Punjab Public Private Partnership Ordinance 2014original .Doc

8/9/2019 Punjab Public Private Partnership Ordinance 2014original .Doc

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THE PUNJAB PUBLIC PRIVATE PARTNERSHIP ORDINANCE2014

(II of 2014)CONTENTS

CHAPTER IPRELIMINARY

1. Shor ! "#$ #% #& '& o**#& #*#&2. A++"! ',!"! -. D#f!&! !o&/

CHAPTER II

INSTITUTIONAL ARRAN EMENTS

4. PPP S ##r!& Co**! ##. PPP C#""3. R!/ M'&' #*#& U&!5. o6#r&*#& A #& -

CHAPTER III

PROJECT DELIVERY PROCESS

7. PPP 'rr'& #*#& /8. Pro9# ! #& !f! ' !o& '& +r#+'r' !o&10. Pro9# +r!or! !:' !o& '& '++ro6'"

11. A++ro6'" of o6#r&*#& /;++or12. Co&/! #r' !o& ,- h# Co**! ##1 . S#"# !o& of h# +r!6' # +'r -14. Pr#<=;'"!f! ' !o&1 . B! !&13. S!& "# / ' # hr## #&6#"o+# ,! !&15. B! #6'";' !o&17. B! /# ;r! -18. o6#r&*#& /;++or20. U&/o"! ! # +ro+o/'"/21. No&<O,/#r6'& # of h# !*#"!&#/

22. Pr#+'r' !o& '& &# o !' !o& of PPP ' r##*#&2 . Pro9# !*+"#*#& ' !o& '& o+#r' !o&24. S# !& '& ' 9;/ *#& of ;/#r "#6!#/2 . T#r*!&' !o& of h# PPP ' r##*#&23. D!/+; # r#/o"; !o&25. V#/ !& of h# +ro9# !& h# +r!6' # +'r -27. Tr'&/f#r of h# +ro9#

CHAPTER IVMISCELLANEOUS

28. D!/ "o/;r# of #&#r! r!/ /0. I& # r! - +'1. P;,"! !/ "o/;r#2. Pr#/ r!,!& '& #&for !& / '& 'r /. I& #*&! - ,- h# +r!6' # +'r -4. R# o6#r- of o/ /$ ;#/ '& f##/

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FIRST SCHEDULE

[see section 2]

SECTORS

SECOND SCHEDULE

[see sections 3(q)& 27]

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http://opt/Alfresco/tomcat/temp/Alfresco/secondschedule










TE?T

THE PUNJAB PUBLIC PRIVATE PARTNERSHIP ORDINANCE 2014(II of 2014)

[5th

March, 2014] AN

ORDINANCE

to foster an enabling environ ent for !rivate sector !artici!ation in "evelo! entin the #$n%ab thro$gh !$blic !rivate !artnershi!

@h#r#'/ it is expedient to expand the provision of physical and infrastructureservices in the Punjab and improve their reliability and quality for acceleratingeconomic growth and achieving the social objectives of the Government; to harnessthe substantive role of public private partnership as a means of mobilizing private

sector resources for financing, construction, maintenance and operation of projectsfor delivery of physical and social infrastructure services; to improve the efficiency ofmanagement, operation and maintenance of infrastructure facilities by introduction ofmodern technologies and management techniques; to incorporate principles offairness, competition and transparency in the procurement of public privatepartnership; and, to provide for ancillary matters;

A& >h#r#'/ the Provincial Assembly of Punjab is not in session andGovernor of the Punjab is satisfied that circumstances exist which render itnecessary to ta e immediate action;

No>$ h#r#for# , in exercise of the powers conferred under clause !"# of

Article "$% of the &onstitution of the 'slamic (epublic of Pa istan, Governor of thePunjab is pleased to ma e and promulgate the following )rdinance*

CHAPTER IPRELIMINARY

1. Shor ! "#$ #% #& '& o**#& #*#& + !"# -his )rdinance may be citedas the Punjab Public Private Partnership )rdinance $."/+

!$# 't extends to the whole of the Punjab+

!0# 't shall come into force at once+

2. A++"! ',!"! - + 1ubject to the provisions of section 0%, the )rdinance shallapply to all the projects implemented through public private partnership in thesectors listed in 2irst 1chedule+

. D#f!&! !o&/ + 'n this )rdinance*

!a# 3bid4 means a technical and financial proposal submitted by a person whois eligible under the )rdinance to underta e a project;

!b# 3&ommittee4 means the PPP 1teering &ommittee established by theGovernment;

!c# 3company4 means a company registered or deemed to be registeredunder the &ompanies )rdinance, "5%/ !678'' of "5%/# or a foreigncompany under the &ompanies )rdinance, "5%/ !678'' of "5%/#;

!d# 3construction4 includes reconstruction, rehabilitation, renovation,improvement, expansion, addition, alteration and related activities;



!e# 3consortium4 means an association of persons who have formed theassociation under a legally enforceable contractual arrangement forpurposes of entering into a PPP agreement;

!f# 3Government4 means Government of the Punjab;

!g# 3Government Agency4 means a department, attached department ofthe Government, a local government, or a body corporate owned orcontrolled by the Government or a local government;

!h# 3investment4 includes financing, development and pre9operativecapital expenditure made or incurred on services, facilities, land,construction and equipment;

