Amendment to Public-Private Partnership Regulation

With a view to assist the acceleration of state-procured infrastructure projects (i.e., public-private partnerships), Presidential Regulation No. 13 of 2010 was issued to amend Presidential Regulation No. 67 of 2005 on Cooperation Between the Government and Business Entities in the Procurement of Infrastructure Projects. The regulation dovetails efforts to arrange international financing for infrastructure development projects, suggesting an increase in public-private partnerships to come.

The amended articles are: Articles 4 (1), 10, 13, 14, 20, 23 (1), 24 (2), and the Attachments. Newly introduced by this amendment are: Articles 1 (9), 2 (3&4), 23 (4), and 24 (1a) (1b). Meanwhile, Chapter VIA (Articles 17 A, B & C) has been inserted between Chapters VI and VII.

Previously, only Ministers, Heads of state agencies, and regional authorities were given authority over public-private partnership projects, but if the project will be carried out by state- or regionally-owned enterprises, Article 2 (3&4) of the amended regulation allows them to adopt that authority over the project. That authority cannot be delegated to other groups, however.

A private-sector actor can suggest an infrastructure project to a Minister, Head of a state agency, or regional authority, provided it accords with development planning in the infrastructure sector and does not require fiscal contribution from the government. 

Article 17A of the amended regulation addresses ‘Government Support’ and ‘Government Collateral’. The former refers to fiscal contribution, licensing, land procurement, and tax incentives, while the latter refers to financial compensation distributed - at the Minister of Finance’s discretion - for any sudden events that might jeopardize the project once it is underway.

Crucially, the amended regulation’s Attachments simplify the procedures required for a state-procured infrastructure project to two steps: planning, and implementation.

Within a year of a private-sector entity’s signature of a Cooperation Agreement, Article 24 (1a & 1b) of the amended regulation requires that they have secured any necessary loans, and have used the loan to prepare all necessities for the to begin in a timely fashion. So long as negligence does not play a role in the failure to secure a loan, the business can extend that timeline.

Any Cooperation Agreements signed prior to this regulation will continue to be valid. However, any prospective projects whose procurement procedures are still underway will be bound by the provisions of this regulation.

This regulation has been in force since 28 January 2010.