The potential PPP project will exist with a public policy framework, which includes specific legal and regulatory settings.
The legal analysis will have resulted in an inventory of existing laws, regulations, contracts, and other legal documents that define the characteristics of PPP or those that have to be changed. Gaps are also identified where new legal instruments are required. These may relate directly to PPP (privatization law, sector licensing, etc.)-or be of more broad and general relevance (company law, labor laws, environmental laws, foreign exchange regulations, etc.). It may be possible to change the "direct" ones to facilitate the PPP, but the "general" ones typically simply need to be recognized and followed.
As such, the PPP structure has to reflect the prevailing tax regime, concession rights, dispute resolution procedures, public service laws, labor laws, etc. Corporate structures have to adhere to company laws and other legal requirements. To the extent that laws have to be changed to accommodate the desired PPP, the timetable should reflect a realistic period for this. The legal work continues as the PPP process progresses.
Similarly, the regulatory regime including oversight arrangements for pricing, customer service, operations, and market structure may need to be changed or newly created. The desired PPP option has to be contrasted with the existing regulatory arrangements and capacity and regulatory gaps should be filled or the PPP structure should be changed. The gaps may include the need for (i) more explicit regulations and requirements of the operator (to be embedded in contract, regulations, or statute); (ii) developing actual regulatory institutions (such as an independent regulator, a regulatory unit within government, and contracting of regulatory capacity); (iii) training regulators; and (iv) developing procedures whereby the regulator requests and receives information.
The roles of each entity involved in performance monitoring (boards, ministries, auditors, monitors) and regulation (ministries, regulators) should be described and justified by as-signed authorities.