!i# 3lender4 means a financial institution, ban or an establishmentproviding financial support with or without security;

!j# 3local government4 means a local government as defined in thePunjab 7ocal Government Act $."0!68''' of $."0# or any other law;

! # 3person4 means a company, entity, firm, association of persons, bodyof individuals, or a sole proprietor other than a Government Agency;

!l# 3PPP4 means public private partnership+

!m# 3prescribed4 means prescribed by the rules or the regulations;

!n# 3private party4 means a person who enters into a PPP agreement witha Government Agency;

!o# 3project4 means a public project implemented on PPP basis;

!p# 3Province4 means Province of the Punjab;

!q# 3public private partnership4 means a commercial agreement betweena Government Agency and a private party pursuant to which theprivate party*

!i# underta es to perform a public function, provides a publicservice or develops use of a public property on behalf of aGovernment Agency by, amongst other things, designing,constructing, financing, operating, mar eting or maintainingsuch public property; and

!ii# assumes substantial financial, technical, operational orenvironmental ris s in connection with the performance of sucha public function or provision of such public services or use ofsuch a public property;

!r# 3PPP agreement4 means a contract between the public sectorrepresented by a Government Agency and a private party for theprovision of an infrastructure facility or service through a project andincludes a contract described in 1econd 1chedule;

!s# 3PPP &ell4 means the &ell established under the )rdinance;

!t# 3PPP node4 means a unit established by a Government Agencyresponsible for identifying projects suitable for development as PPPprojects, carrying out the initial screening and feasibility studies in

connection with such projects, liaising with the PPP &ell with regard todevelopment and submission of project proposals, and monitoringrelated coordination throughout the project life;

!u# 3ris 4 means any event or circumstance affecting the project which canadversely affect performance and costs of any contractual obligations



related thereto including design, construction, financing, operation ormaintenance;

!v# 3regulations4 means the regulations framed under the )rdinance;

!w# 3(is :anagement nit4 means the (is :anagement nitestablished under the )rdinance;

!x# 3rules4 means the rules made under the )rdinance;!y# 31chedule4 means a 1chedule appended to the )rdinance;

!z# 3user levy4 means a levy which may be collected under a PPPagreement and includes a tariff, toll, fee or charge; and

!aa# 3viability gap fund4 means the fund established by the Government forpurposes of compensating, on the recommendation of the &ommittee,the private party to a PPP agreement for any revenue shortfalls,through grants, subsidies or guarantees+

CHAPTER IIINSTITUTIONAL ARRAN EMENTS

4. PPP S ##r!& Co**! ## + !"# -here shall be a 1teering &ommittee topromote, facilitate, coordinate and oversee projects+

!$# -he &ommittee shall consist of the following*

!a# :inister for Planning and &hairperson

<evelopment;

!b# :inister for 2inance; 8ice &hairperson

!c# &hairman, Planning and :ember

<evelopment =oard of the

Government;

!d# 1ecretary to the Government, :ember

2inance <epartment;

!e# 1ecretary of the concerned :ember

Government Agency;

!f# 1ecretary to the Government :ember

&ommunications >?or s <epartment;!g# 1ecretary to the Government, :ember

7aw and Parliamentary Affairs

<epartment;

!h# two experts from private sector :ember

to be nominated by the Government;

!i# :ember !PPP#, Planning and 1ecretary@:ember

<evelopment =oard+

!0# 1ix members shall constitute the quorum for a meeting of the&ommittee but no member shall be represented by any other person+

!/# -he &ommittee may co9opt an expert in the relevant field for aproject+



! # -he &ommittee shall*

!a# formulate the policies relating to the projects for approval ofthe Government;

!b# supervise and coordinate the implementation of the)rdinance, rules and regulations;

!c# approve, reject or send bac for reconsideration any projectproposal submitted by a Government Agency;

!d# decide on any direct or contingent support for a projectrequested by a Government Agency;

!e# approve, reject or send bac for reconsideration therecommendation submitted by a Government Agency for aPPP agreement to be awarded to a private party on the ratesor terms and conditions different from the original approval;

!f# assist the Government Agencies in solving major problemsimpeding project preparation and implementation;

!g# be the final deciding authority for all the projects;

!h# notify, with the approval of the Provincial &abinet, criticalsectors as also the duration or window of opportunity during

which the Government shall underta e to extend preferentialfacilitation to projects falling under critical sectors;

!i# determine the maximum limit of government support referredto in section "5 for any project;

!j# may change any timeline provided in the )rdinance exceptthe timelines mentioned in sections "/ and "%; and

!h# ta e all other steps necessary for giving effect to theprovisions of this )rdinance+

. PPP C#"" + !"# -he Government shall, by notification published in the officialGazette, establish the PPP &ell in the Planning and <evelopment <epartment ofthe Government to promote and facilitate projects in the Province+

!$# -he composition of the PPP &ell shall be as prescribed and until soprescribed, as the Government may determine+

!0# -he PPP &ell shall*

!a# facilitate the preparation of a project by a GovernmentAgency;

!b# act as a PPP catalyst and advocate, nowledge manager,and policy and project advisor in the Province+

!c# provide technical support to the &ommittee and act as itssecretariat;

!d# develop operating guidelines, procedures and modeldocuments for projects for approval by the &ommittee;

