to formulate a comprehensive plan for Government to create a policy, legal, and institutional framework for PPP. At the end of this research and analysis period, the team prepared a draft Cabinet Paper, for the Minister of Finance to present to Cabinet, proposing specific actions that could be undertaken by Government in order to establish such PPP frameworks. This Final Report serves as both an update of our previous reports and recommendations and an Action Plan for implementing the nascent PPP Program in Malawi. Malawi, along with numerous other countries, has been conducting Privatization in an effort to shift the burden of service delivery onto the private sector. This has been done by transferring the ownership and control of public enterprises to the private sector, with the objective of having services performed by those public enterprises subsequently performed by private enterprises, thereby relieving Government of the costs associated with owning and operating public enterprises. Legal Framework and Options for PPP: New Legislation Desirable in the Long Run but not Necessary in the Short-Run The Public Enterprise (Privitisation) Act provides the legal mandate for such privatization activities. However, the scope of the Act is limited to such transfers of ownership and control (privatization) to the private sector, including concessions. The question has arisen: “how can the private sector participate in the delivery of services to consumers, when such services are not to be delivered through the use of existing public assets?” Another way to phrase the question is: “what will be the legal basis of a transaction in which the private sector is invited to participate in the delivery of services (that would otherwise have been provided by the public sector) if there are no existing public assets to sell in order to enable the service delivery?” If the service delivery contemplated involves the use of new assets, there is no provision for such a transaction in the Public Enterprise Act, in its present form. However, there is a provision for issuing “concessions” to the private sector, and that provision provides a legal foundation to bridge the existing legislation with what we propose to be its new successor, a PPP Act. Such an Act would address the long term issues that will likely emerge as Malawi’s PPP program matures, harmonize existing legislation with key PPP practices and procedures, and modernize and clarify the process by which PPP projects are selected, tendered, negotiated, awarded, and monitored. However, PPP activities and transactions need not be delayed until a PPP Act is established. In fact, PPP can advance using existing legal instruments as long as “Implementing Rules and Regulation” as well as PPP “guidelines and procedures” are enacted so that line agencies, the private sector, and the public understand the rules of the game governing an effective PPP process. THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 1
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