Powering Africa : PPP in the Energy Sector The regulatory framework for PPP Projects Alex Sarac DLA Piper UK LLP Saidi Amiri Tanzania Investment Centre
Presentation overview 1 Main applicable laws - Energy 2 3 4 5 6 Regulatory bodies and stakeholders - Energy Main applicable laws - PPP Stakeholders and their roles - PPP Process Potential and ongoing PPP projects 55563695.1 2
Main applicable laws - Energy Legislation Electricity Act 2008 ("Electricity Act") Electricity and Water Utilities Regulatory Authority Act 2001 Electricity Rules Electricity and Water Utilities Regulatory Authority (Rules of Procedure) 2007 Electricity Rules Features Provides for facilitation and regulation of electricity transmission and distribution Liberalised production and distribution which was previously reserved for TANESCO (See Regulatory bodies and stakeholders) Regulates licences, tariffs and charges, customer rights, investigations and compliance. Regulates EWURA (see Regulatory bodies and stakeholders) as autonomous regulator for electricity, petroleum, natural gas and water Grants EWURA a wide mandate to do all things which enable it to perform its functions and discharge its duties Provides rules for EWURA investigations and proceedings in addition to tariff reviews Provide for technical requirements of electricity supply including location of overhead lines, voltage of supply and safety. 17283506.2 3
Regulatory bodies and stakeholders - Energy Body/ Stakeholder Responsibilities and Features Energy and Water Utilities Regulatory Authority ("EWURA") Regulates the downstream electricity supply industry including power generation, transmission and distribution Awards licences and approves procurement of new electricity supply installations pursuant to the Electricity Act Responsible for considering the impact of electricity supply on the environment Promotes effective competition and efficiency in the electricity supply industry Generally required to consult with the MEM (see below) in exercising its functions Tanzanian Electric Supply Company Limited ("TANESCO") TANSECO is parastatal under the MEM (see below) TANSECO owns most of the electricity generating, transmitting and distributing facilities in Tanzania including the power grid Ministry for Energy and Minerals (the "MEM") The Government ministry responsible for the development of energy and minerals in Tanzania The MEM has overall supervision and oversight of electricity supply in Tanzania, pursuant to the Electricity Act Projects are developed in consultation with EWURA who will then consult with the MEM 17283506.1 4
Main applicable laws - PPP The Government of Tanzania made changes to the legislative framework for public private partnerships ("PPPs") in 2010 and 2011 to encourage further private investment Legislation The Public Private Partnership Act No. 18 of 2010 ("PPA") Features The principal governing act for PPPs in Tanzania Established the PPP Co-ordination Unit and Finance Unit (see Stakeholders) Provides responsibilities for each party in PPP contracts Stipulates what should be included in a PPP contract The Public Private Partnership Regulations 2011 Addresses the private party's liability for risk Made pursuant to and to give effect to the PPA Regulates project identification, bidder selection and implementation of agreements 17283506.1 5
Stakeholders and their roles - PPP Stakeholder PPP Co-ordination Unit ("Co-ordination Unit") established under the PPA Responsibilities and Features Based in the Tanzanian Investment Unit Promotes and co-ordinates all aspects of PPP projects PPP Finance Unit ("Finance Unit") Assesses project proposals submitted by contracting authorities and makes recommendations Based in the Ministry of Finance Undertakes assessment of financial risk on projects where government participation is taking place Contracting authority The public body seeking to have one of its functions carried out by a private body Ministry/Minister of Finance ("Minister") The Minister/Ministry responsible for finance Takes many important decisions in respect of PPP projects and has an oversight role 17283506.1 6
Process: Solicited bids Project selection Pre-feasibility study Feasibility study The Minister prepares a list of potential PPP projects as an investment plan. The Contracting authority orders that a pre-feasibility study be undertaken (or it may carry out this step on its own if capable of doing so). Depending on the outcome of the pre-feasibility study, the Contracting authority will then instruct or undertake a feasibility study. Final approval Contract award Implementation If feasible, the project proposal is then sent to the Co-ordination Unit, Finance Unit, Minister responsible for the Contracting authority and Minister of Finance who will approve/reject the proposal. Following a procurement process compliant with the Public Procurement Act 2011, the Contracting authority will award and conclude the contract with the private party. 17283506.1 7
Process: Unsolicited bids Project concept Feasibility study Public Tender Private party makes an approach to a Contracting authority with a project concept. The Contracting authority must approve or reject the concept within 21 days. The private party must instruct or undertake a feasibility study. The Contracting authority, following the satisfactory completion of the feasibility study must conduct a competitive tender in accordance with the Public Procurement Act 2011. The Contracting authority may give preference to the private party in this process. The Contracting authority then chooses a successful bidder. Approval of Project Agreement The Contracting authority prepare a draft project agreement and submits the same to the Co-ordination Unit, Finance Unit, Minister responsible for the Contracting authority and Minister of Finance. The project agreement will also be submitted to the Attorney General who will provide a legal opinion. Project Agreement The Contracting authority proceeds to amend the project agreement at the Attorney General's direction and executes the agreement. Implementation 17283506.1 8
Potential PPP projects: Airports 17283506.1 9
Potential PPP projects: Rail 17283506.1 10
Potential PPP projects: Ports 17283506.1 11
Ongoing PPP projects: Urban transport 17283506.1 12
Powering Africa : PPP in the Energy Sector The regulatory framework for PPP Projects expected changes to the PPP Regulations Alex Sarac DLA Piper UK LLP Saidi Amiri Tanzania Investment Centre