!e# provide support and advice to any Government Agency

regarding PPP projects throughout the public privatepartnership process;

!f# assist the &ommittee to evaluate and prioritize projectproposals submitted by the Government Agencies;

!g# evaluate, in close consultation with the (is :anagement nit,the type and amount of Government support that may be



made available for a project and ma e recommendations tothe &ommittee for appropriate decision;

!h# prepare and regularly update a pipeline of the projects inconsultation with the Government Agencies and ma eavailable updated lists of the said PPP projects to theGovernment Agencies; and

!i# perform such other functions as may be prescribed orassigned by the &ommittee+

3. R!/ M'&' #*#& U&! + !"# -he Government shall, by notificationpublished in the Gazette, establish a (is :anagement nit in the 2inance<epartment to act as a fiscal guardian for the projects+

!$# -he (is :anagement nit shall*

!a# develop ris management guidelines for approval by the&ommittee;

!b# provide support and advice to any Government Agency withregard to ris management in a project throughout the publicprivate partnership process;

!c# examine, in consultation with the PPP &ell, whether requestsfor Government support and the proposed ris sharingarrangements are consistent with the )rdinance, rules andregulations, and are fiscally sustainable;

!d# ma e recommendations to the &ommittee through the PPP&ell;

!e# recommend the inclusion of approved Government support inthe annual budget of the Province;

!f# monitor direct and contingent liabilities of the Governmentincurred through the projects; and

!g# perform such other functions as may be prescribed or as the&ommittee may assign+

5. o6#r&*#& A #& - + !"# A Government Agency shall manage the projectthroughout its life cycle consisting of project identification, project proposalpreparation including feasibility, tendering, supervising the implementation andoperation of the project, and if applicable ta ing over the project under a PPPagreement+

!$# -he Government Agency shall*

!a# form a PPP node if it intends to underta e a project;

!b# identify suitable projects and prioritize them within its sectoror geographical area of responsibility;

!c# submit a project concept paper in the form of pre9feasibilitystudy through the PPP &ell to the &ommittee for itsconsideration and approval, if it intends to avail itself of aproject development facility from the Government fortransaction advisory services;

!d# where necessary, hire transaction advisors for the preparation ofproject proposal and tendering;

!e# prepare a feasibility for the project and, if its outcome ispositive, submit a project proposal along with estimated cost



of the project, type of PPP agreement and the details ofGovernment support, if required, to the &ommittee;

!f# conduct a competitive tendering process for a projectapproved by the &ommittee, including a pre9qualificationprocess and bidding by the pre9qualified bidders to select thesuitable private party;

!g# carry out bid evaluation;

!h# negotiate and sign the PPP agreement with the selectedprivate party; and

!i# monitor and evaluate implementation and operation of theproject+

CHAPTER III

PROJECT DELIVERY PROCESS

7. PPP 'rr'& #*#& / + 1ubject to the )rdinance, a Government Agency

may*!a# enter into a PPP agreement with a private party for the performance

of functions in relation to the design and construction of a project, orprovision of services relating to a project, or management of aproject, or the provision of finance or technology for the design andconstruction of a project, or the operation of a project, or for any oneor more of the said functions;

!b# arrange or provide for any applicable payment to the private party inaccordance with the terms and conditions of the PPP agreement;

!c# subject to the approval of the &ommittee, transfer an interest in aproject or part of a project to a private party or a nominee of theprivate party, by transfer, assignment, conveyance, lease, license orotherwise; and

!d# subject to the PPP agreement, accept the transfer of an interest of theprivate party or a nominee of the private party, in a project or part of aproject, by transfer, assignment, conveyance, lease, grant or surrender+

8. Pro9# ! #& !f! ' !o& '& +r#+'r' !o& + !"# A Government Agency shallidentify and prepare a project proposal $ obtain approval of the &ommittee andshall complete this phase before tendering+

!$# -he Government Agency shall identify and conceptualize potentialprojects which relate to development activities falling within its sector orgeographical area+

!0# -he Government Agency shall prioritize the projects and prepareproject proposals, using criteria such as supply and demand gaps, social andeconomic benefits, financial attractiveness, ris s and uncertainties involved, andreadiness for implementation+

!/# A project proposal shall consist of, amongst other things, ananalysis of feasibility and sustainability of the project including detailed businesscase and financial model justifying projectBs financial and economic viability over

the expected duration of the project, initial environmental examination orenvironmental impact assessment, ris analysis, analysis of the need forGovernment support, the affordability of the project, determination of the publicprivate partnership modality, and preparation of bid documents including a draftPPP agreement+



! # -he Government Agency shall submit a project proposal to the&ommittee through the PPP &ell+

10. Pro9# +r!or! !:' !o& '& '++ro6'" + !"# -he PPP &ell may*

!a# exercise quality control of project proposals received fromGovernment Agencies by reviewing the viability of a projectand the completeness of the proposal in terms ofdocumentation; and

!b# ma e observations and recommendations to the GovernmentAgency with regard to the project proposal before submittingit to the &ommittee for its consideration and approval+

!$# -he PPP &ell shall*

!a# prioritize the projects that pass the review across sectors andthe Province by ta ing into account the policy and thedevelopment objectives of the Government and submit them,

within thirty days, to the &ommittee for its consideration and

approval; and!b# maintain a list of approved projects and publicize the list by

publishing it on the web+

11. A++ro6'" of o6#r&*#& /;++or + !"# A Government Agency shallinclude all requests for Government support as an integral part of a projectproposal+

