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Generally, the government is primarily responsible for providing basic social amenities, public infrastructure and utilities to its citizenry.
Nigeria Government, Public Sector
Generally, the government is primarily responsible for providing basic social amenities, public infrastructure and utilities to its citizenry. The ability to provide such needs is often impacted by financial constraints. The inability to fulfil these obligations as well as private sector contribution to public infrastructure development and enhancement has therefore birthed the concept of public private partnership. In this article, we define the concept of Public Private Partnership, and discuss some of the key laws and regulations in respect of Public Private Partnerships in Nigeria.
1.What is Public Private Partnership?
A Public Private Partnership (PPP) is a contractual agreement between a public agency (federal, state or local) and a private company. Typically, the terms and conditions of PPPs terms are incorporated into a contract which sets out the mutual agreements and understandings of the parties to establish their obligations, rights and duties. An example of a PPP in Nigeria, is the contractual agreement between The
Federal Airports Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services for the Build Operate and Transfer (BOT) of Murtala Muhammed Airport 2 terminal in Lagos.
2. Why should PPPs be considered?
Some of the reasons why governments execute PPPs for infrastructure and service include;
2.1. To attract private expertise and/or capital investment for infrastructure and service delivery improvements;
2.2. To increase efficiency and use available resources for infrastructure and service delivery more effectively; and
2.3. To reform sectors through a reallocation of roles, incentives and improve accountability.
These are very crucial as in most cases, the government lacks capacity to achieve some of these objectives.
3. What is the Legal Framework for PPPs in Nigeria?
a. The Infrastructure Concession Regulatory Commission (Establishment Etc.) (ICRC) Act of 2005; This is the principal legislation for the regulation of PPP contracts involving Federal Government infrastructure. The Act provides for the participation of the private sector in financing the construction, development, operation or maintenance of infrastructure or development of Federal Government projects through concessions or other contractual arrangements.
b. The National Policy on PPPs: This policy was approved by the Federal Executive Council (FEC) in 2009 and the policy aims to provide a conducive environment for private sector's involvement in the delivery of infrastructure development services in Nigeria.
c. The Public Procurement Act (PCA), 2007: The Act established the Bureau of Public Procurement (BPP) as the regulatory body responsible for monitoring and overseeing public procurement activities, harmonizing existing government policies and practices by regulating, setting standards and developing a legal framework and professional capacity for public procurement in Nigeria
d. The Fiscal Responsibility Act 2007: This is another relevant legislation which provides for rules to ensure the accountability, transparency and prudence of government in the preparation of budgets and expenditure frameworks.
e. The Debt Management Office Act 2003: This legislation governs all Federal Government loans, borrowings, guarantees and other long-term contingent liabilities.
f. There are also sector-specific legislations and authorities which regulates different services such as; the Electric Power Sector Reforms Act (EPSRA) 2005, which provides a statutory framework for the participation of private companies in electricity generation, transmission and distribution. The Federal Highways Act, which empowers the Minister of Transport to construct federal highways and operate toll gates and collect tolls on the federal highways.
Some state governments also operate their own PPP laws. For instance, the Lagos State Public Private Partnership Law 2011 and the Rivers State Public-Private Participation in Infrastructure Development Law 2009.
4. Which Agencies are Responsible for Regulating PPPs in Nigeria?
a. The ICRC Act established the Infrastructure Concession Regulatory Commission (ICRC) which functions as the regulatory body with the power to amongst others, inspect, provide general policy guidelines, rules and regulations, to take custody of every concession agreement, to ensure compliance with the provisions of the Act, to ensure efficient execution of any concession agreement or contract executed between the Federal Government and private sector. The ICRC also guides the Ministries, Departments and Agencies (MDAs) in structuring PPP transactions. Importantly, only federal bodies undertaking federal projects fall under the scope of the ICRC.
b. The Bureau of Public Enterprises (BPE) established by the PCA is also responsible for the
implementation of full or partial privatization and commercialization of the list of public enterprises set out
in the PCA. The ICRC and BPE collaborate when assets specified within the PCA are required to be
developed as PPPs.
In addition, the EPSRA established the Nigerian Electricity Regulatory Commission (NERC) to regulate the
activities in the electricity sector.
While there have been a number of notably successful PPP infrastructure projects across Nigeria, research also indicates that there is a continuous decline in PPP projects in Nigeria. To encourage private sector participation in public projects, it is important that the Government considers the development of certain areas within the Nigerian business environment including; (i) expedited hearings and a trusted judicial system, (ii) clarity on economic and fiscal policies and (iii) ease of doing business. Focusing on these. The Fiscal Responsibility Act 2007: This is another relevant legislation which provides for rules to ensure the accountability, transparency and prudence of government in the preparation of budgets and expenditure frameworks.
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.
