Process of drafing PPP Act starts
Published: November 27, 2015 7:50 am On: Business
Kathmandu, November 26
The Ministry of Finance (MoF) has initiated the process of drafting Public Private Partnership (PPP) Act, which will pave the way for the government to legally engage the private sector in the development of physical infrastructure by extending various incentives. “We received a green signal from the Ministry of Law, Justice and Parliamentary Affairs to draft the Act last week,” said Surya Prasad Acharya, chief of the Economic Policy Analysis Division at the MoF. “With this permission, we have now started framing the zero draft of the Act.”
However, the MoF is still awaiting permission of the Cabinet to draft the Act in full swing. “We have already sent the request to the Council of Ministers. Once we get the go-ahead, we will formally form a drafting committee, which will hold consultations with all the stakeholders to frame the Act. We will also hand over the zero draft to the committee.” The MoF had initiated the process of drafting the PPP Act after Cabinet approved the PPP Policy on October 9.
As per the Policy, the projects to be built under PPP will generally be identified by the government. But developers can also file ‘unsolicited proposal’ and directly approach the government to develop various projects. To help the developers build the projects and expedite implementation of such projects, the government is creating viability gap fund and project preparation facilitation fund. Also, the land needed to develop projects under PPP model would be acquired by the government on behalf of the private sector. The Policy says the government would help acquire at least 80 per cent of the land required for the project before signing the project agreement. The developer will later have to recompense the government, fully or partially, or pay royalty or rent on the land.
The government has said it would share risk and benefits proportionately with the private developer during and after the construction phase of PPP projects. Generally, risks emanating from design, management, quality, non-compliance of environment protection rules and lack of technical know-how and expertise should be borne by the project developer, as per the Policy. But risks that stem from political condition, lack of coordination between government agencies, lethargic land acquisition process and delay in extension of required licences, permissions or funds promised by the state should be borne by the concerned government agency. Also, the responsibility of servicing the debt will rest on the shoulder of the concerned state agency, if the government cancels the project mid-way, says the Policy.