!$# -he PPP &ell shall forward all requests for Government support tothe (is :anagement nit, which shall review their justification and eligibility, andanalyze the fiscal impact of the related direct and contingent liabilities+

!0# -he (is :anagement nit shall, within fifteen days, ma e, throughthe PPP &ell, appropriate recommendation to the &ommittee for approval,rejection or reconsideration of the proposed Government support+

!/# 'f approved by the &ommittee, the Government shall ma enecessary arrangements for the availability of funds during project life cyclethrough its inclusion in the annual budgetary process+

12. Co&/! #r' !o& ,- h# Co**! ## + !"# -he &ommittee shall, by ta ing intoaccount the recommendations of the PPP &ell and the (is :anagement nit,consider a project proposal submitted by a Government Agency and may, within thirtydays from the receipt of such proposal, approve the proposal with or without

modification, or reject it or return it to the Government Agency for amendment andresubmission+

!$# 'n case a project proposal is returned for amendment, restructuringand resubmission, the Government Agency shall ta e suitable action to amendthe project proposal and resubmit the proposal through the PPP &ell forconsideration and approval by the &ommittee and any decision concerning suchresubmitted proposal shall be ta en by the &ommittee within thirty days of suchresubmission+

1 . S#"# !o& of h# +r!6' # +'r - + !"# After the approval of the projectproposal by the &ommittee, the Government Agency shall select a private party

for the project through competitive public tendering, using a process of pre9qualification and bidding+

!$# -he Government Agency shall not enter into direct negotiations withany person without competitive public tendering+



14. Pr#<=;'"!f! ' !o& + -he Government Agency shall conduct pre9qualification, where necessary, in the following manner*

!a# a public notice, inviting participation in pre9qualification forunderta ing a project shall be published on the websites of theGovernment Agency, PPP &ell and Public Procurement and(egulatory Authority, and also in at least two national newspapers

for national competitive bidding and additionally in one internationalpaperfor international competitive bidding providing at least fifteendays for national competitive bidding and thirty days for internationalcompetitive bidding for preparation of pre9qualification application;

!b# for a project with a total cost equal to or exceeding four billionrupees, the pre9qualification notice shall also be published in at leastone international newspaper;

!c# a person who intends to participate in the pre9qualification shall provideinformation with regard to his legal, technical, managerial and financialcapacity to underta e the project in such form along with such

particulars as may be specified by the Government Agency;!d# in case the person is a consortium, its members and their roles and

proposed shareholding shall be disclosed at the pre9qualificationstage, and the consortium shall provide a written and legallyenforceable underta ing from its members to be jointly and severallyliable if awarded the contract, for the obligations of the private party;

!e# the Government Agency shall examine the information and otherparticulars submitted by the person and shall, within thirty days,decide as to whether such person fulfills the criteria for pre9qualification as laid down by the Government Agency;

!f# a person who fulfills the criteria shall be a pre9qualified person;

!g# if less than three persons are pre9qualified, the Government Agencymay analyze the reasons there for and either proceed for biddingafter recording the reasons, or revise project structuring, and re9initiate the pre9qualification process for additional participants;

!g# if a consortium is a pre9qualified person, the lead consortium membershall not be replaced earlier than four years after the commissioningof the project without the approval of the Government Agency and nosuch approval shall be given unless the consortium finds a suitable

replacement with equal or better qualifications for replacing the withdrawing member;

!h# subject to approval by the Government Agency, any other member ofa consortium may, prior to execution of the PPP agreement or duringthe term of the PPP agreement, withdraw, provided that the remainingmembers are still legally, technically and financially capable ofsuccessfully carrying out the implementation and operation of theproject, or that an acceptable substitute with equal or betterqualifications is available to replace the withdrawing member; and

!i# any change in the shareholding of the consortium shall also be

subject to approval of the Government Agency; and!j# if the consortium fails to comply with the requirement of clause !g#,

clause !h# or clause !i#, the consortium shall cease to be a pre9qualified person+

1 . B! !& + !"# After selecting pre9qualified persons, the Government Agencyshall, within fifteen days from the completion of the pre9qualification process,



issue bid documents to the prequalified persons and shall give adequate time topre9qualified persons for preparation and submission of bids+

!$# -he Government Agency may adopt single stage two envelop or twostage two envelop bidding process in the prescribed manner+

!0# -he bid documents shall include*

!a# instructions for bidders;!b# minimum design and performance standards and

specifications;

!c# draft PPP agreement;

!d# bid form, specifying the information required to evaluate the bidand the bid evaluation criteria;

!e# bid security form and performance bond form; and

!f# any other document relevant to the project, such as thefeasibility study and environmental impact assessment+

!/# -o provide clarifications to bidders and to discuss the terms andconditions of the PPP agreement, the Government Agency shall, within suchperiod as is deemed reasonable, conduct a pre9bid meeting with the bidder sandmay, if necessary, issue addendum to the bidding documents+

! # 'f only one valid bid is received up to the last date for submission ofbids, the Government Agency may evaluate it, and depending on the results ofsuch evaluation and after recording reasons*

!a# negotiate or enter into the PPP agreement or negotiate and enterinto the PPP agreement with the said single bidder; or

