Public Private Partnership (PPP) Regime in Nepal

-Madhab Raj Ghimire

PPP is a long-term risk, reward and revenue (3R) sharing contractual arrangement between a public-sector party and a private-sector. PPP includes design, construction, financing, operation and maintenance of public Infrastructure or service by the private- sector in which concession provisions provided by public authority.

PPP regime needs to introduce bench mark to obtain yard sticks for the successful running PPP projects. For the public sector delivery whether it is for products or services of construction of infrastructure that should be familiar with consumer demand or public authority’s service delivery.  These service deliveries of upstream or downstream level PPP project keep basis of without distorting competitive market with following by revenue stream.

An experience of PPP Laws and Regulations in Nepal, Private Financing Build Operate Infrastructure (PFBOI) Act-2007 promotes only private financing but does not facilitate partnership.The Act has mentioned that Project Coordination Committee will be headed by vice-chairman of Nepal Planning Commission that cannot be institutionally accessible or feasible for local bodies.The Act has carried some misconceptions which fail to provide guidance on the competitive tendering of development infrastructure project. PFBOI and Implementing Regulations-2007 covers only procurement of infrastructure and limitations have been encountered in implementing these procurement procedures.The Act does not require widely-disseminated advertising to alert prospective domestic and foreign bidders and stake holders for participating procurement of infrastructure.

There are some issues that can be amended in PFBOI in coming amendment process or re-draft processing, those are; pre-feasibility study needs to make mandatory before expression of interest after the project selection; each project needs to be including mechanism of public and private sectors participation along with government participation.  In the bidding documents; the evaluation criteria need to be an objective to maintain transparency in evaluation proceedings. The Act contains no requirement of a pre-feasibility study, evaluation criteria, etc. The Act needs to barred unsolicited proposals that encourage avoid competition, transparency or fairness.  Similarly, problems have been encountered in local bodies following by Local Self-governance Act-1999 and Local Body Financial Administration Rules-2007 where PPP projects have been procured under the standard existing procurement law, which has already proven unsuited to PPPprojects.

Finally, PPP have enormous potential country like Nepal to gain access to private sector resources, to reduce project costs and improve service delivery where government does not have enough financial capabilities. PPP can be successful if there is strong specialized regulatory authority which has enough grips to maintain or regulate the activities. Therefore, Government of Nepal made another effort to endorse Nepal Investment Board Act-2011 for the high (fixed) cost based legislation.

The writer is PPP Legal Consultant for Legal Plus P. Ltd, can be reached at mrghimire@hotmail.com