In July 2014, Uganda joined the list of African countries that have implemented Public Private Partnership or "PPP" laws, by passing the Public Private Partnership Bill 2012 (Uganda PPP Law). As in many African countries, improving Uganda's infrastructure is seen as a key step in unlocking its economic potential. To address this, Uganda has identified a robust pipeline of road, power and social infrastructure projects which offer significant opportunities to both sponsors and lenders.
The Uganda PPP Law adopts a simple approach. It focuses on establishing the framework for a successful PPP programme - it is not over prescriptive and allows for various structures. This should provide comfort to both potential lenders and sponsors seeking a degree of certainty over process.
The Uganda PPP Law charges the Ministry of Finance with setting up a central PPP unit which will be a useful source of information and to address "deal breaking" issues which can arise where the public sector lacks the requisite expertise. Its remit includes providing guidance and assistance in the development of projects. It will "assess projects for [PPPs] to confirm that they are affordable and that financial commitments are manageable in terms of the debt management policy and that they are within the Government policies". This may be useful for potential investors concerned about affordability or viability. Its role also extends to advising Government on PPPs and training public sector staff on PPPs.
The Uganda PPP Law sets out a detailed procurement cycle process. It also sets out rules on evaluation, disqualification and oversight. In addition, PPP agreements above a threshold monetary value must be approved by the Cabinet. The Uganda PPP Law also sets out what a PPP agreement must cover. This comprises a list of clauses and risk allocations that an investor or lender would expect to see in any PPP agreement to ensure "bankability". It does not prescribe the drafting of these terms, but the Government may issue more detailed guidance on contractual terms in the future.
The Uganda PPP Law, now separated from general procurement requirements, provides for both competitive (open or restrictive) and non-competitive bidding methods. The latter could involve direct procurement by the Government or (subject to satisfying specified criteria) unsolicited bids from sponsors. However, even where an unsolicited bid is accepted, the proposal remains subject to a...