1. Draft PPP Rules 2012

2. draft PPP Rules 2012 embodies 7 principles - international standards
1. Appropriate systems of procurement, based on transparency, competition and objective criteria in decision-making that is effective in preventing corruption and a system of accounting & auditing & related oversight;
2. Public distribution of information on procurement procedures and contracts;
3. Establishment, in advance, of conditions for participation including selection & award criteria & tendering rules & their publication;

3. draft PPP Rules 2012 embodies 7 principles -international standards
4. The use of objective & predetermined criteria for decisions; 5. An effective system of domestic review, including an effective system of appeal; 6. Measures to regulate matters regarding personnel responsible for procurement, where appropriate, corrective action in case of failure of procurement officials to comply with … 7. Measures to mitigate unethical practices from bidders and sanctions for indulging in such behaviour.

4. Public Private Partnership (Preparation, Procurement and Management) Rules 2012 (draft)
has 105 Rules under 12 chapters
It takes a stage-wise process approach
- project preparation, - planning the procurement, -procurement process, - post award contract management and - audit of PPP project

5. Public Private Partnership (Preparation, Procurement and Management) Rules (draft rules – yet to become formal rules)
what is the Act from which PPP rules derive their authority?
made by exercising powers conferred by relevant Section of Public Procurement Act
that itself is in draft stage- yet to be enacted
draft Public Procurement Bill 2012

6. draft Public Procurement Bill 2012
"public procurement" means acquisition of works, goods or services or any combination thereof and
includes all stages of the process of acquisition, by purchase, lease and licence or otherwise, including
award of Public Private Partnership projects.

7. PPP: a project based on a concession agreement which has a term exceeding five years and is awarded by a public entity to a private entity for providing any works, goods or services to the public entity or to specified users or class of users on payment of user charges, annuity or unitary payment, as the case might be, or in lieu of other consideration such as land or other natural resources,

8. Draft Public Procurement Bill 2012 has 7 conditions for PPP
1. arrangement is with a private sector entity (more than 51% of non-governmental ownership) 2. there is use of a public asset or provision of service for public benefit that is traditionally provided by the government 3. Investments are made by and/or management is undertaken by the private sector entity

9. Draft Public Procurement Bill 2012 has 7 conditions for PPP
4. operations/management would be provided by the private sector entity for a specified period 5. private sector entity concerned should share the risk of providing services 6. Payments are linked to performance of partnering private sector entity 7. delivery of services through compliance to pre- determined and measurable standards

10. What is the likelihood of ‘draft public procurement bill 2012’ becoming an Act and PPP (PPM) Rules 2012 becoming reality?
India in May 2011 became signatory to the United Nations Convention against Corruption (UNCAC) formed in December 2005.
Article 9 of UNCAC - each State take necessary steps to establish appropriate system of procurement based on transparency, competition and objective decision making which are effective in preventing corruption.

11. planning the procurement procurement process
Public Private Partnership (Preparation, Procurement and Management) Rules 2012 (draft)
has 105 Rules under 12 chapters
It takes a stage-wise process approach
project preparation
planning the procurement
procurement process
post award contract management
audit of PPP project

12. Chapter I : applicability and definitions
Rule 5 says Contracting Authority (Department, HoD) should carry out the responsibilities in a fair & transparent manner with complete probity.
They should disclose potential conflict of interest if any and have procedures to deal with
They should not include (in the contract) any specifications or conditions which may be likely to favour a particular bidder.

13. Chapter II deals with project preparation
Contracting Authority (CA) has to identify the projects that can be implemented through PPP.
on the basis of socio-economic priority, value for money, suitability in creation of an asset/efficient service delivery (Rule 9).
CA would appoint a Project Officer (PO) - responsible throughout the process –till signing the Concession Agreement.
PO assisted by Project Management Team constituted by CO for this purpose

14. Chapter II deals with project preparation
process involves defining the objectives of the PPP Project, its suitability,
determining the value for money, payment & revenue mechanism, affordability for users,
selection & appointment of legal advisor & transaction (financial) advisors and
conducting a pre-feasibility study of the project (Rule 10). (Format prescribed)

15. Pre-feasibility report includes
preliminary analysis of technical & operational practicalities of the project,
environmental and socio-economic aspects,
preliminary assessment of financial and economic viability
and institutional capability.

