The document discusses public-private partnerships (PPPs) for infrastructure projects in East Africa. It outlines different PPP models like service contracts, management contracts, Build-Operate-Transfer contracts, and concessional contracts. These models vary in terms of asset ownership, duration, operation and maintenance responsibility, investment, commercial risk allocation, and compensation for the private sector partner. The document provides examples of existing PPP arrangements and concludes by outlining prerequisites and key factors for successful PPP projects in East Africa.

1. East-Africa Regional Office in Nairobi
Commercial Section Norwegian Embassy
Phone: +254 20 76 06 100,
email: IN-EA@innovationnorway.no

2. Commercial section of three Embassies
• Objective;
• Promote trade with and investments from Norway
• Approach;
• We bring EA market opportunities to Norway
• Company requests opportunities
• Limited regional capacity to promote opportunities
• We research trade/investment opportunities
seeking technology/know from Norway
• Work with Gov. agencies, associations and investors in
EA – and Norway

3. Procurement or PPP
• Procuring goods and/or services as
input to government led investment
program
• PPP = delivery of public goods and
services through a partnership
contract for private sector provision of
a government service
• = sharing of operational risks and
responsibilities in delivery of a public
service

4. PPP is NOT privatization
• PPP = Public Entities enter long-term contractual
cooperation with private sector
• Purpose; to improve delivery of public goods/services
traditionally provided by public entities.
• Brings in new investment, technical solutions and/or
management practices.
• PPPs = shared risks by different forms of shared
ownership and/or responsibilities
• In SSA, South Africa has been a frontrunner for PPP
arrangements for public service delivery

5. Sample PPP
1. Private entity take over management of current public
infrastructure or part of operations to improve
performance.
2. Private entity lease current assets, reinvest in them to
improve technical and financial efficiency of service.
3. Private entity is given concessions to invest in new
infrastructure to expand service.

6. PPP have many dimensions to consider
• Who will have responsibility of delivering which service?
• Who will invest and have ownership of assets?
• Who will finance investments?
• Who will operate and maintain assets?
• …..
= different forms of contractual arrangements

7. Sample of contractual arrangements
• Service contracts
• Management contracts
• Different forms of concessions with
different arrangements for ownership/lease
and transfer of assets (BOOT, etc.)

8. Service Contracts
• A contractual arrangement for management
of a particular task of a public agency.
• Bring private sector skills into service delivery.
• Public agency retains ownership of facility and
equipment.
• Private contractor is paid a fee (usually
performance based) to deliver service.
• Typical contract period 2-5 years.

9. Management Contracts
• A contractual arrangement for management of a
public service agency by private sector.
• Bring private sector skills into design and
delivery of service, operational control, labor
management and procurement.
• Public sector retains ownership of facility and
assets.
• Private contractor is paid a fee (usually
performance based) to manage and operate
services.
• Typical contract period 2-10 years

10. Build/Rehabilitate-Operate-Transfer
• A private entity resumes responsibility of some
existing assets to add on or rehabilitate and
operate them.
• Lease assets which is subsequently transferred
back to public entity.
• Operates and maintains asset at its own risk for
the contract period.
• Long term contractual arrangement 10+ years.
• A common form of PPP with public utilities.

11. Build-Own-Operate-Transfer (BOOT)
• Private entity receives a concession to
finance, design, construct and operate a
new public investment.
• Operates and maintains facility/assets at its
own risk for the contract period.
• Long-term contract 10 ++ years to recover
its investment, operating and maintenance
expenses.
• Fees are usually increased during
concession period to reach satisfactory
internal rate of return.

12. PPP prerequisites
Transparent and predictable regulatory environment
(Government).
Comprehensive market assessment and feasibility study
(Government and private entity).
Design feasible and sustainable proposal (private entity).
Assessment of proposal (transaction advisor).
Clear understanding overall context, potential risks and
responsibilities (Contractual arrangement).

13. PPP key factors for success
• Political ownership
• Public awareness
• Access to evidence of improved service delivery= studies and
analyses on influences of PPP
• Multi-stakeholder forums for government, private sector and CSOs
for awareness among general public, government officials and
sector management/staff
• Transparency during negotiations and implementation

14. Suggested way forward
1. Decide on PPP arrangement to pursue
2. Decide on contractual partners to work with
3. Outline a proposal for a pilot project at sufficient scale to
prove its financial and economic viability

15. Service
Contracts
Management
contracts
Lease contracts
Build Operate
Transfer contracts
Concessional
contracts
Scope Contracts for
services such
as meter
reading,
billing, etc.
Management
of entire
operation or a
major
component
Responsibility for
management,
operations, and
specific renewals
Investment and
operation
of major
component like
production,
distribution
and/or treatment
Responsibility for
all operations and
for financing and
execution of
specific
investments
Asset
Ownership
Public Public Public Public/Private Public/Private
Duration 1-2 years 1–5years 10–15years Varies 5–10 years
O&M Public Private Private Private Private
Investment Public Public Public Private Private
Comm.
Risk
Public Public Shared Private Private
Risk for
Private
Sector
Minimal Minimal/moder
ate
Moderate High High
Compensat Unit prices Fixed fee with Portion of Fixed or variable All or part of