An extract from The Public-Private Partnership Law Review, 6th Edition

General framework

The PPP Act 2010 came into effect in 2010 with PPP Regulations in 2011. There have been various subsequent amendments to the legislation, the latest in 2020. The PPP Act was last revised in October 2018 and the latest PPP Regulations 2020 have been in place since 24 January 2020.

The PPP Act and Regulations provide for the institutional framework for the implementation of public private partnership agreements between the public sector and private sector entities, set rules, guidelines and procedures governing public-private partnership procurement, development and implementation of public-private partnerships and provide for other related matters.

Under the amended PPP Act:

1、the PPP Centre shall administer PPPs as a 'one-stop centre' and in so being, it shall, for effective discharge of its functions seek recommendations from the Ministries responsible for investment, finance, planning or any other ministry, department or agency;

2、the Public Private Partnership Steering Committee shall consider and approve PPP projects and agreements.

The Minister is allowed make regulations for better carrying out of the provisions of the PPP Act, prescribing:

3、levying of fees and charges;

4、investment opportunities and promotion;

5、functions of local government authorities under the PPP Act and clear linkages of roles between the implementing ministries and appropriate bodies at the local government;

6、evaluation, operation and management of projects under the PPP Act;

7、the management of, and terms and conditions for accessing the Facilitation Fund;

8、procedures for procurement of private parties and matters incidental thereto;

9、the manner in which the empowerment of citizens of Tanzania may be implemented including provision of goods and services by Tanzanian entrepreneurs, training and technology transfer, employment of Tanzanians and corporate social responsibility;

10、process and procedure for scrutiny and analysis of projects that require provision of government support; and

11、any other matter in the promotion and furtherance of objectives of the Act.

In addition to the above powers, the Minister may also make rules and guidelines for the better implementation of PPP Act.

Each project requires a feasibility study to demonstrate that the PPP shall, among other things, be affordable to the contracting authority, shall provide value for money, and shall transfer appropriate technical, operational or financial risks to the private party.

The Public Procurement Act and Regulations do not apply to PPPs. The PPP Act and Regulations govern the procurement procedures of the PPPs. PPP projects that relate to natural wealth and resources shall take into account the provisions of Natural Wealth and Resources (Permanent Sovereignty) Act 2017 and Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act 2017. A Facilitation Fund shall be set up (see Section VI.i, below for more details).

The PPP Centre functions include:

1、mobilising resources;

2、ensuring that government departments integrate PPP plans;

3、implementing a fair, transparent, competitive and cost-effective procurement process;

4、dealing with fiscal risk allocation;

5、monitoring and evaluating the performance of the PPP projects; and

6、undertaking research on PPP matters.

The PPP Steering Committee functions include:

1、reviewing policy, legislation, plans and strategies pertaining to the promotion, facilitation and development of PPPs and advising the Minister accordingly;

2、advising the Minister on matters relating to the implementation of the PPP Programme;

3、considering and approving detail projects report, selection of preferred bidders, agreements and any amendment to the agreements;

4、approving allocation of project development funds from the Facilitation Fund or the Treasury;

5、assigning to contracting authority's terms and conditions for utilisation of the Facilitation Fund; and

6、subject to the recommendation made by the PPP Centre, approving feasibility studies, selection of preferred bidder agreements and amendment to agreements.

Both solicited projects (i.e., competitively tendered initiated by the public sector) and unsolicited projects (i.e., initiated by a written proposal from a private party to a contracting authority) are permitted.

PPPs in the energy sector have additional requirements that are set out in more detail in Section IV, below.

PPPs must endeavour to provide opportunity for empowerment of the citizens of Tanzania. The government has resolved to take measures designed to promote and facilitate economic initiatives aimed at empowering Tanzanians; and has agreed in terms of the National Economic Empowerment Policy 2004 and the National Economic Empowerment Act 2004 that natural resources, trade, agriculture, industry and other economic opportunities must generate wealth and boost the small and medium enterprise sector, in order to bring about a sustainable affirmative action and facilitate genuine and positive economic empowerment for the population of Tanzania. It has also stated that economic empowerment is a central means for bringing about economic growth and social justice among Tanzanians that is necessary for the promotion of peace, tranquillity and social stability.

