Mbadi draws tough rules to avert PPPs backlash

The National Treasury has introduced stringent new guidelines to govern Public-Private Partnerships (PPPs) to avoid the controversies plaguing major infrastructure projects under President William Ruto’s administration.

In a circular dated April 24, Treasury CS John Mbadi outlined mandatory disclosure requirements for all Privately Initiated Proposals (PIPs).

PPP projects have suffered public mistrust due to a lack of information, which the directive seeks to reverse by emphasising transparency at every stage of project approval and execution.

This move follows a series of high-profile setbacks, including the collapse of Adani Group’s bid to manage the Jomo Kenyatta International Airport and the cancellation of several power transmission line contracts awarded under PPP arrangements.

The circular, addressed to all Cabinet Secretaries, Principal Secretaries, accounting officers, and governors, comes at a time when the government is keen on PPP processes to deliver legacy projects.

“The National Treasury, government of Kenya, seeks to embed disclosure into its PPP process and in particular the Privately Initiated Proposal process,” Mbadi said.

“This circular, therefore, enhances openness, transparency and accountability in the processing of PIPs,” the CS stated.

The PPP Act of 2021 outlines a three-phase process for PIPs – receipt and evaluation by contracting authorities, project development and procurement design.

Under the new rules, contracting authorities must publicly announce the receipt of any privately initiated proposal within 14 days.

The notice should disclose details such as the proponent’s name, project description, estimated cost and potential stakeholder impacts.

The notice must be published in at least two nationwide newspapers and on the contracting authority’s digital platforms.

Agencies would be required to observe a 21-day window for competing proposals.

Kenyans recently went up in arms – staging a public outcry and legal suits – over major deals often negotiated behind closed doors.

Projects, such as the failed JKIA privatisation and the stalled power transmission lines, have raised questions about the viability and transparency of PPPs.

The Nairobi Expressway, a 27-kilometre highway linking JKIA to Westlands, remains the only fully operational PPP success story, credited with reducing travel time by over two hours.

President Ruto’s team is currently considering two main PPP projects – the Rironi-Mau Summit highway and the Naivasha-Malaba Standard Gauge Railway.

Energy and irrigation projects top the ventures being pushed under PPP, most of which are at the latter stages of roll-out.

Power transmission lines and substations sponsored by Africa 50, which are to be implemented by Ketraco, are also in the list.

Feasibility is also underway for the Galana Dam, Mombasa Expressway and cargo scanning services infrastructure across airports, borders and ports.

The Treasury’s circular mandates further disclosures at each subsequent phase of a PIP.

Once the PPP Committee approves a project, the contracting authority must publish a notification within 14 days, informing the public of the decision and allowing stakeholders to track progress.

During the project development phase, private proponents are required to conduct feasibility studies and stakeholder engagement exercises, with findings submitted to the contracting authority.

These reports, including summaries of economic, technical, environmental and social viability assessments, must later be made public, alongside key financial and risk allocation details.

“The contracting authority shall…publish the feasibility studies and the evaluation criteria used to evaluate the project,” the circular reads.

However, the notice also carves out exceptions for sensitive commercial information, such as base case financial models and debt pricing structures, which may remain confidential.

After negotiations conclude and a project agreement is signed, the contracting authority must publish the contract’s key terms, including scope, duration, financial arrangements and performance metrics, in national newspapers and on its website.

The new rules reflect lessons learned from recent controversies.

The Adani Group’s attempted takeover of JKIA faced fierce opposition from Kenyans – led by lawmakers and aviation workers – who accused the government of sidelining local interests.

The cancellation of the projects awarded to the Indian firm under opaque terms exposed weaknesses in Kenya’s PPP framework.

By enforcing stricter disclosure requirements, the Ruto administration aims to preempt such backlash and reassure investors that projects are awarded fairly and competitively.

The Treasury’s circular acknowledges concerns from past experiences, urging contracting authorities to adhere strictly to the guidelines.

Mbadi has warned that non-compliance could undermine the country’s Vision 2030 goals.