!b# after a mar et research to ascertain the reasons for the poorresponse to the call for bids, restructure the project proposal and theproposed Government support and submit the revised proposal tothe &ommittee+

!C# -he &ommittee shall deal with the revised proposal in the samemanner as is prescribed for a new proposal for a project+

13. S!& "# / ' # hr## #&6#"o+# ,! !& + !"# Dotwithstanding anythingcontained in section "/ and " , the Government Agency may, with prior approvalof the &ommittee, combine the processes of pre9qualification and bidding throughsingle stage three envelope process in the prescribed manner+

!$# 'n case of single stage three envelope bidding process*

!a# the Government Agency shall first open the envelope relatingto pre9qualification of a person, and if the person is not pre9qualified, the other two envelopes submitted by such personshall not be opened at any stage; and

!b# the Government Agency, PPP &ell and (is :anagementnit shall observe such timelines as may be prescribed+

15. B! #6'";' !o& + !"# -he Government Agency shall, within fifteen daysfrom the receipt of the bids, evaluate the bids+

!$# )n receipts of bids, the Government Agency shall assess thetechnical, operational, and environmental responsiveness of the bids received,according to the requirements, criteria, minimum standards, and basic parametersspecified in the bid documents, and shall reject non9responsive bids+



!0# After the technical evaluation of the bids, the Government Agencyshall conduct a financial evaluation of the responsive bids; and, depending on thetype of the project, it may use one or more of the following parameters for theevaluation*

!a# lowest proposed tariff, toll, fee or charge at the start ofoperation of the project if a parametric formula for periodical

tariff adjustment is specified in the bid documents;!b# lowest present value of the proposed tariffs, tolls, fees and

charges for the period covered under the PPP agreement ifthere is no such formula;

!c# lowest present value of payments from the Government;

!d# lowest present value of Government subsidy to be providedfor the period covered under the PPP agreement;

!e# highest present value of the proposed payments to theGovernment, such as concession fees, lease or rental payments,

fixed or guaranteed payments or variable payments andpercentage shares of revenues for the period covered by thePPP agreement; or

!f# such other parameters as are determined by the &ommitteeon the recommendation of the Government Agency, the PPP&ell, or the (is :anagement nit+

!/# -he Government Agency may, for reasons to be recorded in writing,reject a speculative or unrealistic bid as non9responsive but such rejection of a bidshall not lead to the termination of the bidding process+

! # 'f the result of bidding process leads to a bid conforming to theproject estimate, type of PPP agreement and Government support if approved bythe &ommittee, the Government Agency may proceed with execution of the PPPagreement+

!C# 'f the lowest bid is higher than project estimate or in case there is aneed to restructure the project or type of PPP agreement, the same shall besubmitted to the &ommittee for approval+

!E# -he Government Agency shall announce the result of the biddingprocess and issue a notice for execution of PPP agreement to the selected privateparty within ten days of the bid evaluation or approval of the &ommittee, ifapplicable+

17. B! /# ;r! - + !"# A pre9qualified person shall deposit with the GovernmentAgency the bid security amount as determined by the Government Agency basedon the project cost+

!$# -he Government Agency shall, within thirty days after the award,return the bid security amount to all unsuccessful bidders in the prescribedmanner+

18. o6#r&*#& /;++or + !"# -he Government Agency shall indicate theGovernment support, if any, approved by the &ommittee for a project+

!$# -he Government support may ta e the following forms*

!a# administrative support to the private party in obtaininglicenses and other statutory and non9statutory clearancesfrom the 2ederal Government, any public sector organizationor a Government Agency for purposes of the project on such



terms and conditions as may be prescribed* such supportshall be available for all types of projects;

!b# provision of utility connections for power, gas and water atproject site; clearance of right of way or acquisition of landnecessary for the project; and, rehabilitation and resettlementnecessitated because of the execution of the project* such

support shall be available for all types of projects;!c# Government equity, in the form of land or infrastructure

facilities owned by the Government or a Government Agency,to be calculated with reference to the current mar et value ofland or infrastructure or future value of discounted cash flowsaccruing or arising from asset to be offered, with reference tothe project cost and its capital structure or debt equity ratio*such support on first come first served basis shall beavailable for the projects where the bidding competition is notinstantly expected;

!d# the &ommittee may, with the approval of the Provincial&abinet, identify projects of critical sector in the areas wherethere appears to be a supply side constraint, leading to nocompetition or little room for competition and standard termsand rates are to be offered to all private parties* the projectsfalling under such sector, requiring Government support asspecified in this section including Government equityparticipation, direct financial assistance through viability gapfund or other asset based facilitation, may be presented bythe Government Agency to the &ommittee for decision and insuch projects, the &ommittee may extend Governmentsupport on first come first served basis, for specific durationor window of opportunity;

!e# direct financial assistance from the viability gap fund* suchsupport may be offered for projects which, in the opinion ofthe &ommittee, are economically and socially viable, but maynot be financially attractive enough for investment;

!f# Government guarantees for political ris s under theGovernmentBs control such as changes in the law, delay ofagreed user levy adjustments, early termination of the PPPagreement owing to no fault of the private party, andexpropriation* such of support shall be available for allprojects; and

!f# Government guarantees for other ris s such as demand ris ,and default by a Government Agency on payments due undera PPP agreement* the need for this type of support shall bedetermined on case to case basis as part of the ris sharinganalysis underta en during project negotiations+

