Viewpoint: Adelaide Benneh Prempeh
A new law on PPPs came into force in Ghana on December 29, 2020. The PPP Act, 2020 (Act 1039) is heralded as the long-awaited solution to a single, more efficient and investor-friendly legal framework for infrastructure projects.
Historically, in the absence of a single legal framework for PPPs, various sector-specific laws formed the backbone of collaboration between public and private parties on infrastructure projects. While the National Policy on PPPs, 2011 offered more direction and was an improvement on the PPP guidelines developed in 2004, it was regarded as informal and lacked a clear definition of PPPs. The PPP Act, 2020, however, requires every PPP deal to conform with its provisions and specifies the minimum contractual obligations of the parties under a PPP agreement.
The new framework is underpinned by a threestage process: project preparation; procurement and contract; and post-contract award management. It promotes due process by way of institutional arrangements for structuring and competitive tendering; public interests and consumer rights; local content and technology transfer; environmental safeguards; a transparent and competitive bidding process; risk-sharing mechanisms with a preference for the party best placed to manage and control the risk; and clear instructions to bidders and interested persons. Additionally, the new PPP framework provides the basis of competitive selection criteria for all the procurement methods.
PPP projects in Ghana can now be initiated in two forms: first, as proposed by the government in response to an identified need and subjected to a two-stage national or international competitive tendering process; and second, by way of unsolicited proposals, encouraging the private sector to put forward investment projects.
Additionally, there is now a clear hierarchical structure in the proposal and approval process for PPPs. Parliamentary approval is still required for all PPP projects that involve the imposition, waiver or variation of a tax, or the grant of a loan out of any public fund or public account. Parliamentary approval is also required where the PPP project binds the government for more than one financial year or results in a contingent liability.
The primary contracting authorities (CAs) responsible for the supervision of PPP projects are the Public Investment Division (PID) of the Ministry of Finance and Economic Planning, the Project and Financial Analysis Unit, the PPP Advisory Unit of the PID, the PPP Approval Committee and the Cabinet.
The PPP Act, 2020 establishes a seven-member panel to handle disputes arising from any aspect of the bidding process. If an individual asserts that a bidding process was not carried out in good faith, that individual may lodge a complaint with the Complaints Panel within 30 days of the decision.
Disputes pertaining to a CA and the other party may be resolved under the dispute resolution clauses in the parties’ agreement. Otherwise, disputes must be resolved according to the Alternative Dispute Resolution Act, 2010 (Act 798).
The new PPP framework empowers a public authority and private entity to determine in their agreement the dispute resolution mechanism by which disputes between them shall be settled. This gives flexibility to the parties to choose their preferred place of arbitration.
Crucially, the new PPP law clarifies that projects previously approved will be governed by that law which existed when the agreement was executed, although all such agreements must be registered with the Private Partnership Office within 12 months of the new PPP Act, 2020 coming into force. This distinction between the old and new legal regimes demonstrates the government’s intention to substantially improve the PPP environment in Ghana.
Read More from OBG
