Legal and Regulatory Structures

NO	ASPECTS	DESCRIPTION
1.	Legal and Regulatory Framework	- PNG National Public Private Partnership Policy Framework - Public Investment Program (Department of National Planning and Monitoring) - Medium Term Development Plan 2011-2015 - Medium Term Debt Strategy (MTDS) - Medium Term Fiscal Strategy (MTFS) - Public Finances (Management) Act 1995 and the Fiscal Responsibility Act 2006. - PNG Development Strategic Plan 2010-2030 - PNG Vision 2050 - National SME Policy - Independent Consumer and Competition Commission Act
2.	Involved Government Agencies	- Ministry/Department of Treasury - Department of National Planning & Monitoring - State Solicitors Office (Department of Justice & Attorney General) - Department of Prime Minister & National Executive Council - The Legislation of the PPP Bill will create the PPP Centre/unit. Submission for legislation is before the National Executive Council (NEC).
3.	Supporting Agencies	- PPP Centre - PPP Steering Group - PPP Forum - Line Agencies covers all National, Provincial and District Government departments and entities that are charged with the mandate to deliver government services that can benefit from partnership with the private sector. The PPP Centre will report to the Government on the performance of parties against this PPP policy.
4.	Available Sectors	- Telecommunications & IT, Energy/Electricity, Oil & Gas, Agriculture, Health, Education, Construction & Real Estate, Transport, water and sanitation/waste management.
5.	Eligible Tender Participants / Project Initiator	- In all cases, the commitment of the Government to enter into PPP contracts with the private sector is required to comply with the Government's medium and longer term strategies - the Medium Term Development Strategy (MTDS), Medium Term Debt Strategy (MTdS) and the Medium Term Fiscal Strategy (MTFS), including consistency with the fiscal rules guiding public investment projects. It will include international best practice in probity of project awarding and delivery process.
6.	Types of PPP Structures/ Contract Types	- Direct Provision of Infrastructure and Services- government assume the financing and delivery risk entirely on the balance sheet of the Treasuries and generally use the capacity of the public service to manage the delivery of such projects. - Privatization and Outsourcing- government transfers the financing and delivery risk solely to the private sector under 'privatization' programs whereby capital-intensive infrastructure projects highways, power generation etc, are awarded to the private sector on a long term basis. - Public Private Partnerships (PPP) - government ensures value for money and shares the risks with the private sector in a partnership approach. Risk is transferred to the partner that is best able to manage that risk - generally, the private sector bears the financing, delivery and completion risks while the government bears risks associated with service delivery, land acquisition and meeting minimum revenues to ensure the projects remain financially viable.
7.	Types of Project	- Transport Infrastructure (land, air, sea) - Communications & Technology - Energy/Electricity - Water & Sanitation/Waste Management - Health - Education
8.	Project Stages and Implementation for Solicited Proposals	- The PPP Project Process is outlined in the National Public Private Partnership Policy. - The PPP Project Process consists of four stages, beginning with development followed by procurement, implementation (construction and operation), and termination on a consecutive basis. The PPP Centre shall play the central role throughout the PPP process, in particular during the development and procurement stages. The PPP Centre shall help ensure that sound analysis is used as the basis of determining whether the project should be offered to the market as PPP and under what PPP transactions model, and to ensure that the awarded private sector counterpart shall provide the best value for money. - STAGE 1 - DEVELOPMENT • Submission of Project Concept Note from Line Agency or SOE to the PPP Centre • Development of the Outline PPP Business Case • NEC Approval STAGE 2 - PROCUREMENT • Advertising for Expressions of Interest (EOI) and Prequalification • Advertising for Expressions of Interest (EOI) and Prequalification STAGE 3 - CONSTRUCTION AND OPERATION • Upon signing of the concession or partnership agreement, the private proponent will have been provided with a reasonable period in which to proceed to financial closure. The Government and contractor should then proceed to satisfy the conditions precedent as soon as possible. • When independent regulators are involved, the Government will focus on its role as project owner, and the regulator will act as a referee to monitor service delivery and act as an objective party to take decisions that ensure the best interests of all parties are safeguarded. • The Project Committee will then complete its work and the Contract Management Team within the relevant line agency, assisted by the PPP Centre, will begin its work in ensuring that the private proponent delivers the project on schedule and according to specifications. The PPP Centre is expected to provide assistance to the Contract Management Team, particularly given the PPP Centre understands the project contract. Advisers' services can be sought to assist the Contract Management Team. STAGE 4 - CONTRACT TERMINATION - Contract termination can occur during the period of the partnership due to triggers as stipulated in the agreement or by the end of the partnership period. The Line Agency, and the independent regulatory body if any, shall be responsible for this process. This shall include surveying project status, including assets and future needs for the project. In reviewing the options for continuing the project, the PPP Centre shall provide advice and expertise in selecting the most economically favorable option, prior to concluding the PPP with the existing private counterpart. -
9.	Project Stages and Implementation for Unsolicited Proposals	- The PPP Policy envisages that it will consider unsolicited proposals from the private sector for infrastructure projects that are NOT in the project list of any Line Agencies and/or SOEs - i.e. the unsolicited project has attributes that justify its inclusion in this category, and has not already been considered by the Government, Line Agencies and/or the SOEs. - The process for consideration of an unsolicited bid will be defined in due course. However, in principle, the proponents of an unsolicited project will be given an opportunity to develop a business case at their own costs on the understanding that the technical sections of their business case will be used for a competitive bidding process should the project be deemed a priority. The PPP Law, to be developed in due course will specify in detail the preferential treatment that may be afforded to unsolicited bidders for having spent their own resources to develop a feasibility study or business case for such projects.
