PUBLIC PRIVATE PARTNERSHIPS AND BUILD, OPERATE AND TRANSFER (BOT ...

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43. Full privatisation of government owned assets will not be considered under this PPP policy. Existing legislative frameworks are in place to accommodate this arrangement. Principle 6: Investors will be allowed to earn a market-based rate of return 44. Two important provisions will be considered to allow a market based rate of return. These include: (i) The rate of return should not be subject to any legislative ceiling on profits. (ii) The sources of revenues should be adjusted annually. 45. However a cap on the rate of return will be maintained for projects that are natural monopolies, operate as public utilities, and entered into through a negotiated contract, that is, an unsolicited proposal. In this way user charges will be regulated and provide protection to the users of the facility. Principle 7: Recognising that there may be a need for the Fiji Government to share in the risks and costs of a project to make it financially viable, a variety of government undertakings will be allowed under carefully prescribed conditions 46. Cost sharing arrangement between the public and private sectors will be considered and a limit of 50% set for the public sectors contribution to the total project cost. The public sectors contribution could be financed from a number of sources including direct government appropriations, official development assistance and provision of support facilities to the PPP project such as: (i) Facilitation in assisting the private sector in obtaining access and customary rights held by resource owners; and (ii) Fiscal incentives allowable under the Government’s Investment Policy such as tax holidays, duty free importation of equipment or the relaxation of foreign staff restrictions, risk sharing measures or credit enhancements such as minimum throughput, take-or-pay contacts, performance undertakings and foreign exchange risk cover. Principle 8: The approving authorities for PPP arrangements should be specified and the procurement process must be transparent 47. All PPP projects will be referred to Cabinet for approvals. 48. PPP projects will be procured in an open and transparent fashion consistent with standard procurement rules that will be contained in the Implementing Regulations to the enabling legislation and with the need to ensure effective competition. Special considerations will be given to accommodating projects and proposals under the affirmative actions policies of Government. 12
Principle 9: For public utilities, a franchise to operate the new, rehabilitated or upgraded infrastructure should be automatically issued to the selected PPP proponent 49. The successful proponent who finances and develops the public utility (infrastructure) will be given the right to operate the facility for a period not exceeding 50 years. This right will be included in the PPP agreement between the public and private sector. Principle 10: Fiji ownership requirements will be imposed on the operator of public utilities for projects contracted under any of the concession contract variants 50. The facility operator under a concession contract could be a company which may or may not be the project proponent and which is responsible for all aspects of operation, maintenance of the facility including collection of user fees, that is, an operations company. Direct ownership of a public utility operation company will be 51 percent held by Fijian interests. This provision ensures that local investors will have a majority shareholding in companies that operate public utilities. This will also provide the ability for international expertise to be transferred to local companies through joint venture companies. Principle 11: The private sector will have the flexibility to initiate new project ideas or concepts by allowing directly negotiated contracts for unsolicited proposals 51. Conditions that will be attached to this type of proposal include: (i) The proposed project Involves a new concept or technology; (ii) The proposed project is not part of the list of priority projects for public bidding; (iii) No direct government guarantee, equity, or subsidy is required; and (iv) To ensure competition the implementing authority will invite proposals from other proponents to be submitted within 3 months of it receiving the unsolicited proposal. If another proponent does submit a lower price or better proposal, the original proponent will have the right to match that price or proposal within 2 months. Principle 12: Negotiated contacts will be allowed for unsolicited proposals and for publicly bid projects where there is only one complying bidder 52. A Public Sector Comparator (PSC) will be undertaken and compared to the one complying bid received from the private sector. The contract will be awarded to whichever proposal achieves the best value for money to the government. Any dispute arising out a contract will be resolved in accordance with the Arbitration Act [Cap: 38] and the contract will be govern by the laws of Fiji. 13
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