Hilary Muza 
PUBLIC-private partnerships (PPPs) are not a new phenomenon in Zimbabwe. From as far back as 1998, PPP deals saw the construction of the New Limpopo Bridge on a 20-year Build-Operate-Transfer arrangement between New Limpopo Bridge (Pvt) Limited and the government of Zimbabwe.
PPPs have also been effective in regulating recent deals such as the 2017 Kariba South Expansion project between SinoHydro and the Zimbabwe Power Company.
The curious thing is that despite the obvious need for PPP deals, there was no law regulating them apart from policy positions and guidelines. That was until the enactment of the Public Procurement and Disposal of Public Assets Act [Chapter22:23] (hereinafter referred to as the “PPDPA”), which came into effect on January 1, 2018.
What are PPPs?
PPPs are long-term contracts between a private player and the public sector (government or local authorities), for providing a public asset or service, in which the private party bears significant financial, technical and operational risk and above all management responsibility. PPPs can be implemented in virtually every sector from health, energy, education, commerce, mining, agriculture, sport, tourism, information technology and most prominently in transport and infrastructure development projects.
Is a PPP the same as a tender?
Generally, a PPP deal is subjected to a tender process. That does not however, mean that a PPP is strictly a tender. The focus of a PPP project should not be on delivering a particular class or type of assets, but delivering specified services at defined levels. Also, the risk allocation between government and the private sector provider is much more complex than in ordinary service or goods procurement deals. Both parties must clearly understand the risk associated with the deal and allocate risks between or among each other. Further, a PPP generally has a longer tenure than an ordinary tender procurement.
Various methods for structuring PPP arrangements
The PPDPA, however, favours the ‘PPP-as-tender’ model with modifications that suit different situations. For example, the restricted bidding method, which allows a public entity to select and invite only a limited number of individuals to bid. The direct procurement method entitles a public entity to approach a single bidder or supplier without having received bids from other bidders. Lastly, there is the request for quotations method. This entails a process in which the procuring entity solicits at least three competitive quotations for its procurement requirement from reputable suppliers, and the procurement requirement is below the prescribed threshold. Ordinarily, however, every private player as a matter of necessity, must bid for the provision of services to a public entity.
Do tariffs apply to PPPs?
Private players are often restricted in their charging by tariffs issued by their regulators. Legal practitioners are a typical example. The PPDPA however, releases professionals from being bound by tariffs and no adverse consequences shall be visited upon that person for not adhering to such tariff. The obvious problem here is that the procuring entity will have a dilemma: select a lower bid with unverified quality of work or select a more expensive bid where quality is guaranteed. Suspending a tariff also potentially creates friction between the service provider and its regulator. A more practical solution is to do away with tariffs altogether or keeping them robust enough to keep service providers competitive.
Joint ventures can be procuring entities for PPDPA purposes
Joint ventures, which are regulated under the Joint Ventures Act [Chapter 22:22] (the JVA), are largely left untouched by the PPDPA. The PPDPA creates a clear distinction between PPPs and joint ventures. In terms of the JVA, a contracting authority (procuring entity) delegates its duties to a counterparty (private player) and the latter gets paid either from a loan from the contracting authority, user levies, revenue generated from the project, or from funds appropriated by Parliament. As with the PPDPA, the private player assumes all the risk. In return, public resources may be transferred to or made available to the private party. What this means is a joint venture can also tender for services and goods in terms of the PPDPA. The commercial advantages of this go without saying.
Manipulating the PPDPA
The PPDPA neither repeals nor entirely subsumes the JVA. The general requirement for private players to bid to offer services can be circumvented by going the JVA route. The JVA provides for an unsolicited bid or expression of interest mechanism where a private player can offer services and goods without being invited by a public entity to do so.
Once the necessary formalities are done and a joint venture comes about, compliance with the PPDPA becomes that much easier. Choosing the JVA option gives private players the option of “pushing the envelope” and not having to wait for a bid to be put out in terms of the PPDPA.
Merits of the PPDPA
PPPs require high level government leadership commitment before and after implementation, since the private players incur operational and financial risks in these long term contracts. The Act discourages political subversion and corruption by providing checks and balances in section 16 that see the line minister being held accountable to the Auditor-General and the Accountant-General. Also, shared procurement among procuring entities leverages bargaining power, which drives costs down. Most importantly, PPPs require a clear policy and legal framework before the private sector can commit millions of dollars into public projects. The PPDPA, though not all-encompassing, does this to a great extent.
Muza is a duly admitted legal practitioner and litigation specialist. He writes in his personal capacity and is reachable at hilarykmuza@gmail.com and at 0719 042 628
