What PPP means in the Tanzanian context.
A Public-Private Partnership (PPP) is a long-term contractual arrangement between a public authority (government, ministry, agency, or local government), and a private sector entity, for the financing, design, construction, operation, maintenance, or management of public infrastructure or services, with risks shared between the parties.
Common PPP sectors in Tanzania include Roads, bridges, railways, Ports and airports, Energy and power generation, Water and sanitation, Health facilities, Education infrastructure as well as Housing and urban development
Main Features of a PPP.
A PPP is characterized by the following key features:
Contractual Partnerships
PPPs are founded on long term contractual arrangements between the public and private sectors for the implementation of projects that serve the public interest. This partnership framework is designed to ensure the sustainability of large scale projects through the allocation and sharing of risks and responsibilities. In this arrangement, the private sector typically assumes substantial financial, technical, and operational risks throughout the project lifecycle, thereby reducing the financial and operational burden on the public sector.
Performance-Based Payment Contracts
PPPs adopt a results-based approach in which payments to the private sector are directly linked to performance. This mechanism ensures that the private partner delivers infrastructure and services in accordance with agreed standards, timelines, and quality benchmarks. Performance-based payments promote efficiency, encourage innovation, enhance value for money, and shift the focus from input-based delivery to measurable outcomes, while simultaneously limiting the Government’s exposure to inefficiencies.
Payment Mechanism
Under a PPP arrangement, the private sector may be remunerated through payments made by the Government, revenue collected directly from end users of the project, or a combination of both. Government payments may take the form of availability payments, service payments, or viability gap funding, depending on the nature of the project. Where user charges apply, the private partner recovers its investment through tariffs, fees, or tolls charged to users, subject to regulatory oversight. These payment mechanisms are structured to ensure financial viability of the project while safeguarding affordability, public interest, and long-term service delivery.
LEGAL FRAMEWORK GOVERNING PPP IN TANZANIA.
PPP arrangements in Tanzania are governed by the Public Private Partnership Act, Cap. 103 R.E 2023 (the Act), amending the Public Private Partnership (Amendment) Act of 2019. The enactment and progressive amendment of the Act demonstrate the Government’s commitment to fostering a supportive investment environment and encouraging increased private sector participation in strategic national projects. This is achieved, among other measures, through the introduction of incentives for private sector investors, including tax benefits in accordance with the Tanzania Investment Act, Cap. 38 R.E 2023. Overall, the amendments aim to promote effective private sector participation while safeguarding public interest.
Key Features of the Act;
The Act introduces several critical features and applications that shape the implementation of PPP projects in Tanzania, including the following:
Strategic Projects and Special Arrangements
Section 2 of the Act permits the application of special arrangements for strategic projects in Tanzania, subject to approval by the Cabinet. Prior to Cabinet consideration, such PPP agreements must be vetted by the Attorney General to ensure legal compliance and protection of public interest.
Introduction of Special Purpose Vehicles (SPVs)
Section 3 defines the concept of a Special Purpose Vehicle (SPV), as a private company established by a successful private party prior to the execution of a PPP agreement for the sole purpose of implementing the PPP project. The SPV may include other parties, including a public entity, as shareholders, provided that liabilities and financial risk exposure are limited to shareholding.
Mandatory Submission of Concept Notes and Prefeasibility Studies at the Commencement of the Budget Cycle.
Section 4 introduces a new requirement obligating contracting authorities to submit concept notes and prefeasibility studies for potential PPP projects at the beginning of each budget cycle. These studies must align with national development priorities and receive approval from the responsible Minister. Where applicable, the Minister forwards the studies to the PPP Centre for technical analysis, which is subsequently shared with the Public Private Partnership Steering Committee.
Timelines for PPP Centre Review
Section 5 imposes a strict timeline requiring the PPP Centre to analyze prefeasibility studies, proposal documents, bidder evaluation reports, and draft PPP agreements submitted by contracting authorities within thirty working days, thereby enhancing efficiency and predictability in project approval.
Definition of Public Funding
Section 7B defines public funding as Government financial support that constitutes a fiscal commitment or contingent liability in relation to a PPP project, thereby strengthening fiscal discipline and transparency.
Reporting Obligations of Contracting Authorities
Section 9(1)(d) mandates contracting authorities to submit implementation reports reflecting the PPP Centre’s recommendations every three months, reinforcing accountability and project oversight.
Procurement Process and Exemptions
Section 15 of the Act provides about procurement process and grants the Minister the power to exempt solicited projects from the competitive bidding process under specific conditions including cases of urgency, private party’s exclusive rights or intellectual property and lack of reasonable alternatives.
Establishment and Structure of SPVs
Section 18A formally provides for the establishment of SPVs, requiring private parties to incorporate SPVs in accordance with the Companies Act, Cap. 212 RE 2023. The provision allows public entities to hold minority shareholding in the SPV, subject to prescribed conditions on equity contribution and risk-bearing capacity.
Dispute Resolution Mechanism
Section 22 introduces international arbitration and emphasizes amicable dispute resolution through negotiations. Where negotiations fail, disputes may be referred to arbitration under Tanzanian arbitration laws, the International Centre for Settlement of Investment Disputes (ICSID) framework, or applicable bilateral or multilateral investment protection agreements.
Annual Performance Reporting
Section 23A expands reporting requirements by introducing annual performance reports. The PPP Centre is required to consolidate these reports and submit them to the PPP Steering Committee before onward submission to the Minister.
