PPPs involve a long-term agreement in which a private company/party offers a service traditionally provided by a government entity. This service is performed based on the output specifications outlined by the public entity and any payments to the private party are based on its performance. Risks and responsibilities are shared, and typically assigned to the party that is best suited to handle them in the most cost effective manner.

Infrastructure refers to the physical and organizational structures and facilities (such as roads, power plants, rail, fiber cables, public housing, ports, pipelines, airports, water and sewerage, health and educational facilities etc.) required for normal operation of a society and for enterprise to thrive in a society.

Kenya’s economic growth blue-print, Vision 2030 prioritizes modernization of the country’s infrastructure as a means to enhance the country’s competitiveness and improve the standards of living for citizens. Construction, operation and maintenance of infrastructure is however a capital intensive undertaking that requires collaboration between the public and private actors. PPPs as such provide an avenue for the government to partner with the private sector to pool more resources, innovation and efficiencies for the faster development of the country.

The PPP Policy of 2011 articulates the rationale for PPPs in Kenya as follows:

• Accelerated modernization of infrastructure in the country
• Bridging infrastructure development budgets by tapping private sector finance
• Tapping private sector innovation and efficiencies in delivery, operation and maintenance of infrastructure
• Prudent management of public debt through development of off-balance sheet delivery of infrastructure projects
• Opening up investment projects to local and international investors
• Lifecycle approach to infrastructure projects to ensure better operation and maintenance of infrastructure developed
• Improved governance and management of infrastructure projects in the country

The PPP Programme applies to both national and county government entities, state corporations as well as the private sector with regard to developing and implementing critical infrastructure and other development projects. Focus areas of the Programme include but not limited to: power generation, water and sanitation, irrigation, transport, solid waste management, health, education, housing, sports facilities, information communications technology, tourism, land reclamation projects, land swaps, industrial estates, business process outsourcing, wholesale and retail markets, abattoirs, mining and other infrastructure and development projects.

Yes, under the current PPP framework, a number roads under the Annuity programme – Lot 33 Project Roads covering Ngong to Isinya (the“Ngong-Kiserian-Isinya”) and from Kajiado to Imaroro (the “Kajiado-Mashuru-Ishara Road); Lot 15 Project Roads in Central Kenya region covering Nyeri, Muranga, Laikipia and Tharaka Nithi Counties; and Lot 18 Project Roads in the Western Kenya region covering Busia, Kakamega, Bungoma and Vihiga Counties – are operational. The 27 kilometres – long Nairobi Expressway, which connects Jomo Kenyatta International Airport and Syokimau area to Nairobi’s Westlands area is also a complete and operational PPP project.

Kenya has enacted the PPP Act 2021 (which has repealed the PPP Act 2013).

The PPP Act places the responsibility to the contracting authority (government agency) – at the county or national government level – to identify, prioritize and select projects that they would like to undertake as PPPs. In identifying such projects, the relevant contracting authority is mandated to ensure that the proposed projects fit in with the county/sector ministry/state departments overall development plans, programme or policies. The projects are thereafter considered by the PPP Directorate to determine their viability and suitability as PPPs.

A Contracting Authority at the National and County government level, under whose mandate the project lies, is in charge of delivery of such projects. Further the PPP Act has established the institutional framework which has the PPP Committee at the apex to provide overall oversight to the PPP Programme in the country. The Committee is supported by the PPP Directorate in technical matters. It is also the PPP Directorate’s role to support contracting authorities (county/sector ministry/state departments) in preparation of PPP Projects in the country.

A stable and supportive legal regime, a pipeline of bankable projects, political will and robust capital markets are critical to the success of a PPP program. Kenya is fortunate to have the right mix of these factors.

The PPP Law in Kenya (PPP Act 2021) provides for 3 main ways to select a private partner in a PPP Project:

• The Solicited process where a project is procured through competitive tender
• The Privately Initiated Proposal (PIP), where a private party proposes a project to the public party.
• Direct Procurement where a PPP project is single sourced subject to meeting specific conditions set under the Act.

With many development needs against scarce resources, governments world over have adopted PPPs as a financing model to augment ordinary public infrastructure development budgets. Countries such as the UK and India have had robust PPP markets for many years now. In the African continent, South Africa, Egypt, Nigeria and Senegal are among countries that have adopted this novel financing model. In East Africa, Uganda has a road project from Kampala to Jinja being developed as a PPP, while both Ghana and Rwanda are setting up legal and institutional frameworks to support delivery of PPP projects. Tanzania has developed a legal framework and has identified a couple of projects for delivery.

The contract duration for a PPP project is determined by various factors among them the cost of the project, technologies involved, affordability to both the contracting authority and the end user, etc. However, the Directorate may issue guidelines to determine contract duration.

The PPP Law in Kenya provides for a Solicited Competitive process, a Privately Initiated Proposal (PIP) process and Direct Procurement. Under the first process, the public agencies undertaking a project will normally undertake the 2-stage procurement process of inviting the private sector to apply for qualification to bid after which the pre- qualified firms will be requested to bid for the project. Under PIP process, a private party identifies an infrastructure need under a mandate of a certain public agency, undertake a feasibility study of the project to gauge viability, affordability, etc. The private party then proposes the project to the relevant public agency. If the public agency approves the PIP, it submits it to the PPP Directorate and the Committee for approval. If the Committee approves the PIP, they enter into negotiations. Subsequent PPP approvals will follow in line with the PPP Act. Under Direct Procurement, the private partner is single sourced by the Contracting Authority in line with the Act.

Kenya has developed a robust PPP project pipeline with small, medium and large-scale infrastructure projects planned for delivery as PPPs. Both local and international financing institutions are encouraged to invest in these projects.

The PPP Act 2021 identifies and provides for both the National Government Agencies and County Governments to deliver PPP projects in line with their respective mandates as the contracting authorities. The County Governments Act also provides for County Governments to implement PPP Projects in line with their delegated responsibilities.

PPP Project Agreement feature dispute resolution mechanisms to amicably settle disputes. Any petitions during the procurement of a PPP Project are heard and determined by the PPP Petitions Committee as established by the PPP Act 2021.

PPPs involve substantial risk transfer to the private party, mobilization of project finance by the private sector and private party’s compensation being strongly indexed to performance standards. Public procurement entails financing of a project from public means and the government retaining most project risks, for a project is fully owned by the state, especially after the defects and liability period elapses. Further, PPPs are output based as opposed to input based, meaning the Contracting Authority is more focused on the output, that is, service arising from the project as opposed to input which details the specifications of a project.

The PPP Law in Kenya stipulates a sequential process starting with project identification and screening, analysis and feasibility study, procurement, contracting, delivery, operations and handback of a PPP project.

As per the process stipulated in the PPP process above, a contracting authority is required to prepare and submit a PPP project proposal to the PPP Committee, through the PPP Directorate, for consideration and approval.

No, the Government does not offer sovereign guarantees. However, various forms of available Government support for projects are in the Government Support Measures (GSM) Policy, 2018.