16. project can proceed for clearance & registration- after the pre-feasibility report cleared by CA (Rule 12) after it is cleared, the Contracting Authority has to apply for registration of the proposed project with the Public Private Partnership Appraisal Committee (PPAC) Secretariat in Dept of Economic Affairs (DEA) in the prescribed form (Rule 13 & Appendix - 2) and along with documentation of entire process. once registered, it is entered in the database of the PPP Cell &website of the Contracting Agency (Department) for public display CA-PO-PMT can start – PPP Project Preparation

17. PPP Project Preparation
PO to prepare a budget to meet the expense on project preparation and procurement process
prepare a work plan for the preparation phase of project with specific activities and timelines
Contracting Authority (CA) can seek financial assistance for this purpose from IIPD Fund
(India Infrastructure Project Development Fund)
CA can engage consultants and advisors on technical, legal & financial matters

18. Project background: type of infrastructure, location etc
Project officer to conduct feasibility study and due diligence FEASIBILITY ASSESSMENT includes:
Project background: type of infrastructure, location etc
Strategic needs assessment: current & future needs, demand
Service standard: output expected, service gaps
Market assessment: potential market players, their capability & appetite, competition, sources of revenues; demand projections etc
Technical feasibility: technical solution, preliminary technical design of facilities, alternative design options, capital cost and operating & maintenance estimates based on preliminary design

19. Project officer – Project Preparation Feasibility study ……
Financial feasibility: project costs, start-up capital, sources of financing, potential revenues, estimated returns
Environment impact: environmental impact study
Legal framework: licences and/or requirements
Social impact analysis, stakeholder consultation and public interest evaluation
Public sector comparator, value for money analysis and recommendations: comparing the costs and benefits of a PPP Project with publicly financed (same) project

20. Project Officer should also prepare a structure of the PPP Project
Risk assessment: all material risks associated with PPP, what risks proposed to be retained, shared, transferred to private entity
Key commercial principles: payment mechanisms, relief, compensation, force majeure, default events, termination payments etc
Evaluation criteria for selection of the preferred bidder
Implementation plan: persons/entity responsible for implementation, time-lines of stages of completion
Project resource requirement: during and after the project development period

21. Contracting Authority (CA) should examine Feasibility Report and Structure of Report prepared by PO with reference to project affordability Whether users can afford proposed user charges What risks are transferred to private participant Review the project revenue assumptions Whether the tariff revision framework (periodical or by a regulator) is predictable and transparent CA to examine financial commitments – grants, annuity payments, management fee, revenue guarantees (minimum tariff), cash flows, land Contingent Liabilities

22. Public sector comparator (PSC) to conduct value for money analysis
CA should conduct value for money assessment through the tool public sector comparator Systematic comparison of discounted cash flows of the proposed project using the proposed PPP mode (capital cost, borrowing costs, operating, maintenance costs, discounted cash flows) with the - if government sets up the project Sensitivity analysis of financial models under different scenarios with assumed IRR, NPV

24. Table as example from quebec

26. Contract Authority to decide on revenue support mechanism for the concession agreement
Some of them are revenue sharing mechanisms
CA to balance to see private party does not enjoy super normal profits and should not be exposed to high revenue risk
If satisfied, CA can ask Project Officer to prepare draft tender documents (strictly using model tender documents of MoF)
CA should seek approval from PPAC for ‘in principle clearance to proceed’ by sending all the related documents ; also procurement plan

27. Four major “families” of PPP modes are;
Management Contracts, Lease Contracts, Concessions
and Build-Operate-Transfer (BOT) and its variants
Lease Contracts are Build Lease Transfer (BLT) or Build-Own-Lease- Transfer (BOLT) or Build-Transfer-Lease (BTL) or lease.
Build and Operate Contracts (BOT) are Design-Build-Operate (DBO), Build-Operate-Transfer (BOT)/ Design-Build-Finance-Operate-Transfer (DBFOT)
Build-Own-Operate Transfer (BOOT) Contracts are Build-Own-Operate-Transfer (BOOT) or DBOOT, Build-Own-Operate (BOO).
In the roads sector, BOT is a common PPP mode, with revenues for the private operator often being from tolls (BOT Tolls contract) or from a fixed annual/semi-annual payment (BOT Annuity contract).

