Important FAQ

Frequently Asked Questions

What is PPP?

Public-Private Partnerships (PPP) is a collaboration between the Public and Private sectors to deliver a service or facility to the public. PPP enables both sectors to combine resources, knowledge and skills in delivering such services or facilities.

The essence of a PPP is first and foremost to offer public service to the people and secondly to transfer risks to the party well suited to manage the risks in the partnership.

PPPs have been used for delivery of services worldwide in sectors like, power, education, roads, aviation, health, agriculture, transportation, tourism, etc.

PPPs benefits nations as it allows access to the substantial financial resources of the private sector; enables the public sector to benefit from private sector expertise, experience, and efficiency; and enables the public sector to transfer project – related risk to the private sector.

Types of PPPs

There are several types of PPP such as:

1. Service Contracts: Under a service contract, the government (public authority) hires a private company or entity to carry out one or more specified tasks or services for a period, typically one to three years. The public authority remains the primary provider of the infrastructure service and contracts out only portions of its operation to the private partner. The private partner must perform the service at the agreed cost and must typically meet performance standards set by the public sector. Under a service contract, the government pays the private partner a predetermined fee for the service.

2. Management Contracts: A management contract is a comprehensive service contract that covers all of the management and operational components of the public utility or service provider. Although the ultimate obligation for service provision remains with the public sector, daily management control and authority are assigned to the private partner. The private partner is paid a predetermined rate for labour and other anticipated operating costs and, often, to provide an incentive for performance improvement, the contractor is paid an additional amount for achieving pre–specified targets.

3. Lease Contracts: Under a lease contract, the private partner is responsible for the service in its entirety and undertakes obligations relating to quality and service standards. Except for major capital investments, which remain the responsibility of the public authority, the operator provides the services at his expense and risk. In particular, the operator is responsible for losses and unpaid consumers’ debts. Given the increased burden on the private sector, the duration of a lease contract is typically longer than a service or management contract. Leases do not involve any sale of assets to the private sector.

4. Concessions: Concession makes the private sector operator (Concessionaire) responsible for the full delivery of services in a specified area, including construction, operation, maintenance, collection, management, and rehabilitation of the system. Although the private sector operator is responsible for providing the assets, such assets often remain publicly owned and are returned to government at the end of the Concession period. The public sector is responsible for ensuring that the Concessionaire meets performance standards and the public sector’s role subsequently shifts from being the service provider to regulating the price and quality of service. The Concessionaire collects the user fees directly from the systems customers. The tariff is typically established by a regulator, but as part of the Concession arrangement the methodology for tariff adjustments will be established in advance. The Concessionaire is responsible for financing capital investments and working capital out of its resources and from the tariffs paid by the system users, but in certain cases, the government may choose to provide financing support to help the Concessionaire fund its capital expenditures.

Is the Government selling off its assets in the name of PPP?

No; the Government is not selling off its assets through PPP. PPP is different from privatization. In PPP, ownership of the asset still remains with the Government, while the private party provides financial, technical, or managerial resources (in most cases all of the aforementioned) for a specified period of time, after which the asset reverts back to the Government, who may then decide to continue running the asset as a PPP or otherwise.

What are the Rationale for PPP

PPP blends the strength of the private sector and public sector.
The strength of the private sector is:
Newer Technologies;
Workplace Efficiencies;
Cash Flow Management;
Personnel Development;
Shared Resources and Platform; and
Access to Diverse Sources of Capital.

The strength of the public sector is
Legal authority;
Protection of procurement policies;
Broad prospective/balancing of the competing goals to meet public needs; and
Personnel – dedicated but constrained by rules and regulations.
PPP, therefore, combines the strength of both sectors to the benefits of the society.

Benefits of PPP

PPP also helps to:
1. Attract private capital investment (often to either supplement public resources or release them for other public needs).
2. Increase efficiency and use available resources more effectively, and
3. Reform sectors through a reallocation of roles, incentives, and accountability.

Is there a Regulatory Framework for PPP in Rivers State?

Yes. The Public – Private Participation In Infrastructure Development Law 2009 (The Rivers State PPP Law) was signed into law on the 20th day of October 2009. Everything pertaining to PPP in Rivers State is governed by this law.

What Incentives does Rivers State Government Offer to Partners?

The Rivers State Government offers the following incentives to encourage private investors participation:

Infrastructure Credit Guarantee: A guarantee of the loan that the PPP Company obtains from a financial institution for a project. See Section 37 of the Rivers State PPP Law.
Provision of Viability Gap Funding (VGF): VGF is payment made by the Public Sector to part-finance a PPP project cost to raise the return to the Private Sector making the project more financially attractive. See Section 36 of the Rivers State PPP Law.
Minimum Revenue Guarantee: A guarantee by which the Government shares the demand risk for a project, thereby compensating the Private Partner in the event of revenues falling short of the guaranteed amount. See Section 38 of the Rives State PPP Law.
Equity Participation
Reduction of or exemption from payment of taxes and levies: Projects are exempted from payment of tax for a number of years to cushion financial burden enable on the PPP company.
Provision of subsidies
Grant of Loans: Loans that hep to reduce the capital expenditure that the private investor needs to incur for the project.
Facilitation of the processes and regulatory approvals: Government’s involvement in the regulatory approval process enables the Private Investor get needed approvals speedily.

What is the Expected Time-frame for Negotiating a PPP Project?

There is no stipulated time frame for negotiating a PPP project. The negotiation time for a PPP is dependent on such factors as the type of PPP; financial and technical capability of the private sector; nature of stakeholders involved; number of Ministries, Department and Agencies (MDAs) involved in the project; and so on.

What is the Role of BPPP in PPP in Rivers State?

BPPP regulates the PPP procurement process to ensure it meets the standards set by the PPP Law. Post PPP contract award, BPPP monitors the agreements to ensure compliance, acts as a middleman between the Private Party and Government and acts as ombudsmen in the event of a dispute.

What kind of projects does BPPP get involved with?

Infrastructure, Services, Housing Development, Markets Redevelopment, Educational projects and services, Health Sector, Agriculture, Power, transportation, among others.

How can one go about starting a PPP Project?

If there is a project you think is worth implementing as a PPP, then you woud do a pre-feasibility of the project. If convinced that you or your company have the requisite technical, financial, and managerial resources to deliver the project as a PPP, then download our PPP project template here. Complete the template as appropriate, and submit it in hard copy at our office, attaching all necessary documents. An electronic copy could also be sent to BPPP’s email. BPPP will review your submission and get back to you. Proper filling of the template and attaching all required document will help to fast track the pre-negotiation process.

How can I get the PPP Law?

A soft copy of the PPP Law is available online, and can be downloaded here, while a hard copy is available at our Office for the sum of One Thousand Five Hundred Naira (N 1,500.00) only.

How can I get Updated on PPP Adverts in the State?

Follow us on any of our social media platforms here to be updated on PPP adverts as well as any development concerning PPP in the Rivers State.

We believe that the foregoing information will enable all private investors take necessary steps to facilitate the process and bring their transactions to an early and successful completion.

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