- What is PPP?
- Why is PPP needed in Punjab?
- What framework is available for PPP Projects in Punjab?
- Which infrastructure sectors are covered under PPP Act 2014?
- Who is the competent authority to approve/reject projects in PPP mode?
- What is PPP Cell?
- What steps are involved in PPP Projects?
- What is the difference between a project under PC-1 and a project in PPP mode?
- What are different types of PPP arrangements under PPP Act?
- What is Project Development Facility (PDF)?
- What are Solicited and Unsolicited Project Proposals?
- What are the steps and timelines involved in a solicited PPP Project Proposal ?
- What are the steps and timelines involved in a unsolicited PPP Project Proposal ?
- What constitute a PPP Project Concept Paper ?
- What is VGF ?
- Is there a standard form of PPP Agreement that will be used in contracting for PPPs?
|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:
Policy certainty PPP policy and guidelines on its implementation
Legal certainty PPP law
Effective institutional arrangements PPP network (PPP Steering Committee, 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
|Which infrastructure sectors are covered under PPP Act 2014?||Top|
|PPP Steering Committee, 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.|
|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 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?|
|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 Steering Committee, and managed by the PPP Cell. 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
|What are the steps and timelines involved in a unsolicited PPP Project Proposal ?||Top|
|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:
|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.|
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 Steering Committee on a project to project basis in accordance with Section 11 of the Punjab PPP Act.