!0# ?here the Government Agency decides to offer Governmentsupport on first come first serve basis, it shall invite proposals through widepublicity+

20. U&/o"! ! # +ro+o/'"/ + !"# A project proposal submitted by a person to aGovernment Agency for a project not included in the priority list mentioned insection "., together with a written confirmation that it is economically viable, shallbe considered as an unsolicited proposal+



!$# An unsolicited proposal shall be accompanied by a feasibility study,environmental impact statement, and a draft PPP agreement, need forGovernment support and determination of the public private partnershipmodalities+

!0# -he Government Agency shall consider an unsolicited proposal fromall aspects including technical, environmental and financial aspects, and in case

of requirement of additional information, the Government Agency may request forthe submission of an amended or modified proposal+

!/# ?ithin ten days from the receipt of an unsolicited proposal, theGovernment Agency shall require the person to submit details about legal,technical, managerial and financial capability of the person, as well as the cost ofpreparing the unsolicited bid with relevant supporting evidence for itsconsideration and such information shall be submitted to the Government Agency

within fifteen days from the receipt of such requirement+

! # ?ithin fifteen days from the receipt of information required undersubsection !/#, the Government Agency shall evaluate the unsolicited proposal

and, if it is found to be economically, technically and environmentally feasible andthe information submitted by the person about his own legal, technical,managerial and financial capability is satisfactory, the Government Agency maysubmit the unsolicited proposal together with its recommendations to the PPP &ell

which shall see the input of the (is :anagement nit before submission of theproposal to the &ommittee for decision+

!C# -he decision of the &ommittee with regard to an unsolicited proposalshall be communicated in writing by the Government Agency to the person whosubmitted such proposal within seven days from the receipt of the decision of the&ommittee+

!E# 'f the &ommittee approves the unsolicited proposal, the GovernmentAgency shall invite competitive bids for the project identified in such proposal byfollowing the bid procedure described in sections "0 to "% and, if prequalificationis conducted, the person submitting the unsolicited proposal shall not be requiredto be pre9qualified and may directly participate in the bidding process+

!%# -he Government Agency shall give the person who made theunsolicited proposal five percent additional weight age in technical scoring andfirst right to match or improve the best bid received in response to the call forbids, if his bid is not the best bid+

!5# 'f the person who submitted the unsolicited bid fails to match thebest bid, the Government Agency shall direct the successful bidder to reimburseto the person who submitted the unsolicited proposal the amount specified inthe bid documents as the cost of preparing the unsolicited bid but thereasonability of the cost of preparation of unsolicited proposal shall be determinedby the Government Agency+

!".# 'f other valid competitive bids, except the bid of the person whosubmitted the unsolicited proposal, are not received, the Government Agency maynegotiate the PPP agreement with the person who submitted the unsolicitedproposal or decide to under ta e the bidding process afresh+

21. No&<O,/#r6'& # of h# !*#"!&#/ + 1ubject to section /, if the PPP &ell orthe (is :anagement nit fails to observe the timelines mentioned in this)rdinance or the rules, the Government Agency may request the PPP &ell toplace the proposal before the &ommittee and the &ommittee may consider theproposal assuming that the PPP &ell and (is :anagement nit have noobjection to the project proposal+



22. Pr#+'r' !o& '& &# o !' !o& of PPP ' r##*#& + !"#-he draft PPPagreement which forms part of the bid documents shall clearly define the legalrelationship between the Government Agency and the selected private party, theirrights and responsibilities including the specific Government support for the project+

!$# -he draft PPP agreement shall contain the following provisions, asapplicable*

!a# type of the project;

!b# general terms and conditions of contract;

!c# special conditions of contract;

!d# scope of wor s and services to be provided under the project;

!e# main technical specifications and performance standards;

!f# environmental and safety requirements;

!g# implementation milestones and completion date of theproject;

!h# cost recovery scheme through user levies, including mechanismfor their periodical adjustment;

!i# performance bonds for construction wor s and operation;

!j# minimum insurance coverage;

! # acceptance tests and procedures;

!l# rights and obligations of the parties including ris sharing;

!m# type and amount of Government support;

!n# transfer of assets, if any, at the conclusion of the term of thePPP agreement;

!o# warranty period and procedures after the transfer;

!p# requirements and procedure for variations of the PPPagreement;

!q# grounds for and effects of termination of the PPP agreementincluding force a%e$re ;

!r# procedures and venue for disputes resolution;

!s# financial reporting by the private party; and

!t# supervision mechanism of the Government Agency+

!0# A Government Agency shall not enter into a PPP agreement exceptin accordance with the procedure mentioned in this )rdinance and the rules+

!/# -he Government Agency shall ensure conclusion of contractnegotiations with the selected private party within sixty days+

! # -he negotiations shall focus on the terms and conditions not specifiedin the bid documents but no post9bid changes in the terms and conditions mentionedin the bid documents as binding and which formed part of the bid evaluation shall beallowed as a consequence of contract negotiations+

2 . Pro9# !*+"#*#& ' !o& '& o+#r' !o& + !"# =efore signing the PPPagreement with the Government Agency, the private party may establish, withoutchanging its shareholding, a special purpose vehicle for implementation andoperation of the project and such special purpose vehicle shall assume all therights and obligations of the private party under the PPP agreement+



