Question

For a country considering encouraging private sector involvement in the finance of its infrastructure prouname one benfit of having a legal framework for ppp in that country for each of the following stackholders:

1frkm the side of investor

2the side of ppp management unit in government

3From the side of the banks lending money to spv

Answer 1

1 The side of investor :

The PPP legal framework refers to all laws and regulations that govern the PPP project cycle. Governments embarking on PPPs may need to adapt the existing legal framework to ensure—at minimum—that contracts for the delivery of public services by a private entity can be entered into. In some cases, changes may be necessary to introduce PPP-specific processes and responsibilities. Some governments do so by adapting existing laws; others introduce specific legislation.

The legal framework for PPP depends on the legal tradition in the country—common law and civil law are the two main types. In civil law systems, the operations of government are codified through administrative law. This code, combined with other legislation, such as the civil code and the commercial and public contract codes, establishes legal rights and processes that apply to PPP contracts. Common law systems are less prescriptive, with fewer provisions governing contracts in general. As a result, contracts in common law countries tend to be longer than in civil law countries; the terms governing the relationship between the parties tend be specified in greater detail to avoid ambiguities that may not be easily resolved by reference to specific jurisprudence.

This section briefly describes and provides examples of PPP legal frameworks: Scope of the PPP Legal Framework describes the broad scope of legislation that may affect PPPs and PPP Laws focuses on PPP-specific legislation. The following resources provide overview guidance on assessing and developing the legal and regulatory framework for PPPs:

• Jeff Delmon and Victoria Delmon's Legal Guide (Delmon and Delmon 2012) reviews key legal issues in 17 countries.
• The World Bank’s PPP Infrastructure Resource Center (PPPIRC) presents the key features of common and civil law systems and their impacts on PPP arrangements. It has useful online tools for assessing the legal environment for PPPs in various countries (PPPIRC, Legislative Frameworks).
• Annex 2 of the EPEC Guide to Guidance (EPEC 2011b) has an overview of legal and regulatory requirements for PPPs in countries with different legal traditions.
• The World Bank Benchmarking PPP Procurement 2017 (WB 2016b) presents the procurement framework in 82 economies and evaluates them against internationally recognized good practices.
• Farquharson et al (Farquharson et al. 2011, 16–21) sets out key questions that investors and lenders are likely to ask about the legal and regulatory framework, and some principles on developing effective frameworks.
• The PPIAF’s online PPP Toolkit for Roads and Highways (WB 2009a, Module 4) includes a section on legislative framework that describes the types of enabling law for PPPs. It includes other laws that typically impact PPP projects in highway infrastructure.

2 The side of ppp management unit in government :

• PPP framework should guide governments and private partners through each step in developing a PPP, ensuring that projects are well structured and delivered in line with expectations. The PPP framework will achieve this by outlining procedures and decision rules for various institutions, and by ensuring effective public financial management and oversight.
• A PPP framework should articulate its objectives. These make explicit what the government wants the PPP framework to achieve. They also provide a basis for subsequent evaluation of the framework.
• A good framework will also set out its scope, that is, the types of projects to which it applies. The framework may be most effective for certain kinds of projects within certain sectors. For example, it may not be sensible to have PPPs of a low value follow the same rigorous procedures as those that apply to high value PPPs.
• The PPP framework will need to be developed taking into account the legislative and administrative contexts. The PPP framework will often be embodied in PPP specific policy documents or legislation.
• Procedures: What things need to be done, by whom, in what order, to allow the right decision to be made and the right actions to be taken? For example, the Appraisal Phase could set out how a specified agency in government will gather and process information to assess whether the project would be best done as a PPP.
• Decision criteria: How will decisions be made at each step? Again, at the Appraisal Phase, one criterion should be “whether the public interest will be better served by doing this as a PPP or as a conventional public sector project”.
• Institutional responsibilities: Which entities are responsible for which tasks and objectives? For example, a specialist PPP unit may be responsible for assessing whether a project is best done as a PPP or not; the cabinet may be responsible for making a decision at to whether a project should proceed as a PPP; the ministry of finance may have a responsibility to advise on fiscal commitments made to a PPP project.

3 From the side of the banks lending money to spv :

• The World Bank Group is committed to helping governments make informed decisions about improving access and quality of infrastructure services, including, where appropriate using Public-Private Partnerships (PPPs) as one delivery option. This approach is further enabled by working on: strengthening data, building capacity, developing and testing tools, promoting disclosure and encouraging engagement with all relevant stakeholders.  
• The tools presented here showcase the World Bank Group's efforts in enabling better decisions around PPPs and empowering better decision making. In some cases, PPPs are the answer, while in other situations, they may not be the right approach to deliver infrastructure services. These tools enable stakeholders to get one step closer to making an informed decision.