Every operator of an approved PPP project shall enshrine and implement local content and corporate social responsibility as stipulated under the PPP Act. Parties to a PPP agreement shall, at any appropriate point in the course of implementing a PPP project, endeavour to prioritise acquisition of goods and services, in the first instance, in favour of a local service provider or locally manufactured goods, provided that such goods or services are of competitive terms and meet standards acceptable by Tanzania Bureau of Standards or other internationally acceptable standards. PPPs must also ensure that qualified Tanzanians are afforded first opportunity for employment, ensure prioritisation of on-the-job training for Tanzanians, ensure that there is a succession plan, and, where applicable, ensure that a Tanzanian citizen is given priority in any matter relating to the technology transfer, research, development and innovation in any PPP related activities; and PPPs must adhere to corporate social responsibility and the associated disclosure requirements.

In contracts for goods and related services to be awarded on the basis of international competitive tendering or national competitive tendering, procuring entities shall grant a margin of preference of up to 15 per cent to domestically manufactured or produced goods and related services.

A non-local company that intends to provide goods, works or services to the PPP projects within Tanzania shall, subject to the Minister's approval, after thorough scrutiny by the PPP Centre and recommendation by the Public Private Steering Committee to the Minister, enter into any arrangement that will guarantee a local participation of at least 10 per cent shares, interest or equity of the contract value for the provisions of the works, goods and services provided that such arrangement does not divert from the PPP arrangement.

Bidding and award procedure

All PPP projects shall be procured through an open and competitive bidding process except for unsolicited project exempted by the Minister having met the following criteria:

1、the project shall be of priority to the government at the particular time and broadly consistent with the government strategic objectives;

2、the private proponent does not require government guarantee or any form of financial support from the government;

3、the project shall have unique attributes that justify departing from a competitive tender process;

4、the project is of significant size, scope and requires substantial financing as per conditions provided in the regulations;

5、the project shall demonstrate value for money, affordability and shall transfer significant risks to the private proponent;

6、the project has wide social economic benefits including improved services, employment and taxation; and

7、the proponent commits to bear cost of undertaking a feasibility study.

All solicited and unsolicited projects shall be procured through an open and competitive bidding process and in a manner prescribed in the PPP Regulations. The current PPP Regulations 2020 specify that for solicited projects, at least two months before the beginning of the budget cycle, each contracting authority will submit to the PPP Centre a concept note of all potential projects to be undertaken in partnership with the private sector. Based on the recommendation of the PPP Centre, the contracting authority may then proceed to conduct a full feasibility study of the project.

For unsolicited projects, upon approval of project concept, the private proponent shall make a commitment to undertake the project by depositing a refundable amount of not exceeding three percent of the estimated cost of the project to be conducted. The private party is required to put forward a project concept to the proposed contracting authority, which may then be forwarded to the PPP Centre for review.

The PPP Regulations 2020 provide for the involvement of local government authorities in small-scale PPPs, these being PPPs whose total project value does not exceed US$20 million (as per the PPP Amendment Act 2018, which reduced this from US$70 million) and that entails an agreement not exceeding a maximum duration of 15 years.

There are additional requirements in respect of PPPs in the energy sector, which include:

1、the electricity utility, TANESCO, must obtain approval first of the regulator, the Energy and Water Utilities Regulatory Authority (EWURA), before initiation of procurement of any power project;

2、the application to EWURA must be made for solicited proposals, before releasing the tender and for unsolicited proposals, after TANESCO has accepted the proposer's project concept but before commencing any formal negotiations for a power purchase agreement;

3、EWURA will evaluate compliance with all required legislation, including the PPP legislation; and

4、EWURA may nominate a representative to observe the procurement process to be followed by TANESCO.

There are special regulations and a standard power purchase agreement (SPPA) for energy projects of less than 10MW under the recently enacted Electricity (Development of Small Power Projects) Rules 2019.

Wind and solar projects must be solicited proposals (i.e., competitively bid) approved by EWURA. Hydro and biomass projects shall be procured through a letter of intent with an SPPA power buyer.

There are further special rules for mini projects of less than 1MW (called 'very small power projects'/VSPP), such as no requirement for EWURA approval of the retail tariff but EWURA may review the tariff if petitioned to do so by 15 per cent of affected households.