Tanzania: The Legal Framework Of Public Private Partnerships In Tanzania

Last Updated: 27 September 2012
Article by Peter Kasanda

Tanzania has lagged behind many of its neighbours in the development of Public Private Partnerships (PPPs) in the past twenty years. A contributory factor has been the lack of a robust legal framework with which to implement such projects. PPPs can play a prominent role in the development of infrastructure projects and we consider here how the model has been applied in Tanzania.

Recent legislative changes and a visible political push towards PPP as a model for delivering public services and utilities have opened the door for PPP opportunities in the coming years and we summarise the key legislation governing the area below.

The principal act

The principal act governing PPPs in Tanzania is the Public Private Partnership Act No. 18 of 2010 (Act). Also applicable are the Public Private Partnership Regulations (Regulations) passed in 2011.

Application of the Act

The Act came into force in 2010 and it applies to mainland Tanzania.

Objects of the Act

The Act aims to promote private sector participation in the provision of public services. It is hoped that the Act will facilitate the transfer of skills and technology from the private sector to the public sector as well as encourage foreign direct investment.

Features of the Act

The Act established a PPP Coordination Unit (Coordination Unit) within the Tanzania Investment Centre to promote and coordinate PPP projects in mainland Tanzania. The Act also established a PPP Unit in the Ministry of Finance tasked with assessing proposed PPP projects that involve public finance.

In addition to setting up the two units, the Act sets out:

(a) the responsibilities of each of the contracting parties in any given project

(b) what is to be contained in every PPP Agreement

(c) penalties for non-adherence to the Act

There are some notable requirements for all PPP agreements. In particular, they must

(i) provide for remedies in case of breach by either party

(ii) provide for the period of execution

(iii) provide for assistance by the public party to the private party in obtaining licences and permits necessary for implementation of the project

(iv) impose financial management duties on the private contracting party in the form of internal financial controls, transparency, reporting and accountability

(v) contain obligations on the private party to be liable for risks arising from the performance of its functions

The Act further states that all disputes arising out of such agreements shall be resolved by negotiation, mediation or arbitration and that agreements must be reviewed and approved by the Attorney General before they can be signed by the relevant public authority.

All PPPs are to be monitored by the ministry responsible for the provision of the particular service.

The Regulations

The Regulations were made pursuant to and to give effect to the Act. They regulate the manner in which PPP projects shall be identified, how agreements shall be entered into, the criteria to be used by the public body in choosing which projects to enter into and when the contracting authority shall have the right to terminate the project.

The Structure of the Regulations

Part I: an introduction to the Regulations.

Part II: deals with the procedure by which projects shall be identified. The Minister responsible for investment is tasked with identifying projects that may be implemented by PPP. The Minister is to advertise these projects through the Government Gazette. Procurement shall be conducted under the procedures set out in the Act and Regulations, but where the bid is unsolicited, procurement bids shall be conducted in accordance with the Public Procurement Act 2011. Part II also prescribes that feasibility studies shall be conducted in respect of the project.

Part III: provides for recommendation of the proposed project by the Coordination Unit. It sets out the mode of application, factors to be taken into account by the PPP unit and the powers of the PPP unit.

Part IV: deals with the approval of the project by the finance unit in the Ministry of Finance. The unit is empowered to form a committee to consider the feasibility study and to make recommendations to the Minister.

Part V: provides for the manner in which the procurement process shall be conducted after approval of the project by the finance unit.

Part VI: provides for the negotiation, agreement and entering into an agreement with the winning bidder.

Part VII: provides for the circumstances under which the contracting party shall have the right to terminate the project.

Part VIII: contains a general provision providing for the monitoring and evaluation of the project.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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