Stakeholders proffer ways to strengthen PPP structure in Lagos State

Buoyed by the impact of the Office of Public-Private Partnerships in closing the infrastructure gap in Lagos State across different sectors, stakeholders have suggested ways to further strengthen the PPP structure in the state with a view to delivering greater value, impact more people, and improving service delivery efficiency of the PPP Office.

The recommendations of the experts and speakers were contained in various presentations at an interactive session between the Office of PPP (OPPP) and members of the Lagos State House of Assembly House Committee on PPP, held over the weekend in Lagos.

It was suggested that ensuring value for money expended on PPP projects was the responsibility of the OPPP, House Committee, and the private equity investors while calling on all stakeholders in a PPP arrangement to understand the requirements of PPP including project financing from the beginning to the end.

‘‘The major role of the OPPP is to provide a global view of making decisions and quantifying guarantees; ensuring value for money expended on projects is the major responsibility of the OPPP, House Committee, and the private partner. The public sector should avoid over-influencing projects (subsidizing) and focus more on the value that the project will offer. Quantifying the cost of a PPP project cannot be easily estimated from inception; hence it is important for all stakeholders to be fully informed of the demands and dynamics of the project before delving into PPP,’’ they stated.

They also noted that dealing with macroeconomic issues will create a long-term effect on PPP projects, and recommended that risks registered on projects should be strictly considered including the advance determination of which party can best influence or take liability for the consequences of unforeseen risks. ‘‘Once the risks have been identified, there has to be risks mapping; hence risk identification, allocation, and mitigation become necessary,’’ they said.

The stakeholders advocated amendment of the Lagos State Public Private Partnerships Law, 2011, citing certain gaps in the legislation. ‘‘The PPP law should be amended to expand the circumstances where a project may be excluded from the OCB requirement and provide for the ability of private participants to submit unsolicited proposals. The PPP law should clearly define what PPP is, clearly the scope of its law, and provide an exhaustive list of permitted and prohibited sectors where PPP is applicable to give clarity to investors.’’

‘‘It is recommended the law is amended to provide for the nature of support that may be provided by procuring entities and to remove the restriction on the ability to provide guarantees for PPP projects. It is recommended that the law be amended such that the PPP Office may have oversight functions in respect of the implementation of PPP projects within the state,’’ they restated.

The Special Adviser to the Governor on PPP, Mr. Ope George, while welcoming participants said the interactive session was organized to enable the PPP Office and the House Committee on PPP to discuss the mandate of the OPPP with a view to deepening synergy and promoting the cordial relationship.

He added that the session provided an avenue to solicit the continued support of the legislature in the fulfillment of the OPPP’s statutory responsibilities of improving infrastructural development in the state.

Three presentations were facilitated by experts who assessed relevant areas that affect the operation of the OPPP and proffered cutting-edge recommendations that could promote sustainable service delivery.

A Partner at Vista Advisory Services, Mr. Sunloye Adekanye, in his presentation on ‘Financing PPP projects and the role of the state’ said PPP projects were assets built for the government for the use of the citizenry, hence in financing PPP projects, understanding the role of quantifiable guarantees and inherent risk factors was imperative to the sustainability of PPPs.

He emphasized the need to consider important factors such as the value and affordability of projects to the users; how strategic the project is; whether can or should the project be delivered through PPP or traditional procurement; whether should the project be handed over to the government or managed by private operators if it will be cost-effective; as well as the guarantees tied to the risk.

‘‘Therefore, the government must make good decisions when choosing to stand as a guarantor for any PPP project,’’ Adekanye stated.

A Partner in the legal firm of Olaniwun Ayayi LLP, Mrs. Ibi Ogunbiyi, spoke on ‘Salient points in the PPP legal framework in comparison to global best practices, highlighting the differences in the current PPP frameworks in comparison with global best practices.

While acknowledging the efforts made by the Lagos State government to align with global standards, she suggested, however, amendments to the Lagos State PPP Law, 2011 to improve service delivery.

Mrs. Ogunbiyi noted that since the government’s role was both statutory and contractual, it should not be surprising that the state treasury cannot fund infrastructure effectively and efficiently without affecting its administrative functions, thus stating that there was a need to harness the PPP approach.

Another speaker and a Partner in the law firm of Olajide Oyewole LLP, Ms. Solape Peters, in her presentation, ‘A synopsis of the PPP law, the challenges, and recommendations for reform’, reiterated that financial guarantee has remained a problem over the years with PPP projects in Lagos State resulting in the death of many proposals.

She identified some challenges with the PPP law, stating that the existing law set a blanket on financial guarantees which many times limits the applicants while urging the state government to be fair in its dealings with private partners.

Ms. Peters added that the long waiting time to get the state House of Assembly’s ratification on the concessions agreement before implementation should be improved, even as she called for the review of the provision of the law that gave the power to vary or adjust service charges, user fees, and tolls among others.