!$# -he private party shall prepare a detailed design and implementationplan in accordance with the technical specifications contained in the PPPagreement, and shall submit these to the Government Agency for consent prior tothe start of the wor +

!0# -he private party shall execute the project in accordance with theperformance standards and technical specifications contained in the PPP

agreement and the design and implementation plans approved in accordance withthe PPP agreement+

!/# -o guarantee its performance in the construction wor s, the privateparty shall post a bond or furnish a ban guarantee, which shall be valid up to theacceptance of the completed wor s by the Government Agency and for projects

which include operation by the private party, the private party shall also post orfurnish another performance bond or ban guarantee upon the acceptance of thecompleted wor s to guarantee compliance with the operating parameters andstandards specified in the PPP agreement+

! # ?ithin three hundred and sixty five days of the signing of the PPP

agreement or such other period as is specified in the PPP agreement, the privateparty shall achieve financial closure for the project+

!C# -he Government Agency shall not allow variations in the PPPagreement during the implementation and operation of the project unless thefollowing requirements are met*

!a# there is no increase in the agreed tariffs except the periodicformula9based tariff adjustments, unless the scope of wor sor performance standards are increased;

!b# there is no reduction in the scope of wor s or performancestandards, fundamental change in the contractualarrangement or extension of the term of the PPP agreement,except in cases of breach by the Government Agency of itsobligations;

!c# there is no additional government guarantee or increase inthe financial exposure of the Government; and

!d# the variation in the PPP agreement is necessary due to anunforeseeable event beyond the control of the GovernmentAgency or the private party+

!E# -he Government Agency shall monitor and evaluate the project

during its implementation and operation to ensure its conformity with the plans,specifications, performance standards and user levies set forth in the PPPagreement, and to assess its actual outcomes+

!%# -he Government Agency shall submit annual reports on projectperformance to the &ommittee+

24. S# !& '& ' 9;/ *#& of ;/#r "#6!#/ + !"# -he Government Agency shallset the user levies at levels that ensure financial viability of the project by fullycovering the capital, operation and maintenance costs plus a reasonable rate ofreturn to the private party or the Government Agency+

!$# Dotwithstanding anything contained in any other law, the privateparty shall have the right to receive or collect tariffs or payments in accordance with and at the rates set forth in the PPP agreement, either from end users or fromthe Government Agency+

!0# nless specified in the bid documents, the Government Agency shalldetermine the user levies through bidding and the user levies shall be adjusted



periodically during the term of the PPP agreement in accordance with the termsand conditions of the PPP agreement+

!/# 'f the Government Agency eeps the user levies at lower levels toma e the services provided by the project affordable to the end users, theGovernment Agency shall compensate the private party for the difference byma ing appropriate payments as agreed in the PPP agreement through viability

gap fund+2 . D!/+; # r#/o"; !o& + !"# 'n case of any dispute between a GovernmentAgency and a private party in relation to or arising out of the PPP agreement, theparties shall resolve the dispute in the following manner*

!a# the parties shall first deliberate to achieve a consensus;

!b# if no consensus is achieved, the parties shall settle thedispute in an amicable manner by mediation by anindependent and impartial person appointed by the&ommittee; and

!c# if no amicable settlement of the dispute has been reached bymediation, the parties shall resolve the dispute by arbitrationin the city of 7ahore or any other place agreed to by theparties in Pa istan or abroad in accordance with thearbitration clause contained in the PPP agreement and thearbitral award may be enforced in any court of competent

jurisdiction+

!$# -he disputes shall be decided in accordance with the laws ofPa istan or under any other law as may be specified in the PPP agreement+

23. T#r*!&' !o& of h# PPP ' r##*#& + A party to the PPP agreement may

terminate the agreement in the following cases*!a# if the Government Agency fails to comply with any major obligation in

the PPP agreement, and such failure is not remediable or, ifremediable, remains un9remedied for an unreasonable period of time,the private party may terminate the agreement with written notice to theGovernment Agency as provided in the PPP agreement and, in theevent of such termination, the project shall be transferred to theGovernment Agency and the private party shall be entitled tocompensation by the Government Agency as provided in the PPPagreement; or

!b# if the private party fails to perform the agreement, or fails to achieve theprescribed technical and performance standards, or fails to comply withany major obligations in the PPP agreement, and such failure is notremediable or, if remediable, remains un9remedied for an unreasonableperiod of time, the Government Agency may terminate the agreement

with written notice to the private party as provided in the PPPagreement and, in such a case, the Government Agency may eitherta e over the project and assume all related liabilities or allow lendersof the private party to exercise their rights and interests as specified inthe loan agreements relating to the project+

25. V#/ !& of h# +ro9# !& h# +r!6' # +'r - + 1ubject to the PPPagreement and except for the build9own9and9operate and rehabilitate9own9and9operate PPP arrangements described in 1econd 1chedule, the completed projectmay vest in the private party for a period not exceeding thirty years as agreed inthe PPP agreement and on expiry of such period, the project shall vest in theGovernment Agency+



27. Tr'&/f#r of h# +ro9# + 'f a project is transferred to the GovernmentAgency in accordance with the provisions of the PPP agreement or this)rdinance, all the rights granted under the PPP agreement to the private party inrespect of the project shall stand transferred to the Government Agency+

