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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 an 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 investments 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
The following components of the PPP Framework are available in Punjab: 
Prerequisite  Component
Policy certainty PPP policy and guidelines on its implementation
Legal certainty PPP law
Effective institutional arrangements  PPP network (PPP P&M Board, PPP Cell, Risk Management Unit, and PPP Nodes)
Fair risk sharing  Risk management guidelines
Adequate regulatory arrangements  Initially regulation by contract, later independent regulatory bodies
Full cost recovery  Cost-based tariff setting and adjustment mechanisms, complemented by direct government support through viability gap funding (if necessary)
Supplementary financing arrangements  Project Development Facility and Infrastructure Project Financing Facility
Pipeline of attractive PPP projects  Preparation and execution of pilot projects to start the process
 
PPP Institutional Framework  
Demarcation of Main Responsibilities for PPP Projects 
   
   
Who is the competent authority to approve/reject projects in PPP mode?
 Top
PPP Policy and Monitoring 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 Government Agencies.
   
What is PPP Cell?
 Top
PPP Cell has been established in the Planning and Development Board to promote and facilitate PPP development in the Province, assist a Government Agency in preparing and Executing high-quality projects, and act as a PPP catalyst and advocate, knowledge manager, and policy and project advisor. 
   
What steps are involved in PPP Projects?
 Top
  • Project Identification 
  • Request for PDF (Project Development Facility)  
  • Hiring of Transaction Advisor (TA) for feasibility development  
  • Review of Project Proposal by PPP Cell + RMU and approval by PPP P&M Board 
  • Market Sounding by TA/PPP Nodes 
  • Pre-Qualification of parties by TA/PPP Nodes 
  • Bid floatation/evaluation by TA/PPP Nodes 
  • Review of bid evaluation by PPP Cell + RMU 
  • Approval of contract award by PPP PPP P&M Board 
  • Contract negotiation and signing by PPP Nodes 
  • Monitoring and supervision of projects by PPP Nodes 
   
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?  
  • Build-and-Transfer (BT)
  • Build-Lease-and-Transfer (BLT)
  • Build-Operate-and-Transfer (BOT)
  • Build-Own-and-Operate (BOO)
  • Build-Own-Operate-Transfer (BOOT)
  • Build-Transfer-and-Operate (BTO)
  • Contract-Add-and-Operate (CAO)
  • Develop-Operate-and-Transfer (DOT)
  • Rehabilitate-Operate-and-Transfer (ROT)
  • Rehabilitate-Own-and-Operate (ROO)
  • Management Contract (MC)
  • Service Contract (SC)
  • Joint Venture (JV)
   
What is Project Development Facility (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 Commettiee and managed by PPPPA. It is a revolving fund, with the project preparation costs reclaimed from winning bidders.
   
What are Solicited and Unsolicited Project Proposals? Top

PPP project proposals are generally classified as solicited or unsolicited. Solicited project proposal is identified and conceptulized by the goverment 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 Goverment support, the affordability of the project, documents including a draft PPP agreement. 

A project proposal submitted by a person to a Goverment 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 Goverment support and determination of the public private partnership modalities.
 
What are the steps and timelines involved in a solicited PPP Project Proposal ? Top

Solicited Project Proposal Aapproval Process

  1. GA submits Project Proposal (“PP”) to the PPP Cell
  2. PPP Cell forwards requests for Govt. Support (“GSR”) to RMU. Within 15 days RMU makes recommendations through PPP Cell for Committee to approve, reject or reconsider GSR. 
  3. PPP Cell submits PP to the Committee within 30 days of receipt (may make recommendation/observations to GA before submission).
  4. Committee approves/ rejects the PP (including GSR) within 30 days of receipt; or returns PP to GA for amendment.
  5. Government Agency within 30 days of submission examine information and other particulars for selection of prequalified persons.
  6. Within 15 days of prequalification process, Government Agency issues bid documents. Thereafter, within 15 days of receipt of bids Government Agency evaluates bids .
  7. Government Agency announces result of the bidding process and issues notice for execution of PPP agreement to the selected private party within 10 days of the bid evaluation or approval of the Committee (if applicable).
 
What are the steps and timelines involved in a unsolicited PPP Project Proposal ? Top
  1. Within 10 days of receipt of proposal GA requests submission of details (legal, technical, managerial and financial capability of person) - to be submitted within 15 days of request.
  2. Within 15 days GA (with its recommendations) submits proposal to PPP Cell.
  3. PPP Cell seeks RMU input before submitting to PPP P&M Board.
  4. PPP P&M Board decision is communicated to person by the PPPPA within 7 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) means the fund established by the Goverment for purposes of compensating, on the recommendation of the Committee, the private party to a PPP agreement for any revenue shortfalls, through grants, subsides or guarantees.
 
Is there a standard form of PPP Agreement that will be used in contracting for PPPs ? 

Although there is no binding standard form which all parties are required to use in contracting for PPPs in Punjab, the Government of Punjab has published a Model PPP Agreement on the 'Downloads' section of the PPP Cell Website 

The Model PPP Agreement is a comprehensive agreement that covers the main concepts applicable to a project being implemented on the Build Operate and Transfer (BOT) basis including, inter alia, license for project land, requirements and operative provisions for each of the design, construction and operation stages along with the relevant performance securities, appointment and role of the independent engineer and independent auditor, service charge(s) recoverable from users of concession assets, dispute resolution, compliance with applicable standards and key performance indicators, insurances, termination, force majeure and other miscellaneous provisions. Please note that this document does not deal with project specific matters or other issues that may be relevant to a particular sector. Nevertheless, many provisions in this Model PPP Agreement (including but not limited to dispute resolution, insurances, termination, force majeure and change in law) will be applicable and relevant to projects implemented in different PPP arrangements/modalities.

Although changes will be required to amend the model form for different structures and projects, any changes to the following sections (as set out in this Model PPP Agreement) in the preparation of the Draft PPP Agreement should be justified in the project proposal submitted for approval: Section 9 (Indemnities & Limitation of Liability); Section 15 (Relief Extensions & Relief Compensations); Section 16 (Change of Scope); Section 20 (Insurances) not as regards the specific types of insurance required; Section 21 (Force Majeure); Section 23 (Termination); Section 26 (Disclaimer), other than to the project-specific language in square brackets; Section 27 (Assignment and Charges); Section 28 (Change in Law); Section 30 (Dispute Resolution); Section 31 (Miscellaneous).

Note that any concessions/support by the Government of Punjab set out in this Model PPP Agreement are only indicative. The concession/forms of Government of Punjab support available for each project shall be as approved by the PPP P&M Board on a project to project basis in accordance with Section 25 of the Punjab PPP Act 2019.