Public Private Partnerships: Development of Kenya’s PPP Programme

In the past, the Government of Kenya has played the role of being the primary provider of public infrastructure and services. In or about 2011, the Government seems to have made a conscious decision to adopt new and innovative approaches to the provision and financing of public infrastructure and services. This led to the Government adopting a public private partnership (PPP) framework to fund infrastructure projects that would otherwise be a strain on the public purse. The PPP policy formulated at that time has since then undergone a metamorphosis of sorts into the more robust legal platform that exists today. 

In this article, we review the development of Kenya’s PPP programme since 2011, pinpointing the various developments that have shaped the evolving take-up of PPPs in Kenya. 

What is a PPP?

Many countries are now formally adopting a framework for PPPs in their local laws and Kenya is no different. Currently in Kenya, a PPP is defined under the Public Private Partnerships Act, 2013 (the PPP Act) as an arrangement between a contracting authority and a private party under which a private party:

1. undertakes to perform a public function or provide a service on behalf of the contracting authority;
2. receives a benefit for performing a public function by way of:

1. compensation from a public fund;
2. charges or fees collected by the private party from users or consumers of a service provided to them; or
3. a combination of such compensation and such charges or fees; and
4. is generally liable for risks arising from the performance of the function in accordance with the terms of the project agreement.

The development of Kenya’s PPP framework

Prior to the enactment of the PPP Act, most PPP-oriented projects were undertaken under the prevailing public procurement laws. In 2009, the Government passed the Public Procurement and Disposal (Public Private Partnerships) Regulations, 2009 (the 2009 PPP Regulations). The 2009 PPP Regulations sought to institutionalise PPPs by establishing the Public Private Partnership Steering Committee and Public Private Partnership Nodes. 

Between November 2011 and early 2012, the Government issued a “Policy Statement on Public Private Partnerships” dated November 2011 (the PPP Policy). In the PPP Policy, the Government acknowledged that the funds required to support Kenya’s agenda for Vision 2030 and to narrow the infrastructure deficit would require involvement of the private sector. The PPP Policy created the basis for the enactment of a PPP law.

In 2012, the Public Private Partnerships Bill was approved by Parliament and enacted into law as the PPP Act, which came into force on 8^th February, 2013. The PPP Act sought to provide for: 

1. the participation of the private sector in the financing, construction, development, operation, or maintenance of infrastructure or development projects of the Government through concession or other contractual arrangements; and 
2. the establishment of the institutions to regulate, monitor and supervise the implementation of project agreements on infrastructure or development projects and for connected purposes.

Amongst the institutions established under the PPP Act include the Public Private Partnership Committee, the Public Private Partnerships Unit, the Petition Committee, and the Public Private Partnership Nodes. In addition, the PPP Act provided for the setting up of proposal evaluation teams for the purpose of evaluating bids submitted by bidders. 

In October 2014, the Petition Committee published the Petition Committee Guidelines, 2014 (the Petition Guidelines) in the Kenya Gazette for general public information and as guidance to any participant or investor in any PPP project procurement. The Petition Guidelines seek to set out the rules of procedure intended to guide the work of the Petition Committee, as well as complainants and respondents to any PPP dispute. 

In December 2014, the Public Private Partnerships Regulations, 2014 (the 2014 PPP Regulations) were passed. The 2014 PPP Regulations provide more details regarding various matters captured in the PPP Act. It provided operational details on how PPP projects will be prepared, tendered, approved and implemented; and the roles and responsibilities of the parties involved in the PPP transactions. The 2014 PPP Regulations also provide for the approval of PPP arrangements not originally captured by the PPP Act. 

In August 2015, the PPP Unit developed a draft of the Kenya Public Private Partnership Manual (the PPP Manual) to act as a guide to PPP practice in Kenya. The PPP Manual provides an overview of the concepts and procedures to be followed and the requirements to be met for successful implementation of PPP projects. The PPP Manual is to be read or used in conjunction with the PPP Act, applicable Regulations under the PPP Act and other PPP guidelines issued periodically by the relevant institutions. 

The concurrent application of the PPP Act and the Public Procurement and Disposal Act, 2005 (the 2005 Public Procurement Act) created a lot of confusion when it came to projects that were of a PPP nature. Many government institutions ended up using the 2005 Public Procurement Act mostly because they were more familiar and comfortable with the procedures set out in that Act. On 7^th January 2016 a new Public Procurement and Disposal Act, 2015 (the “New Public Procurement Act”) came into force. The New Public Procurement Act was enacted to fulfil the requirements of the Constitution of Kenya, 2010 that required that an Act of Parliament be enacted to prescribe a framework within which policies relating to procurement and asset disposal shall be implemented. The New Public Procurement Act repealed the 2005 Public Procurement Act. The New Public Procurement Act provides that procurement and disposal of assets under the PPP Act are not procurements or asset disposals to which the New Public Procurement Act should apply. It may be the case that this express limitation of scope of the New Public Procurement Act was deemed necessary as there was a significant overlap between the provisions of the 2005 Public Procurement Act and the PPP Act.

Since then, Kenya has also passed the Public Private Partnerships (Project Facilitation Fund) Regulations, 2017 (the Project Facilitation Fund Regulations) in 2017. The Project Facilitation Fund Regulations set out, among others, the eligibility criteria for which the Public Private Partnership Project Facilitation Fund established under the PPP Act shall be applied (the Project Facilitation Fund). The Project Facilitation Fund was set up under the PPP Act to bridge the viability gap funding for eligible projects.

What’s in store?

The PPP Unit website reveals that the PPP Toolkit and guidelines under the PPP Act (the PPP Toolkit) are currently under development and will be available soon. The PPP Toolkit will address PPPs under both the National and County Government frameworks and across various economic sectors.

Kenya continues to develop, streamline and fine-tune its laws, guidelines and policies on PPPs in a bid to create an enabling environment to attract private sector partners in financing and managing infrastructure projects. With a notable pipeline of ongoing projects, regulatory authorities, investors and stakeholders are continually adapting to PPPs as the hallmark of Kenya’s future development prospects.