The new PPP law

A turn­ing point for in­fra­struc­ture in­vest­ments in Le­banon?

Executive Magazine - - ECONOMICS & POLICY -

Pre­vi­ous ex­pe­ri­ence in a num­ber of coun­tries has proven that pub­licpri­vate part­ner­ships (PPP) are an ef­fi­cient method for de­vel­op­ing long-term in­fra­struc­ture projects. Un­der a PPP model, the govern­ment re­mains fo­cused on its pri­mary reg­u­la­torary role, while the pri­vate sec­tor in­jects funds and ex­per­tise into de­vel­op­ing projects for the ben­e­fit of the govern­ment and, ul­ti­mately, the pub­lic. One of the main fac­tors of a suc­cess­ful PPP is the ex­is­tence of a le­gal regime based on the prin­ci­ples of trans­parency, com­pet­i­tive­ness, and ac­count­abil­ity.

Af­ter a decade of de­lays, the en­act­ment of Law No. 48 on Septem­ber 7, 2017 will un­doubt­edly cre­ate new prospects for the im­ple­men­ta­tion of PPPs in Le­banon for both ex­ist­ing and fu­ture projects. The en­act­ment of the law can­not be dis­so­ci­ated from the up­com­ing in­ter­na­tional donors con­fer­ence, Cé­dre, which is sched­uled for April 6 in Paris for the pur­pose of sup­port­ing the Le­banese econ­omy, and in par­tic­u­lar for the fi­nanc­ing of in­fra­struc­ture projects in Le­banon—ex­pected at around $16 bil­lion over a pe­riod of 10 years.

The law in­tro­duced a new le­gal regime for PPP projects in Le­banon, re­plac­ing the tra­di­tional pro­cure­ment pro­cesses, which suf­fered from weak trans­parency, com­pet­i­tive­ness, and ac­count­abil­ity stan­dards. The PPP law re­names the “High Coun­cil for Pri­va­ti­za­tion,” a min­is­te­rial com­mit­tee, to the “High Coun­cil for Pri­va­ti­za­tion and PPP,” and grants the coun­cil the power to as­sess and eval­u­ate po­ten­tial PPP projects. Once a PPP project is iden­ti­fied by the coun­cil, a PPP project com­mit­tee will be es­tab­lished to study the tech­ni­cal, eco­nomic, le­gal, and financial as­pects of the project, and to de­ter­mine the cri­te­ria for qual­i­fy­ing the pri­vate part­ner. The PPP law stip­u­lates the main manda­tory pro­vi­sions that must be in­cluded in the PPP agree­ment gov­ern­ing the con­trac­tual re­la­tion­ship be­tween the pub­lic and pri­vate par­ties, and de­fines the pro­ce­dures that should be ap­plied by each party and their obli­ga­tions. There­fore, the pri­vate part­ner is pro­vided with suf­fi­cient clar­ity and vis­i­bil­ity on the im­ple­men­ta­tion of the project.

In ad­di­tion, the PPP law pro­vides that the pri­vate part­ners must sub­mit both a tech­ni­cal and financial pro­posal, and that at least three of­fers will have to qual­ify, or the project will be re­opened for an­other round of bid­ding, en­sur­ing equal­ity among the bid­ders and cre­at­ing fair com­pe­ti­tion. More­over, it is worth noth­ing that the ap­point­ment of ex­perts and con­sul­tants to sup­port a PPP ten­der may be based ei­ther on the pro­vi­sions of the Le­banese Pub­lic Ac­count­ing Law or, if avail­able, the rel­e­vant in­ter­nal reg­u­la­tions of the High Coun­cil for Pri­va­ti­za­tion and PPP, or the rel­e­vant state au­thor­ity that is in­volved in the ten­der. This pos­si­bil­ity pro­vides for ad­di­tional flex­i­bil­ity in terms of de­vel­op­ing the nec­es­sary ten­der re­sources.

The PPP law is ex­pected to cre­ate a fa­vor­able en­vi­ron­ment for the pri­vate sec­tor to in­vest in in­fra­struc­ture projects in Le­banon. The pri­vate sec­tor will be keener to en­ter into part­ner­ships with the Le­banese govern­ment and to pro­vide much-needed fund­ing when the part­ner­ship is gov­erned by a strong le­gal frame­work that pro­tects their in­ter­ests. In this re­spect, the coun­try will ben­e­fit from the pri­vate sec­tor’s knowhow and man­age­rial skills, con­tribut­ing to the ef­fi­cient de­vel­op­ment of in­fra­struc­ture projects in Le­banon. In ad­di­tion, the adop­tion of the PPP law will play an im­por­tant role in at­tract­ing for­eign in­vest­ments

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