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Even though public-private partnership (PPP) projects are increasingly widespread across the world, it is only now that they are beginning to gain traction in Kenya. However, the efficacy of PPPs as a new investment phenomena in Kenya (like most developing countries) is virtually untested.
More importantly, despite the passage of relevant legislation to facilitate PPPs for public investment, the principles and practices that underpin the attitudes of PPPs’ implementation remain largely undeveloped. There is still a lot of ambiguity and weaknesses in the interpretation and implementation of key provisions of the law that are critical to the realisation of the true objectives of PPPs for achievement of the maximum public benefit from such projects.
This is particularly true in Kenya where the Public Private Partnerships Act, (PPP Act) was only enacted in 2013. Though prior to the enactment of the said Act, a number of national projects were developed using the PPP approach, such projects were under-regulated and provisions were largely tucked into the Public Procurement and Disposal Act (Cap.412C(as amended)). As such, some projects were successful while some failed for varied reasons, including the lack of proper controls and poor regulation of for instance, the tendering processes. Successes include the Mtwapa and Nyali Bridges Concessions, the 74 MW Tsavo/Kipevu IPP, 2000, Orpower-Olkaria III 2000/2008 (48 MW Geothermal Plant), Mumias (34 MW power plant) and the Port of Mombasa Grain Terminal – BOO, 1998. One notable failure is the Nairobi Urban Toll Road, 2009.
Kenya now has a substantive Act of Parliament that governs the entire PPP process from project conception to hand over and establishes the relevant institutions such as the PPP Committee, the PPP Unit and the PPP Petition Committee (the Petition Committee) to oversee PPP projects from conception to execution and finally completion. So far, a number of independent power production projects are ongoing under the new legislation and a number of projects have been identified and approved by the Cabinet to be implemented under the new PPP framework. The current list of pipeline projects includes fifty nine (59) projects from different sectors of the economy.
Nonetheless and perhaps owing to the nascent state of the PPP Act, the underlying principles and values that ought to govern the critical tendering processes of PPPs and to ensure competitive, fair and transparent private investment under the framework remain largely undeveloped. Key among them being the proper balance between the need for transparency and accountability vis-à-vis the protection of commercially sensitive information relating to the tendering process, all of which are aimed at protecting the integrity of the entire process.
One of the fundamentals of any PPP process is confidentiality of information exchanged between the contracting authority and bidders. The underlying theory on the need for confidentiality is for the protection of commercially sensitive information which, if disclosed to the public, may harm the financial position of the Government or of a competitive bidder. Confidentiality is also required to ensure that none of the bidders abuse the system by knowing the contents of the bids submitted by the others and thus compromising the competitive process.
However, of equally fundamental importance to ensure integrity and competitiveness of the process is transparency, fairness and accountability through the entire process. The PPP Act and regulations plainly espouse these fundamentals both during and after tender evaluation and award. Notably, Regulation 40(5) of the Public Private Partnerships Regulations, 2014 requires that, “the proposal evaluation team shall preserve the confidentiality of a tender evaluation process and shall not be influenced or directed by any person regarding the evaluation of a proposal except in accordance with the Act and these Regulations.” Section 29 on the other hand, requires that, “unless otherwise provided under the Act, all projects shall be procured through acompetitive bidding process and that in procuring and awarding a contract to a private party under the Act, a contracting authority shall be guided by the principles of transparency, free and fair competition and equal opportunity in accordance with the guidelines made under this Act.”
These two fundamentals require careful balance as it is almost impossible to achieve transparency and accountability without information. Still, unless the flow of information is checked, particularly at the stage of pre-award and execution of the tender agreement, commercially sensitive information may be jeopardised both for the bidders and the Government. This may thereby put to question the competitiveness of the entire process with serious ramifications on value for public funds. In this regard, the Petition Committee, which was established to adjudicate challenges relating to a PPP process, plays a major role. Unfortunately, in the initial challenges brought before the Petition Committee in which the issue of disclosure arose, it adopted a very narrow understanding of its powers, rejecting applications by aggrieved parties to compel disclosure of relevant information relating to the evaluation process by contracting authorities. The Petition Committee held that it had no jurisdiction to do so, a holding that wholly undermined its ability to review impugned decisions of contracting authorities. This seemingly, elevated confidentiality over transparency and accountability with the resulting twin effects of considerably limiting the rights of parties challenging evaluation outcomes to fair hearing and compromising the competitiveness of PPP tender awards.
The above position has now been put right by the High Court in Republic vs. Public Private Partnerships Petition Committee & 3 Others ex Parte APM Terminals (2015) eKLR (the APM Terminals Case). As appreciated by the High Court (Korir J.) in that case, the Petition Committee’s jurisdiction was focused and specialised for the development of jurisprudence on PPP matters. It goes without saying therefore that its decisions, especially at the nascent stage of the PPP Act, are bound to play a crucial role in developing the PPP procurement regime in the country, in the same fashion as other monitoring mechanisms provided for in law. It is therefore crucial that it grasps these principles and develops the same to the highest standards possible.
Confidentiality of commercial information if over protected would obviously threaten the integrity of PPPs and foster a lack of trust, unfair competition and unaccountability. The need to strike a balance between the two is therefore critical and more so in circumstances where, as per the court in the APM Terminal case, ‘shenanigans’ in public procurement have been known to cost taxpayers value for money in public projects’. Therefore, confidentiality and/ or technical rules for the same should not be used by parties or condoned by the Petition Committee as a shield, when questions are raised on hideous decisions and/or actions of the contracting authority and/or any other person involved in the process. Transparency and accountability is nothing without information.
As aptly stated by the Court in the APM Terminals Case, there should be nothing to hide and nothing to be ashamed of, where goods and services of good quality are being procured at the best prices in the market. Indeed, the only way to assure that is by jealously guarding the transparency of the procuring process.
Benchmark: effectiveness of Public Private Partnerships in Kenya