ICRC ACT WITH OTHER PPP LAWS
It Is a notorious fact that Nigeria suffer from gross underdevelopment of infrastructural services. This is because there has been years and years of constant lack of investment in infrastructure despite the growing population increase and movement from rural to urban dwelling. Aside from this, various levels of governments have either refused/neglected or are just unable to provide the badly need investment in infrastructure. In recent years the decay in infrastructure services have led to a new thinking, a different approach from the traditional means of providing infrastructure. This new thinking which is mainly premised upon private sector involvement and participation has been warmly received by all levels of government. The crucial question however is how to manage this new concept. One of the first things that have been done and rightly so was to promulgate Infrastructure Regulatory Commission Act of 2005. This article will amongst other thing seek to compare and contrast ICRC Act (what many people consider as the PPP legislation in Nigeria) with other similar legislations in other jurisdictions as well as UNCITRAL
It was aimed to advance the participation of the private sector in service delivery in the various sectors of the economy. The federal legislation has formed the bedrock on which all PPP activities in the country have been premised, and it is designed to facilitate these programs of the government that involves PPP projects. However, this legislation on PPP does not adequately address all the areas that are required to enhance the private sector’s position in the delivery of infrastructure service. It mainly provides for the regulation of Public private partnership in relation to Concession agreements of public facilities to the private sector. The Nigerian legislation does not make provisions for financing of the projects, adequate supervision of projects and provides little for the bidding and procurement process of concessioned projects in the country.
States have also been following through with the drive, even though most of them have been unsuccessful, except for Lagos state. Lagos state had already promulgated the Roads, Bridges Infrastructure Tolls Law in 2004, even before the Promulgation of the ICRC to facilitate the ongoing concession arrangements between the government and the private sector in the state.
Without dwelling on the inadequacies of the Nigerian legislation, a country which has effectively applied the concept of PPP is Brazil. It is the 8th largest economy by nominal GDP and 9th largest in purchasing power. The concept of PPP has been embraced to effectively sustain this momentum of economic growth and development, and thus infrastructure services is at hand to allow the flow of economic growth and development necessary to improve the economy at the current or even higher rate.
With a population of over 200 million people, Brazil is the most populous country in the American continent, except the United States, and its GDP was about $ 1.5 trillion in 2004. Brazil’s growth is now crucially dependant on the development and improvement of its current infrastructure. For one, the country’s touted record of exports in 2004 can only be sustained if significant investments are made in highways, railways and ports, which are the core PPP portfolios. PPP Law No. 11,079 was finally enacted as the Brazilian legislation on Infrastructure provision on 30 December 2004. One of the main characteristics of the Brazilian PPPs as provided in the law is that the relevant contract may not exceed R$ 20,000,000 with a minimum term of 5 years and a maximum length of 35 years.
This law on the one hand makes general provisions on bidding and procurement procedures valid in Brazil for partnerships entered between the public and the private sector. This new law, on the other hand, raises the Brazilian government’s expectations in its urgent mission to build the infrastructure required to consolidate the sustainable development process and, on the other, gives rise to an attractive investment alternative for both Brazilian and foreign investors. Likewise in Japan, PPP has developed considerably over the past few years to a stage whereby PPP projects account for more than over half of the Infrastructure projects that is currently being carried out in the country. The legislation in respect of PPP, the Private Finance Initiative [PFI] Law of 1999 was formulated and passed into law in 1999. This comes six years after the British scenario was put into effect, and the impact of this vehicle in Japan began to become apparent immediately after its implementation, with approved projects for Infrastructure substantially exceeding 10% of total expenditures for public works which is carried out by the government. PFI has been used for many public services involving the provision of buildings, facilities or services. Actual projects extend across many sectors and such includes roads, bridges, prisons, computer systems, government buildings, office facilities, urban transit, subways, hospitals, schools and social insurance services.