Primacy of the PPP Act
Section 28A affirms the primacy of the PPP Act by providing that, in the event of inconsistency between the Act and other laws relating to PPP development, the provisions of the PPP Act shall prevail.
Tanzania’s PPP framework ultimately reinforces investor confidence by delivering a transparent, efficient, and predictable process that supports sustainable public private collaboration while safeguarding public interest. Other regulations setting the foundation for PPPs are; the Public Private Policy of 2009, Public Private Regulation GN No. 838A of 2023, The Government Loans, Grants and Guarantees Act Cap 134
INSTITUTIONAL FRAMEWORK
PPP framework in Tanzania is implemented through the following key institutions;
- The Public Private Partnership (PPP) steering committee
- The Public Private Partnership (PPP) Centre
- The Contracting Authorities
1. The Publi1c Private Partnership (PPP) Centre
The Public–Private Partnership Centre (the Centre) was established as a “one-stop centre” with the objective of streamlining the promotion, coordination, and oversight of all matters relating to the implementation of PPP programs in Tanzania. The Centre provides strategic guidance to contracting authorities and investors, while performing a central management and oversight role in the implementation of PPP development projects.
The functions of the Centre, as provided under sections 4 and 5 of the Act, may be broadly categorized into the following three areas:
Promotion function
The Centre conducts public awareness initiatives and publicizes available PPP incentives and investment opportunities with the aim of attracting private sector participation in PPP projects.
Project Advisory function
The Centre provides technical assistance to contracting authorities in the preparation, appraisal, and structuring of PPP projects to ensure value for money, affordability, and effective transfer of substantial project risks to the private sector.
Cross project functions
These include capacity building, development of guidelines and standards, and general coordination and communication relating to the national PPP program in Tanzania.
2. Contracting Authority.
A Contracting Authority is a public entity, including a Ministry, Government department, agency, local government authority, or statutory corporation, that enters into a contractual arrangement with a private party for the delivery of public infrastructure or services. Contracting Authorities are responsible for identifying, appraising, managing, and monitoring PPP projects to ensure value for money and protection of public interest.
In particular, Contracting Authorities are mandated to initiate PPP projects, conduct concept note and feasibility studies, manage the competitive procurement process, and execute, administer, and monitor PPP agreements throughout the project lifecycle.
3. The Public Private Partnership Steering Committee.
The PPP Steering Committee serves as the highest approval and policy oversight organ within the PPP institutional framework. It is chaired by the Permanent Secretary of the Ministry responsible for Finance and comprises key Government and private sector stakeholders, including the Permanent Secretary from the Prime Minister’s Office, the Permanent Secretary responsible for Lands, the Deputy Attorney General, representatives of the national planning authority, the Tanzania Investment Centre, the Tanzania Private Sector Foundation, the Tanzania Revenue Authority, and the Ministry responsible for Local Government.
In addition, two members from the private sector are appointed by the Minister upon the recommendation of the Tanzania Private Sector Foundation. The Permanent Secretary of the sector relevant to a particular PPP project participates in the Committee to provide sector-specific technical and policy input.
The functions of the Steering Committee, as provided under section 7A of the Act, include the following:
- To review policies, legislation, plans, and strategies relating to the promotion, facilitation, and development of PPPs and to advise the Minister accordingly;
- To advise the Minister on matters relating to the implementation of the National Public–Private Partnership Program;
- To approve feasibility studies, detailed project reports and designs, selection of preferred bidders, PPP agreements, and any amendments there to;
- To approve the allocation of project development funds from the Facilitation Fund; and
- To assign terms and conditions to contracting authorities for the utilization of funds from the Facilitation Fund.
PPP PROCESS AND CHECKLIST
The implementation of a PPP project in Tanzania generally follows the structured process outlined below, prior to commencement of the project:
a. Project Identification and Feasibility:
The Government identifies public infrastructure or service needs and undertakes preliminary assessments, including technical, financial, economic, environmental, and social feasibility studies, to determine the viability and suitability of the project for implementation through a PPP arrangement.
b. Project Approval and Proposal Submission:
Upon approval of the project, the contracting authority initiates the procurement process and invites private sector entities to submit competitive proposals in accordance with the applicable PPP and procurement laws and regulations.
c. Negotiation and Contracting:
The contracting authority and the selected private party negotiate and finalize the PPP agreement. Key matters addressed at this stage include project financing, allocation of risks and responsibilities, operational obligations, performance and service standards, reporting requirements, payment mechanisms, dispute resolution, and termination provisions.
d. Implementation and Monitoring:
Following contract execution, the private partner undertakes the implementation and operation of the project in accordance with the agreed terms, while the Government exercises oversight to ensure compliance and performance. Upon expiry of the contract term, the project assets may be transferred back to the Government or the arrangement may be extended, subject to renegotiation and approval in accordance with the law.
CONCLUSION
Public Private Partnerships (PPPs) in Tanzania provide an effective mechanism for accelerating infrastructure development and enhancing the delivery of public services by combining private sector efficiency, innovation, and financing with public sector oversight and accountability. Although PPPs present challenges, including complex contractual arrangements, long-term fiscal commitments, and accountability risks, these can be effectively managed through a robust legal and regulatory framework. When properly structured and implemented, PPPs offer significant benefits, including improved service quality, innovation, and risk sharing, making them a valuable tool for achieving sustainable national development.