CHAPTER IVMISCELLANEOUS

28. D!/ "o/;r# of #&#r! r!/ / + !"# A Government Agency shall, as far aspossible, provide in the PPP agreement, or any other ancillary or additionalagreement, a list of generic ris s involved in the project along with allocation andtreatment of such generic ris s+

!$# -he Government or the Government Agency shall not be liable toany claim of the private party for a generic ris which is not specified in the PPPagreement or any other ancillary or additional agreement+

0. I& # r! - +' + -he Government Agency shall, for every project, enter intoan integrity pact with the private party along with the PPP agreement+

1 + P;,"! !/ "o/;r# + !"# A PPP agreement or any other ancillary oradditional agreement shall be a public document+

!$# -he Government Agency shall ma e arrangements for inspection orprovision of copies of a PPP agreement or any other ancillary or additionalagreement+

!0# Any person may, subject to the payment of the prescribed fee andany other reasonable restriction, inspect or obtain copies of a PPP agreement orany other ancillary or additional agreement+

!/# -he &ommittee may, by recording reasons in writing, declare thecomplete or part of a document not to be a public document+

2. Pr#/ r!,!& '& #&for !& / '& 'r / + -he Government may*

!a# prescribe and enforce performance standards for a project includingstandards of performance of the private party in regard to theservices to be rendered by it to the end users;

!b# prescribe quality standards including standards of materials, equipmentand other resources or processes relevant to infrastructure projectsincluding planning criteria, construction practices and standards ofsuch facilities, operating standards and maintenance schedules forregulating the wor ing of the private party to ensure efficiency and

adherence to the prescribed quality standards;!c# prescribe the mode of output9based contracting, performance9based

payment systems and output9based procurement procedures;

!d# establish a uniform system of accounts to be followed by the privateparty;

!e# ta e steps to promote effective competition and efficiency in projectsusing the public private partnership approach;

!f# prescribe the mode of conducting public hearing and consultation with sta eholders; and

!g# prescribe any other standards for regulating the infrastructuredevelopment through public private partnership+

. I& #*&! - ,- h# +r!6' # +'r - + -he private party shall indemnify theGovernment Agency against any defect in design, construction, maintenance oroperation of the project and be liable to reimburse all costs, charges, expenses,



!0# Iealth facilities;

!/# Iousing;

! # 'ndustrial estates;

!C# 'nformation technology;

!E# 7and reclamation;

!%# Power generation facilities;

!5# (oads !provincial highways, district roads, bridges or bypasses#;

!".# 1ewerage or drainage;

!""# 1olid waste management;

!"$# 1ports or recreational infrastructure, public gardens or par s;

!"0# -rade fairs, conventions, exhibitions or cultural centers;

!"/# rban transport including mass transit or bus terminals;

!" # ?ater supply or sanitation, treatment or distribution; and!"C# ?holesale mar ets, warehouses, slaughter houses or cold storages, grain

silos and street lights etc+

!"E# :ining

SECOND SCHEDULEFsee sections 3(q)& 27

TYPES O PPP A REEMENTS INCLUDE

1. B;!" <'& <Tr'&/f#r (BT) A contractual arrangement whereby the private partyunderta es the financing and construction of an infrastructure project and after itscompletion hands it over to the Government Agency+ -he Government Agency willreimburse the total project investment, on the basis of an agreed schedule+ -hisarrangement may be employed in the construction of any infrastructure project,including critical facilities, which for security or strategic reasons must be operateddirectly by the Government Agency+

2. B;!" <L#'/#<'& <Tr'&/f#r (BLT) A contractual arrangement whereby theprivate party underta es the financing and construction of an infrastructure projectand upon its completion hands it over to the Government Agency on a lease

arrangement for a fixed period, after the expiry of which ownership of the projectis automatically transferred to the Government Agency+

. B;!" <O+#r' #<'& <Tr'&/f#r (BOT) A contractual arrangement wherebythe private party underta es the financing and construction of an infrastructureproject, and the operation and maintenance thereof+ -he private party operates thefacility over a fixed term during which it is allowed to collect from project usersBappropriate tariffs, tolls, fees, rentals, or charges not exceeding those proposed inthe bid or negotiated and incorporated in the PPP agreement, to enable the privateparty to recover its investment and operating and maintenance expenses for theproject+ -he private party transfers the facility to the Government Agency at the endof the fixed term that shall be specified in the PPP agreement+ -his shall include asupply9and9operate situation, which is a contractual arrangement whereby thesupplier of equipment and machinery for an infrastructure project operates it,providing in the process technology transfer and training of the nominatedindividuals of the Government Agency+



1 + Jo!& V#& ;r#(JV) Joint venture is a form of public private partnership in which both the Government Agency and the private party ma e equity contributionsand pool their resources towards the project development and implements theproject by forming a new company !joint venture company# or assuming jointownership of an existing company through the purchase of shares+ ?hen the jointventure company is established, it will have a separate legal identity and it is throughthis company that the common enterprise of the public and private partners will becarried out+ -he Government Agency and the private party will own the shares of the

joint venture company and there will be a board of directors, usually made up ofrepresentatives of the shareholders+

Punjab Public Private Partnership Ordinance 2014original .Doc

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Transcript of Punjab Public Private Partnership Ordinance 2014original .Doc