Tanzania: unsolicited PPP proposals

The law and the institutions

The Public Private Partnership Act was passed as Act No. 18 of 2010. It was assented on 25 July 2010 and commenced on 26 May 2011. It is now Chapter 103 of the laws of Tanzania ¹.

Section 4 sets up the PPP Centre and section 7 sets up the Public Private Partnership Steering Committee. Section 10A creates the PPP Facilitation Fund ¹. In the 2019 text the Steering Committee approves feasibility studies, preferred bidder selection and agreements. The usual time limit is 21 working days from a PPP Centre recommendation ¹.

Parliament passed the Public Private Partnership (Amendment) Act, 2023 on 13 June 2023. It was published in the Gazette on 14 July 2023 as Act No. 4 of 2023 ³.

What the proponent must submit

Section 16 of the Act requires the private party to do a feasibility study covering technical, financial, social, environmental and economic issues. The study must show the benefits to government and the private party's financial capacity ¹.

Regulation 7 of the 2020 Regulations adds an earlier step. The private party submits a pre-feasibility study to the contracting authority before any feasibility study. A privately proposed project cannot be governed by a memorandum of understanding or other non-binding agreement ².

Regulation 11 lists the contents of the pre-feasibility study. They include company details and audited accounts, the project scope, evidence of innovation, estimated cost with projected cash flow, fit with national plans and any expected government support ². The 2023 amendment added a paragraph on climate responsiveness ⁴.

• Review fee paid into the PPP Facilitation Fund before review starts. Set at 0.1 per cent of estimated capital cost in 2020 ²
• Fee changed to 0.1 per cent of estimated project cost or US$50,000, whichever is lower, by the 2023 amendment ⁴
• Paying the fee creates no obligation on the contracting authority ²
• Deposit of not more than 3 per cent of estimated project cost after pre-feasibility approval ²

Review steps and deadlines

The 2023 amending regulations replaced regulation 12. The contracting authority now assesses the pre-feasibility study against five criteria, including that the project needs no financial support or viability gap funding. A study that meets the criteria goes to the sector Minister for approval ⁴.

The private party pays for the feasibility study. For unsolicited projects the contracting authority must attach verifiable and audited study costs when it sends the project to the PPP Centre ².

Competition and the proponent's advantages

Regulation 62 says unsolicited projects must be procured through open and competitive bidding after the feasibility study is approved. The authority must not proceed with a proposal that gives exclusivity or needs government financial support ².

The original proponent must bid. If no other bid arrives, the authority may extend the deadline or re-issue the invitation only once. If still no other bid arrives, the original proponent becomes preferred bidder ².

After the tender board approves the scores, the original proponent gets a ten-point bonus. Another method may be used if the bonus system does not give the best value for money ². The request for proposal must require the winner to repay the proponent's reasonable, verifiable and audited study costs within 30 days of signing ².

Exemption from bidding

In the 2019 text, section 15(2) lets the Minister exempt an unsolicited project from competitive bidding if it meets seven criteria. They include government priority, no guarantee or financial support, unique features and the proponent bearing the feasibility study cost ¹. Under regulation 63 the Steering Committee forwards the study to the Minister at the proponent's request ².

The 2023 Act replaced subsections (3) and (4) of section 15. Once an unsolicited project is exempted from competitive bidding, the Government and the private proponent must start negotiations ³.