The PPP Operational Guidelines for mainland Tanzania dated October 2012 (the Guidelines) provide detailed information regarding the implementation of PPP projects, essentially the implementation tool of the Framework. However, it should be noted that the Guidelines are yet to be approved by the Prime Minister's office in Tanzania which has initial policy oversight of the Framework.

The Guidelines provide the following information:

Overview of the PPP project cycle

The various phases can be summarised as:

a. Initial project selection
The minister responsible for investment establishes a list of potential PPP projects

b. Pre-feasibility study
The Contracting Authority (CA) undertakes a
pre-feasibility study to include financial analysis and local issues
 

c. Commissioning of a feasibility study by CA
A study intended to provide an extensive appraisal of the needs of the locality, financial benefits and likelihood of resistance from local population
 

d. Final approval
Approval is sought by the PPP Coordination Unit (PPCU), PPP Finance Unit (PPFU) and Ministry of Finance (MoF)
 

e. Procurement and Award of Contract
CA commence and conduct procurement (using international best practice and standards) and the contract is then signed
 

f. Implementation
CA undertakes / provides a contract management function throughout the life of the contract

Unsolicited proposals

The different types of unsolicited proposals that exist under the Guidelines and which are open to the CA are set below:

Option

Description

Negotiation and contracting without negotiation

Negotiations are started with the submitter of the unsolicited proposal in order to conclude the PPP Agreement.

Swiss Challenge

An open tender process is conducted in which the submitter of the unsolicited proposal has the right to match the winning bid in order to win the contract.

Bonus

An open tender process is conducted. In the evaluation of bids
the submitter of the unsolicited proposal received a bonus (generally
7-10% of points) giving an advantage over other bids.

Development fee

The procuring authority pays a fee to the submitter of the unsolicited
proposal to acquire the development rights of the project. An open tender process is then conducted in which the submitter of the unsolicited proposal competes on equal terms with the other bidders.

Automatic acceptance to BAFO stage

This option applies to multi-stage procurement. The submitter of the
unsolicited proposal does not have to pass the preliminary stages of
the procedure and is automatically invited to the last stage in which the
remaining bidders submit their best and final offer (BAFO). This option
can be combined with an evaluation bonus for the submitter of the unsolicited proposal.

It is worth noting that several PPP projects have been carried out in Tanzania prior to drafting of the Guidelines. For example, the Kilimanjaro International Airport (KIA) PPP Project whereby the airport and its estate were concessioned for 25 years to Kilimanjaro Airports Development Company (KADCO) in 1998. There is some concern surrounding the PPP projects that were structured without the Guidelines in place and without the fundamental principle of PPP as the driver.

While the draft Guidelines are welcome, there are still several challenges to a successful PPP environment in Tanzania. These include, but are not limited to, the:

i. relative infancy of the sector, and lack of experience throughout the stakeholder chain

ii. inadequate understanding of the PPP concept from the public sector at present

iii. inadequate long term financing instruments – the Tanzanian banking sector is not yet geared up for the scale of the projects envisaged under PPP, therefore most funding will be delivered by international banks

iv. inappropriate risk allocation due to a lack of experience

v. weakness in procurement, implementation, contractual and management capacities

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.