10.	Mechanisms to Engage Private Sector at Project Development Stages	- Privatization and outsourcing - government transfer the financing and delivery risk solely to the private sector under privatization programs whereby capital-intensive infrastructure projects such as highways, power generation etc, are awarded to the private sector on a long term concession basis. - Public Private Partnerships (PPPs)- government ensure value for money and share the risks with the private sector in a partnership approach. Risk is transferred to the partner that is best able to manage that risk while the government bears the risks associated with service delivery, land acquisition and meeting minimum revenues to ensure the projects remain financially viable.
11.	Project Appraisal and Selection Process	A brief explanation on the how projects are assessed, prioritized, and selected as a PPP project. - PPP Policy shall only apply to projects with a total cost of PGK 50 million or more. The National Executive Council (NEC) may alter this minimum benchmark for PPP projects. - All projects of PGK 50 million or more must be submitted to the PPP Centre to test whether a PPP would be the most suitable modality. Exemptions from delivery of the projects as a PPP must be approved by NEC on the recommendation of the Minister for Treasury. - PPP Centre briefly reviews project concept notes (PCN) within 2 weeks. If it is in line with government strategies, PPP Centre reviews PCN in more detail within a month. If suitable for PPP, PPP Centre reviews Business Case within a month and then forward it for NEC's approval. PPP Centre reviews shortlist within a month. If adequate to proceed, PPP Centre conducts further reviews within two months before the bid is approved by the NEC for delivery.
12.	Facilities Available to Facilitate Project Structuring and Transaction Advisory	- The PPP Framework is also required to be fully consistent with the responsibilities for financial management and accountability as outlined in the Public Finances (Management) Act 1995 and the Fiscal Responsibility Act 2006. - The Annual National Budget will continue as the central process for the ultimate prioritization of expenditure (including debt financing) by the Government.
13.	Role of Local Government	- Help in monitoring and reporting to the PPP Centre on all projects carried out on the ground in each respective local level government areas. - Help supervise project delivery and government participation
14.	Risk Sharing Policies/Practices	- There is a substantial risk sharing or risk transfer from the public sector to the private sector. - The public sector and the private sector enter into a concession agreement or contract that is usually time-bound and sets out the principles for the partnership and the responsibilities and obligations of both parties. - Government is not obliged to make any payments either for capital works or services unless and until such works or services are completed to the pre-agreed standards and/or service targets stipulated in the concession agreement. - Generally the private sector assumes the completion and delivery risks while the public sector will assume approval and regulatory risks. - The detailed risk allocation will be determined on a case by case basis through negotiation between the government and the private sector service providers.
15.	Financing Mix Options Allowed	- Government is not obliged to make any payments either for capital works or services unless and until such works or services are completed to the pre-agreed standards and/or service targets stipulated in the concession agreement. - PPPs involve the use of private sector capital to fund an asset which is used to deliver outcomes for the public sector. Under a PPP, the asset may not be ultimately owned by the public sector, however, PPPs involve a long term financial commitment by the public sector through payments to the private sector, to allow the private sector to recoup the cost of their investment.
16.	PPP Promotions/ Marketing Mechanisms	- PPP Centre through the Project Committee prepares expression of interest (EOI) documentation and solicits preliminary interests from the market (i.e, through the public procurement and tender process published in daily newspapers). - PPP Centre through Project Committee evaluate submitted EOIs and compose shortlist of potential bidders.
17.	Monitoring and Evaluation	- In continuously improving the quality in delivering PPP projects, the PPP process shall undergo regular and comprehensive review that is conducted in an open and transparent manner. The PPP Centre shall monitor the adherence to the PPP process and identify any need for revisions required to maintain the relevance of the PPP process with the ongoing developments of Papua New Guinea's PPP programs.
18.	Dispute Resolution Mechanism	- Dispute settlement and supervision is separated from line agency when independent regulators are involved. - All dispute resolutions for aggrieved parties settled through normal PNG court systems and dispute resolution under relevant applicable laws of contract agreement between the public sector and private sector.