10th August, 2011
I was struggling for an appropriate introduction for my topic, which would be attractive to the majority of the reading public (I wonder how many) particularly my target audience, and like an anxious bride I tried several ‘outfits’ before I picked what I hoped would allure the groom but unfortunately, I would have to wait patiently till the honey moon to find out…
Well who are we wooing – potential investors, local and international. In the next few paragraphs I will provide an overview of the Lagos State Public Private Partnership Law (LSPPP, the Law), enacted by the 6th House of Assembly, which commenced as an Executive Bill and was assented to and signed into Law on the 24th of June by the Governor of Lagos State His Excellency Mr. Babatunde Raji Fashola, SAN.
This Law sees the State Government and its Parliament following the positive strides of other emerging markets such as South Africa, Mauritius and Egypt in enacting a PPP specific legislation. There have been many laws passed by the House of Assembly which have jurisdiction over PPPs in various sectors culminating in the Lagos State Roads, Private Sector Participation (PSP) Board Law 2004 which was improved by the Lagos State Roads (PSP) Authority Law of 2007.
The LSPPP Law seeks to enshrine in a single document a governing framework for Public-Private Partnerships in diverse sectors in the economy thus widening the ambit of the Roads PSP Authority Law of 2007 which by its name, reveals that its jurisdiction was limited to roads, bridges and highways.
The new law assumes that the term PPP is widely understood but defines terms sometimes synonymous with PPPs such as concession, concessionaire, concession agreement. There is a presumption that the citizenry are aware that a PPP describes a contractual arrangement between a public sector entity and a private entity whereby the private entity typically assumes the financial, technical and operating risk in the development or management of public infrastructure or provision of services for a specified period, in return for financial return on its investment. Adequate provisions are made for concessions and concession agreements in the new Law. A concession is defined as the right of economic exploitation of land, assets and rights granted pursuant to a Concession Agreement under the Law. Concession Agreement is defined as any agreement between the Government and a person, company, firm, limited liability partnership for the construction, maintenance, operation or management of public infrastructure, assets and facilities over an agreed period of time. Examples include agreements such as Design-Build-Operate Transfer (DBOT), Build Own Operate Transfer (BOOT), Rehabilitate Operate and Transfer (ROT), Joint Development Agreement (JDA). While the foregoing terms are synonymous with PPPs and describe types of PPP agreements, there are other PPP models, such as leases, service and management contracts.
Aside from roads, bridges, highways, the LSPPP Law adequately provides for PPPs in respect of any public infrastructure or asset including rail lines, water transportation facility, public water works, housing, electric power stations, hospitals, recreational parks, waste disposal facilities etc. The law further establishes the Office of Public Private Partnerships (the Office) and its governing Board which will comprise 7 members including the Chairman and the Secretary.
The principal objective of the Office is to develop public infrastructure or public assets and provide for social amenities and other facilities through Public-Private Partnerships and ensure such PPPs are in accordance with Government policy and the public interest. The Office will also monitor the performance of Concession Agreements and other PPP models and has powers to make regulations to designate a public infrastructure/asset as a service charge/user fee infrastructure and prescribe guidelines for use of such asset and when and how service charges will be collected. The prescribed user fee is subject to the approval of the House of Assembly. Whilst the Office is empowered to initiate procurement of PPPs based on requests to the market for Expressions of Interest, the Law requires that the procurement process to be followed should be in accordance with the Lagos State Public Procurement Law, which however is yet to be passed by the House of Assembly.
It is pertinent to note that prior to the passage of the Law, the Office had been in existence for some two years, with a dynamic team led by a Director-General, Mr. Ayo Gbeleyi. The Office has been acting in an advisory capacity to several Ministries Departments and Agencies (MDAs) and the State Executive Council in reviewing potential PPPs and formulating best practice guidelines for PPP procurement. It has also been involved in monitoring compliance and adjudicating issues in respect of existing PPP Agreements such as the Eti-Osa/Lekki/Epe Expressway toll road concession.
Other provisions of the Law relate to the types of entities that may be party to a Concession Agreement which include companies registered with the Companies and Allied Matters Act. However, the Office may also cause to be formed Limited Liability Partnerships or Companies as “Special Purpose Vehicles†for financing PPPs. The Law further provides that the State can enter into Direct Agreements with Lenders, thus entrenching this typical PPP contractual document in the Law. There is provision for appeals from decisions of the Office or exercise of its power and the Law protects the rights and obligations of parties to existing concession agreements prior to its enactment. Moreover, with regard to existing PPP agreements, the law only applies to agreements annexed to the Law, and specifically annexes only the Lekki Toll Road Concession Agreement. Furthermore, the Law repeals the Roads PSP Authority Law 2007 with the detailed Procurement Process therein, but makes provision for consequences of non-compliance with payment of user fee, service charges or toll as required. Thereby ensuring that in terms of user fee based concessions, the private party receives its returns on investment.
The Law will be complemented by Policies and Regulations passed by the Board and the Office which will include guidelines for competitive bidding processes, treatment of unsolicited proposals and other related matters.
Suffice to say, the honey moon is over and work is in earnest to facilitate the delivery of the State’s pledge to overcome constraints facing Lagosians in their daily lives, notably in the areas of Roads, Transportation, Power and Water, Environment, Health, Education, Employment, Food Security, Shelter and Revenue Enhancement.
•Temitope George is a lawyer in the Legal and Risk Management Directorate of the Office of Public Private Partnerships