LEGISLATIVE ALERT: PUBLIC PRIVATE PARTNERSHIP ACT, 2020 (ACT 1039) PASSED
A Public Private Partnership (PPP) is a contractual arrangement or concession between a public authority and a private party for the provision of public infrastructure or services traditionally provided by the contracting authority. As a result of such an arrangement, the private party performs part or all of the service functions and assumes certain risks over a designated period. This brief therefore seeks to inform all employers and private investors of the new Public Private Partnership Act, 2020 (Act 1039), which aims at regulating contracts between public contracting authorities and private parties for the provision of public projects and/or services.
Act 1039 outlines the applicable procedures for the procurement of partnership arrangements, entry into partnership agreements, and ensures the use of local content and promotion of technology transfer in relevant projects. The Act also introduces a framework for the approval of PPP projects, as well as the requisite financial thresholds for approval of a project.
Under the new law, projects are now subject to appraisals by relevant appraisal authorities. For example, the Public Investment Unit of the Ministry of Energy is responsible for the appraisal of PPPs involving the Electricity Company of Ghana, and the Public Investment Unit of the Ministry of Transport is responsible for the appraisal of projects involving the Ghana Maritime Authority.
It also adjusts the financial thresholds of various approval authorities for proposed partnerships. Previously, the Ghanaian Cabinet was required to approve projects with an estimated cost of above GH₵50 million. However, under the new PPP Act, Cabinet’s approval is required for projects with an estimated capital cost that is above the cedi equivalent of USD 200 million. The financial thresholds for the local government authorities have also changed. For example, District Assemblies that previously approved projects that did not exceed GH₵ 500,000 are now required to approve projects involving a capital cost of the cedi equivalent of USD 1 million. Particularly, the Ghanaian Parliament is required to approve all projects which would bind the government to a financial commitment that exceeds one financial year.
With regards to PPP related disputes, the Act introduces a seven-member panel to handle disputes arising out of any aspect of the bidding process. For example, a person who alleges that a bidding process was not carried out fairly is expected to lodge a complaint within 30 days of the decision. All other disputes between the contracting authority and the private party are to be resolved by the dispute resolution clauses in the agreements between the parties. Otherwise, disputes must be resolved according to the Alternative Dispute Resolution Act, 2010 (Act 798).
Given the fact that most PPP arrangements are tied up to several risks that are not always foreseen, GEA would like to encourage all private sector investors to acquaint themselves with the various legislative requirements under Act 1039 and be guided by same when procuring partnership arrangements.