The-Accountant-Jul-Aug-2016

FINANCE AND INVESTMENT
It is suggested for purposes of this article that
although Special Economic Zones developed
through public private partnership (PPP)
arrangements could potentially be competitively
sourced, the easiest route that might yield immediate
traction is the one where the private party initiates
an unsolicited proposal, also referred to as the
privately initiated investment proposal, and then
goes ahead to execute a project agreement with
the contracting authority in relation to the said
proposal. This is a route that is provided for in the
PPP Act but one that has not been fully explored by
the parties involved. It is therefore recommended
that parties consider avoiding the competitive
framework that could be delayed by legal challenges,
provided the parties fully comply with the requisite
PPP legislative on the unsolicited proposals as
herein enumerated. We shall attempt to compare the
Kenyan legislative framework with the experiences
of a few selected jurisdictions globally with regard
to unsolicited proposals.
A TYPICAL
A TYPICAL
PPP
PPP
PROJECT
PROJECT STRUCTURE
STRUCTURE
Government Institution
Direct
Agreements
PPP agreement
Finance
Institutions
Loan agreements
Private Party*
(Special purpose vehicle)
Consortium
agreement
Main
Investors
Sub-­‐Contracts
Sub-­‐contractor
E.g.: construction
Sub-­‐contractor
E.g.: Operation & Maintenance
*sometimes the establishment of the SPV is postponed until after the signing of the contract
Ministry of Finance
4
PPP Unit
Section 36 of the PPP Act: - Assessment
of Contracting Authority’s technical
expertise;
A Contracting Authority is defined
in the PPP Act to mean “a State
Department, Agency, State Corporation
or County Government which intends
to have a function by it performed by a
Private Party”.
A Private Party means a party that
enters into a project agreement with a
contracting authority and is responsible
for undertaking a project on behalf of the
contracting authority under the PPP Act.
1) The PPP Unit shall assess the
technical expertise of the Contracting
Authority to procure the development of
a project under the PPP Act.
2) Where the PPP Unit finds that the
Contracting Authority does not have the
technical expertise to procure the project
under the Act, the Contracting Authority
shall appoint a transaction advisor to
assist the authority in the procurement
process.
3) The engagement of a transaction
advisor shall be based on the principles
of disclosures, transparency, equality, free
competition and equal opportunity in
accordance with the procedure prescribed
by the Cabinet Secretary under the PPP
Act.
Sect 61 of the PPP Act: - Non-Compete
Process: Privately Initiated Investment
Proposals
The PPP Act defines a privately initiated
investment proposal also known as
unsolicited proposals, as a proposal
that is originated by a Private Party
without the involvement of a Contracting
Authority and may include information
that enables a complete evaluation of the
proposal as if it were a bid.
1) A Contracting Authority may
22 JULY - AUGUST 2016