28. Bidding process is planned in single stage or multistage depending ....
Options
Factors to consider
How well defined is the project?
How well defined are the bidders? How much work will proposals require?
Single-stage: RFP (Request for Proposal)
Project scope is clear
Service options have been well-defined
Number of interested bidders is limited
Potential bidders are known and identified
it is not necessary to identify interested bidders or to reduce their number
Multi-stage option 1:
Project scope is not clear, extensive discussions are needed to finalise the service option
Potential bidders are known and identified, but number of interested bidders is large
RFQ (Request for Quotation) + RFP (with or without RTP- Technical Proposal)
Considerable effort required by bidders to submit proposals
In this case RFQ is useful to reduce number of bidders.
Multi-stage option 2:
Number of interested bidders likely to be limited, but potential bidders not yet well known or identified
EOI + RFP (with or without RTP)
In this case EOI is useful to identify interested bidders.
Multi-stage option 3:
Uncertainty about the level of interest in the project – unknown if interest is limited or large
EOI + RFQ + RFP (with or without RTP)
Potential bidders not yet well known or identified
EOI is useful to identify interested bidders and level of interest; RFQ is useful to reduce the number of bidders

29. Chapter IV of PPP Rules – Procurement Plan
Project officer finalizes ‘procurement plan’ defining each stage of the procurement process
CA should form Tender Evaluation Committee with members also from Finance Ministry
CA to appoint ‘Independent Monitor’ to oversee tender proceedings – representative from ministry of finance, law etc.
Independent monitor should be provided with complete information

30. Chapter VI – Expression of Interest (EOI)
Project scope is not clear, extensive discussions needed to finalise the service option, there is uncertainty about the level of interest
Project Officer prepares Request for Expression of Interest (REOI) with a brief description of the PPP Project, the request for expression of interest and a closing date for seeking clarifications, send to registered applicants.
It would give the date for seeking clarification through a meeting (not less than 1 week from date of notification of REOI), date on which they would receive clarifications and amendments to EOI (not less than another 1 week) and due date of submission of EOI (not less than another 2 weeks).
Process meant to list the interested bidders who prima facie seem to have that capacity, experience and resources

31. Next stage is Request for Qualification (RFQ)
CA seeks registration of interested parties/ short listed from EOI
interested bidders are available but is likely to be limited, but project scope is unclear
some projects can start with RFQ (no EOI)
RFQ should contain (model document to be followed- deviations need PPAC approval)
project structure, description and schedule of the tender proceedings and estimated cost
Conditions of eligibility of applicants

32. RFQ should contain (continued) Criteria for evaluating qualification of applicants, and conditions, if any, for the disqualification Criteria should be objective, equitable, unambiguous, and shall be clearly stated Criteria should cover the experience, track record, ability to delivery, to secure funds and invest, net worth, turnover and support the contractual agreement that of longer period Criteria reviewed by the Independent Monitor

33. RFQ should specify the schedule of pre-application meeting, at least 3 weeks before Due Date. Bidders should receive clarifications, amendments at least 2 weeks to go before due date of submission. Total period should not be less than 6 weeks from floating of tender to date of submission Submitted RFQ applications should be opened in the presence of applicant who choose to attend Evaluated by the Tender Evaluation Committee using the qualifying criteria as specified in RFQ.

34. objective of the RFQ stage is to allow the Contracting Authority to find qualified applicants who are most capable of meeting the project objectives for the next stage, RFP.
In case of exceptionally complex projects, CA may issue Request for Technical Proposal (RTP) as an intermediary stage before proceeding to RFP stage.
to have assurance that Qualified Applicants completely understand its requirements
Otherwise RFP state would include or precede RTP