Highlights of Ghana's New PPP Act
The Public Private Partnership Act, 2020 (Act 1039) (“PPP Act”) came into force on 29 December 2020. The Act regulates contracts between public contracting authorities and private parties for the provision of public infrastructure and/or services. It requires partnership agreements to be governed by Ghanaian law; it also outlines the applicable procedures for the procurement of partnership arrangements, entry into partnership agreements, and it ensures the use of local content and promotion of technology transfer in relevant projects.
A public private partnership (“PPP”) is a contractual arrangement or concession between a public authority and a private party for the provision of public infrastructure or services traditionally provided by the contracting authority. As a result of the arrangement, the private party performs part or all of the infrastructure or service functions and assumes certain risks over a designated period.
The new Act has introduced a framework for the approval of PPP projects and has increased the requisite financial thresholds for approval of a project.
PPP Projects are now subject to appraisals by relevant appraisal authorities; for example, the Public Investment Unit of the Ministry of Energy is responsible for the appraisal of PPPs involving the Electricity Company of Ghana and the Public Investment Unit of the Ministry of Transport is responsible for the appraisal of projects involving the Ghana Maritime Authority.
The Act also increased the financial thresholds of various approval authorities for proposed partnerships. Previously, the Ghanaian Cabinet was required to approve projects with an estimated cost of above GHS50 million. However, under the new PPP Act, Cabinet approval is required for projects with an estimated capital cost of above the cedi equivalent of USD 200 million. The financial thresholds for the local government authorities have also changed. As an example, District Assemblies that previously approved projects that did not exceed GHS 500,000 are now only required to approve projects involving a capital cost of the cedi equivalent of USD 1 million. Notably, the Ghanaian Parliament is required to approve all projects which would bind the government to a financial commitment that exceeds one financial year or that would result in a contingent liability.
The Act also introduces a seven-member panel to handle disputes arising out of any aspect of the bidding process. For example, a person who alleges that a bidding process was not carried out fairly may lodge a complaint within 30 days of the decision. All other disputes between the contracting authority and the private party may be resolved by the dispute resolution clauses in the agreements between the parties. Otherwise, disputes must be resolved according to the Alternative Dispute Resolution Act, 2010 (Act 798).
It is expected that the PPP Act will promote investor confidence in the infrastructure sector and will drive development in the sector.