With a population of almost 150 million people by 2010 estimate and an increasing GDP by 8.5 % every year, Japan, though slightly smaller than the state of California, is one of the most developed nations in the world. It provides for about 20 % of the world’s automobiles and also provides about 12 % of the world’s technological output in the last 15 – 25 years. This presents an economy that is infrastructure-driven and requires a lot of investment in the infrastructure-service sector to ensure that the pace of development in the country is continued and sustained in achieving its long-term goals.
According to a World Bank study on Japan in 2005, infrastructure investment is provided with 40 per cent of government funds and about 60 per cent of private investment. Since public funding is limited, the importance of private investment for the promotion of infrastructure development has been increasing over the years. It was stated that through PPP, Japanese entrepreneurs will provide not only private finance, but also high quality infrastructure services in compliance with the needs in the infrastructure sector of the economy.
Asides from Japan in the Asian continent, Turkey has also carried out a lot of PPP projects which has repositioned its infrastructure base to match up with those of the developed countries in the world. The implementation of concessions in Turkey dates back to the Ottoman Empire and the Law of Concessions Regarding Public Benefit which was enacted in 1910 still remains in effect as the foundation for legislation for the granting of concessions to the private sector in Turkey. In Turkey, the main objective is to establish a competent PPP unit within the public administration and to advice on the required PPP enabling environment in terms of legislation, finance and policy.
Even though Europe was the earliest continent to incorporate the PPP concept to its economy in providing Infrastructure service to the populace, some member-countries took a much longer time such as Greece, as it didn’t adopt the vehicle until 2005 and then started applying the concept in the provision of Infrastructure. Greece has experienced a rapid development of its Public Private Partnership (PPP) market since it adopted a PPP law in 2005. This development has also been promoted by the establishment of a centralized process headed by the Special Secretariat for PPPs at the Ministry of Economy and Finance and also the inter-ministerial PPP committee which serves as the monitoring agency for PPP in the country. Alongside the adoption of the PPP Law, the Special Secretariat for PPPs was established at the Ministry of Economics and Finance. The Special Secretariat promotes the use of partnership contracts, assists public entities in developing and implementing PPP projects and monitors the implementation of partnership contracts.
Greece has started a new, dynamic period of PPP development. Being a traditionally socialist country, Greece was initially wary of allowing the private sector into what is seen as the domain of the public sector, as evidenced by the reaction to certain privatisations in the early part of this decade. The most apparent evidence of this move was the enactment of the PPP Law 3389/2005 on 9 September 2005 and the creation of a PPP task force to implement a programme of PPP projects in Greece. One of the issues that impeded the use of project finance in driving infrastructure improvements in Greece was the ad hoc system under which each project had to be submitted to the parliament for individual approval. The new PPP Law establishes a framework under which projects will be implemented directly once approved by a task force, without the need for individual approval by the parliament.
The South African perspective is such that the way PPP is viewed and portrayed in the regulations makes it very evident that a PPP is not a simple outsourcing of functions where substantial financial, technical and operational risk is retained by the institution as it is merely the transfer of the risk usually covered by the public sector to the private sector. In a PPP arrangement in South Africa, the government either the national, provincial or municipal will release a tender and require private consortia to respond. The government of South Africa promulgated the first PPP legislation in the country which is the Public Finance Management Act of 1999, which jumpstarted PPP activities in the country, and also established the agency that would be responsible for the management and overseeing of PPP activities in the country.
The term, Public Private Interaction [PPI] was developed in South Africa to specifically give meaning to the concept of PPP in relation to the economic needs of the South African people. For example, the ranges of public-private interactions that may support or constrain the South African health system’s development are set within the overall public-private mix of the country. In developing an equitable, efficient, coherent and high quality health system in South Africa, there is considerable potential for constructive engagement in form of collaboration and co-operation between the public and the private health care sectors. Both sectors should embrace this opportunity and therefore it is useful to propose some basic guidelines for engagement based on the vision and goals of the national health system.
The PPP legislations in these states will now be discussed below to compare and contrast them in the light of the existing PPP legislation in Nigeria, the ICRC Act of 2005 using the following basis:
- SCOPE
- APPLICABILITY
- DEFINITION OF TERMS
- REGULATORY COMMISSION
- BIDDING PROCESS