Frequently Asked Questions

What is PPP? Top
"PPP" means a partnership between the public sector represented by a Government Agency and a private party for the provision of a public infrastructure facility or service with a clear allocation of risks between the parties.
Why is PPP needed in Punjab? Top

There is a close correlation between infrastructure spending and economic growth. If infrastructure investments are not kept at the required level of at least 6% of gross domestic product, economic growth becomes constrained by power shortages, traffic congestion, high transport costs, and other infrastructure bottlenecks.

The investment needs of the province far surpass the Government’s resources. To bridge this infrastructure financing gap, the Government intends to seek private investment through the PPP approach. In order to develop these facilities at a rapid pace despite limited public sector resources, it is critical to forge an effective and strong partnership with the private sector, promoting investment by domestic and international investors in Punjab’s infrastructure sectors.

What framework is available for PPP Projects in Punjab? Top

To facilitate PPP Projects following key components of the PPP Framework are available in Punjab:

  • Punjab PPP Policy: To provide broad vision and strategic direction.
  • Punjab PPP Act, 2019: To foster an enabling environment for private sector participation for development in Punjab through PPPs. The Punjab PPP Act, 2019 applies to all projects conceived, developed, approved and implemented through PPP in Punjab.
  • PPP Rules & Regulations: To provide legal certainty and detailed guidance on enabling sections of the Punjab PPP Act, 2019. Rules are under preparation.
  • PPP Guidelines:  PPP guidelines are available and will be updated as and when required in line with prevailing legislative framework, to ensure that the processes are streamlined.
  • PPP Institutional Structure: Under Punjab PPP Act, 2019, new institutional arrangement has been provided for PPPs in Punjab, which includes PPP Policy and Monitoring Board (PPP P&M Board), PPPPA and Executive Committee of PPPPA; whilst roles of PPP Cell and Risk Management Unit, which were existent already in PPP Act, 2014, have been redefined with clear allocation/ segregation of duties. Further, the role of screening and development of proposals for PPP projects to be undertaken in the province has exclusively been assigned to the PPPPA.
  • Full Cost Recovery: Cost-based tariff setting and adjustment mechanisms, complemented by direct government support through Viability Gap Funding (VGF), if necessary.
  • Government Support: To facilitate project preparation and development as well as support of projects with low commercial and high social viability.
Who is the competent authority to approve/reject projects in PPP mode?
PPP P&M Board, established by the Government of the Punjab through notification, is the competent authority to approve, reject or send back for reconsideration the PPP project proposals submitted by PPPPA/ Government Agencies.
What is PPP Cell?
The PPP Cell has been established in the P&D Board to act as Secretariat of the PPP P&M Board to perform its functions mentioned under Section 7(3) of Punjab PPP Act, 2019. The PPP Cell is headed by Member (PPP), P&D Board.
What is PPPPA? Top
The Punjab PPP Authority (PPPPA) provides one window solution to identify, develop, execute and implement PPP projects across various sectors throughout the lifecycle of the project. Functions of the PPPPA are elaborated in Section 9 of Punjab PPP Act, 2019. The PPPPA is meant to perform its functions provided under Section 9 of Punjab PPP Act, 2019.
What is Executive Committee? Top
The Executive Committee is responsible for the management and administrative functions of the PPPPA. Functions and powers of the Executive Committee are provided in Section 12 of the Punjab PPP Act, 2019.
What is RMU? Top
Risk Management Unit (RMU) has been established in Finance Department to act as a fiscal guardian for the PPP Projects which is bound to perform its functions mentioned under Section 13(2) of Punjab PPP Act, 2019.  
What steps are involved in PPP Projects?
  • Project identification and conceptualization by the PPPPA
  • Prioritization and preparation of project proposals by the PPPPA/EA
  • Hiring of Transaction Advisor (TA) / Consultant by PPPPA for preparation of proposals /feasibility studies (if required)
  • The Executive Committee approves the Project Development Facility (PDF) funding requests for the PPPPA up to a maximum limit of 50 million rupees and in case a PDF funding request exceeds this limit, the Executive Committee seeks approval of the PPP P&M Board
  • PPPPA seek approval of project proposal from PPP P&M Board through PPP Cell being a Secretariat of the PPP P&M Board
  • Review of project proposal by RMU
  • Review of project proposal by PPP Cell and get approval from by PPP P&M Board 
  • Pre-qualification of parties by PPPPA 
  • Bid floatation/evaluation by TA/PPPPA 
  • Review of bid evaluation by PPP Cell
  • Approval of contract award by PPP P&M Board
  • Signing of contract
What is the difference between a project under PC-1 and a project in PPP mode? Top
The PPP approach represents a fundamental shift in the philosophy of public procurement. While the emphasis still remains for the public procurement to be as efficient as possible, there is a change in the evaluation of what is being procured. The focus under PPPs is towards outputs, i.e., services being provided. By contrast, the focus in the traditional procurement has always been on inputs.
What are different types of PPP arrangements under PPP Act?  
PPP arrangements are defined under Section 14 of Punjab PPP Act, 2019.
What is PDF? Top

Project Development Facility (PDF) is an instrument for facilitating the Government Agencies in preparation and transaction execution of PPP projects. The operations of the PDF are guided and supervised by the PPP P&M Board, Executive Committee and managed by PPPPA. It is a revolving fund, with the project preparation costs reclaimed from winning bidders.

The Executive Committee approves the PDF funding requests for the PPPPA up to a maximum limit of 50 million rupees and in case a PDF funding request exceeds this limit, the Executive Committee seeks approval of the PPP P&M Board.

