The Public Private Partnership (PPP) unit within the Ministry of Finance is a long-term contractual relationship between the public sector and the private sector for the latter to deliver a project or service traditionally provided by the public sector.
In 2006, the Egyptian government launched the PPP programme and pursued partnership with the private sector to establish infrastructure projects, access a new source of investment capital, reduce borrowing loan risks, lower the burden on the budget, all without the state losing control of the facilities during the period of operation until it reverts back to the state after the end of the contract.
Under the relevant law number 67/2010, any project company to execute a project, will be entrusted with the financing, constructing, equipping, operating infrastructure projects and public utilities, and to provide services and facilities necessary for the project.
The PPP contract may allow companies to operate the project, provide the service or the product to the Administrative Authority which will, in turn, provide the both to the end beneficiaries or consumers.
According to the law, the PPP contract duration shall not be less than five years and shall not exceed thirty years from the date of completion of the construction work and equipping work or completion of the rehabilitation work. However, based on the recommendation of the Supreme Committee for Public Private Partnership Affairs, the cabinet may agree to conclude a PPP contract for more than thirty years, if it is required due to material public interest.
The total value of the PPP contract is no less than EGP 100m.
“The Project Company will not start receiving any payments for sales of products or availability of services, in accordance with the performance levels indicated in the PPP contract, until the contracting Administrative Authority issues a certificate accepting the quality level of the works, or products or services available,” article two of the law claims.
As per law, a Supreme Committee for Public Private Partnership Affairs shall be formed, chaired by the Prime Minister and with the membership of the Ministers of Finance, Investment, Economic Development, Legal Affairs, Housing and Utilities, and Transportation as well as the Head of the PPP Central Unit.
On tendering and awarding procedures, the law said that the investor selection is subject to the principles of publicity, transparency, free competition, equal opportunity, and fairness, in accordance with the rules and procedures stipulated in this Law and its Executive Regulations.
The Administrative Authority, in coordination with the PPP Central Unit, can invite qualified Investors for private preliminary meetings and sessions to discuss issues related to the project specifications and initial preliminary conditions.
According to the law, the PPP contract must include:
- The nature and scope of works and services that the Project Company must carry out as well as the conditions for their implementation.
- The ownership of the project’s funds and assets, the obligations of parties related to the handover and receipt of the project site, and the provisions for ownership transfer at the end of the project.
- The responsibility of obtaining authorisations, permits, and approvals.
- Mutual financial obligations and their relation to the funding mechanism.
- The product sale price or the service availability payment on which the project is based and the rules for its determination and amendment.
- Means of quality assurance and quality control, and supervision as well as administrative, financial, and technical monitoring of the project operation, utilisation, and maintenance.
- Regulating the right of the Administrative Authority to amend the conditions of the project’s construction, equipment, maintenance, operation, and utilisation among other obligations of the project company.
- Types and amounts of insurance on the project and the risks of its operation or utilisation and executive warranties issued in favour of the Administrative Authority.
- Determination of the basis of risk allocation in respect of change in law, sudden accidents, force majeure, or discovery of antiquities.
- PPP contract duration.
- Regulation of handing over the project at the expiry of the PPP contract duration, or in case of unilateral, early, or partial termination of the PPP contract.
The PPP Central Unit is currently taking over 13 projects, three of which are contracted; two are under tendering, and six under prefeasibility studies.
The three contracted projects are Mowassat Specialised University Hospital Project and Smouha Maternity University Hospital, a Blood Bank Project in Alexandria University – with a construction period of three years – and the New Cairo Wastewater Treatment Plant Project.