What are Solicited and Unsolicited Project Proposals? Top

PPP project proposals are generally classified as solicited or unsolicited. Solicited project proposal is identified and conceptualized by the government agency relating to development activities following within the sector or geographical area. Such a project proposal shall consist of, amongst other things, an analysis of feasibility and sustainability of the project including detailed business case and financial model justifying project's financial and economic viability over the expected duration of the analysis, analysis of the need for Government support, the affordability of the project, documents including a draft PPP agreement.

A project proposal submitted by a person to a Government Agency for a project not included in the priority list together with a written confirmation that is economically viable, shall be considered as an unsolicited proposal. An unsolicited proposal shall be accompanied by a feasibility study, environmental impact statement, and a draft PPP agreement, need for Government support and determination of the public private partnership modalities.

What are the steps involved in a solicited PPP Project Proposal? Top

The PPP project life cycle for solicited proposals is as under:

  • Project Identification
  • Hiring of TA
  • Project Preparation
  • Appraisal and Approval Process
  • Tendering, Bidding and Selection of Concessionaire
  • Signing of Concession Agreement and Financial Closure
  • Project Implementation, Operations and Transfer
  • Project Monitoring
What are the steps and timelines involved in a unsolicited PPP Project Proposal ? Top
  • Within 07 days from the receipt of proposal, the PPPPA requests submission of details (legal, technical, managerial and financial capability of person) - to be submitted within 07 days of request.
  • Within 07 days, the PPPPA (with its recommendations) submits proposal to PPP Cell & RMU.
  • PPP Cell submits recommendations to the PPP P&M Board along with input of RMU.
  • PPP P&M Board decision is communicated to person by the PPPPA within 07 days of receipt.
What constitute a PPP Project Concept Paper ? Top
The Government Agency, with the aid of the PPP Cell if necessary, should highlight the broad contours of the project and issues related to its implementation on a PPP basis. To the extent possible, the concept paper should include the following information:
  • Background Information: Background to the sector; sector policies, priorities and main issues; and evidence that the proposed PPP project is a priority for the sector.
  • Rationale: Problems the PPP project intends to solve, such as physical deficiencies, inefficiencies, financial and regulatory issues, etc.
  • Project Description: Description of the location and main components of the PPP project, preliminary technical information on its capacity/sizing, etc.
  • Cost Estimate and Financing Plan: Preliminary estimate of investment cost and tentative sources of financing.
  • Project Development Schedule: The proposed project development activities and their tentative timeframe, starting with the appointment of consultants and ending with the selection of the private party and financial closure. This should also indicate all important decision-making milestones.
  • Preliminary Financial Analysis: If possible, cash flow of the estimated investment costs, operation and maintenance expenses, and revenues over the period of the PPP agreement, and a preliminary estimate of the financial internal rate of return.
  • Preliminary Economic Analysis: At least a qualitative description of the economic benefits of the PPP project. If some quantification is possible, a preliminary estimate of the economic internal rate of return.
  • Environmental and social screening: Preliminary assessment of the likely impact of the project on the environment and population in its area of influence.
  • Private Sector Involvement: Scope for private sector involvement ("What is the private sector supposed to do?").
  • Legal Aspects: Provisions under the relevant laws and regulations that grant authority to the Government Agency for developing and implementing the project in the PPP mode.
  • Proposed PPP Implementation Structure: The Government Agency’s view about the most suitable PPP modality, along with the proposed duration of the PPP agreement. This should also describe plans by the Government Agency to undertake any improvements before the PPP project is undertaken, and indicate whether the PPP project is a part of a portfolio of such projects to be undertaken by the Government Agency.
  • Cost Recovery: How the private party is proposed to recover project costs (user charges, government payments, etc.).
  • Risk Management: Preliminary risk identification and allocation (which party shall carry the construction risk, which party the revenue risk, etc.). The information should also bring out any environmental or social risks that can affect the project.
  • Regulatory Aspects: The existing regulatory mechanism, as applicable, in case tariffs are to be structured in the PPP option. In the absence of such regulatory mechanism, an indication of the proposed for regulation by contract.
  • Political Commitment: Evidence that the political authorities support project implementation on a PPP basis;
  • Contribution to Project Development: Resources in terms of counterpart staff and facilities, which the Government Agency is willing to contribute to the preparation and transaction execution of the PPP project.
  • Contribution to Project Implementation: Resources in terms of land and other support, which the Government Agency is willing to contribute to the implementation of the PPP project.
  • Terms of Reference: Draft terms of reference for the consulting services for project preparation and transaction execution, including a detailed cost estimate. 
  • Capacity Building: Details of the capacity building support proposed as part of the project preparation and transaction execution.
  • PDF Funding Requested: Total estimated budget for the consulting services and the amount requested from the PDF. The budget should be broken down into project preparation, transaction execution, and capacity building. The amount requested from the PDF should exclude any expenses incurred by the Government Agency on its own staff and facilities. A recommendation should be provided whether or not the PDF funding, including the capacity building component, should be recovered from the private party selected through the competitive tendering process. 
  • Draft Advertisement: Draft procurement notice for the consulting services for project preparation and transaction execution.
What is VGF ? Top
Viability Gap Fund (VGF) refers to the fund established by the Government for the purpose of compensating, with the approval of the PPP P&M Board, the private party in PPP projects which meet certain criteria for any revenue shortfalls, through loans, grants, equity, subsidies, guarantees or any other mode decided by PPP P&M Board.