The Sindh Public-Private Partnership Act, 2010

An Act to create an enabling environment for private sector participation in infrastructure development projects in the province of Sindh through public-private partnership projects.

Preamble.- Whereas it is expedient to expand the provision of infrastructure services and improve their reliability and quality for accelerating economic growth and achieving the social objectives of the Government; to mobilize private sector resources for financing, construction, maintenance and operation of infrastructure projects; to improve efficiency of management, operation and maintenance of infrastructure and development facilities by introduction of modern technologies and management techniques; to incorporate principles of fairness, competition and transparency in public-private partnership projects; and to provide for the matters ancillary there to,

It is hereby enacted as follows:

CHAPTER I
PRELIMINARY

1. Short title, extent and commencement.
(1) This Act may be called the Sindh Public-Private Partnership Act, 2010.

(2) It extends to the whole of the Province of Sindh.

(3) It shall come into force at once.

2. Definitions.
In this Act unless there is anything repugnant in the subject or context-a) “Act” means the Sindh Public-Private Partnership Act, 2010; b) “Agency” means a department, attached department, body corporate, autonomous body of the Government, local government, or any organization or corporation owned or controlled by the Government or local government ¹[but does not include Unit;]¹ c) “Bid” means a bid tendered by a person who is eligible under this Act to submit a proposal to undertake a project; d) “Board” means the Public-Private Partnership Policy Board established under section 4; e) “Change of control” means and includes any assignment, sale, financing, grant of security interest, transfer of interest or other transaction of any type or description, including by or through voting securities, asset transfer, contract, merger, acquisition, succession, dissolution, liquidation or otherwise, that results directly or indirectly in a change in possession of the power to direct or control, or cause the direction or control of the management of the affected company or a significant aspect of its business; f) “Concession” means grant of a right of a public asset by an agency through the approval of Government in return for stipulated services or a promise that the right will be used for a specific purpose in the form of Build Operate Transfer (BOT), Design Build Finance Operate (DBFO) and any other variant of PPP ²[in terms of the Public-Private Partnership Agreement;]² g) “Consortium” means ³[a joint venture of private parties or majority controlled by private parties formed for the purpose of entering into a Public-Private Partnership Agreement directly or through a registered company formed therefor;]³ h) "Construction" includes, reconstruction, rehabilitation, renovation, improvement, expansion, addition, alteration and related activities; i) “Conflict of interest” means a situation where any member of the Board receives or gives any financial or other remuneration in connection with the assigned position other than as authorized by the Board; (2) engages in any consulting or other activities that conflict with the interests of the Agency or the Board; or (3) has a direct or indirect financial interest in the outcome of any proposal before the Board; j) “Departmental Public-Private Partnership Node” means the cell established within an Agency ⁴[in accordance with section 7;]⁴ k) “Director General” means the head of the Public-Private Partnership Unit appointed by the Chief Secretary with the approval of the Chief Minister; l) "Government" means the Government of Sindh; m) “Infrastructure” includes facilities and services in one of the sectors listed in Schedule I; n) "Investment" includes development and pre-operative capital expenditures made or incurred on services, land, construction and equipment; o) “Lender" means ⁵[and includes]⁵ a financial institution, bank, or establishment providing financial support with or without security; p) “Local government" means a local government as defined in the Sindh Local Government Ordinance, 2001 (XXVII of 2001); q) "Person" means a company, entity, firm, association, ⁶[individual]⁶ , body of individuals, or a sole proprietor other than an Agency ⁷[and the Unit;]⁷ r) "Prescribed" means prescribed by rules or regulations made under this Act; s) “Private party” means a person who enters into a Public-Private Partnership Agreement with an Agency and includes foreign government or an entity owned or controlled by it or its company incorporated under the laws of Pakistan. t) “Project” means a project implemented as a Public-Private Partnership in one of the infrastructure sectors listed in Schedule I; u) “Project Development Facility” means a pool of funds including contributions from donor international agencies, which are available to pay for consulting services required for the preparation and execution of Public- Private Partnership Projects; u-i) ⁸[“Project Support Facility” means a non-profit company called as the Public-Private Partnership Support Facility established by Government under section 42 of the Companies Act, 2017 (Act XIX of 2017), for the purposes enumerated in its Memorandum of Association;]⁸ v) “Province” means the province of Sindh in Pakistan. w) “Public-Private Partnership” means a partnership carried out under a Public- Private Partnership Agreement between the public sector represented by an Agency and a private party for the provision of an infrastructure facility, management functions and / or service with a clear allocation of risks between the two parties; x) “Public Private Partnerships Agreements” mean ⁹[all agreements in writing between Government including the Agency and private parties for the purpose of Public-Private Partnership;]⁹ y) ”Public property” means any movable or immovable assets or rights which are in the public domain pursuant to law or contract; z) "Risk" means any event or circumstance affecting the project which can adversely affect performance and costs of any of the contractual obligations related thereto including ¹⁰[feasibility]¹⁰, design, construction, financing, operation and/or maintenance; z-i) ¹¹["Service” means any of the professional activities concerning imparting of public benefits in publicly owned institution or facility or the objective ancillary thereof;]¹¹ aa) “Sindh Public Procurement Rules” means the Sindh Public Procurement Rules, as may be framed by the Government from time to time; bb) “Viability Gap Fund” means the funds ¹²[or any other assets]¹² from the Government which are made available to the private party ¹³[to support the Project including funds for covering revenue shortfalls through grants, subsidies, guarantees, or any other mode approved by the Board under section 22;]¹³ cc) “Unit” means the Public-Private Partnership Unit established under section 6; dd) "User fee" means a levy, unitary charge, annuity, shadow toll or fee whether paid by the Government or the public, which may be charged by a private party under a Public-Private Partnership Agreement.

3. Private sector participation.
(1) Notwithstanding anything to the contrary in the laws in force, the Government, its Agencies and local governments will be authorized to seek participation from the private sector in appropriate projects subject to the provisions of this Act.

(2) Subject to the provisions of this Act and the procedures outlined in Chapters III and IV hereto, the Government and its Agencies shall be fully empowered to enter into agreements and arrangements with private parties under mutually agreed terms and conditions in one or several project planning and management functions such as designing, financing, building, constructing, owning, operating and maintaining different infrastructure projects.

(3) The Government ¹⁴[or Agency with the approval of the Board]¹⁴ may enter into a Public-Private Partnership Agreement to vest public property in private parties for development and other appropriate purposes. The Government may transfer title in Public Properties to private parties on appropriate terms and conditions as the Government may deem fit.

(4) The Government shall be competent to pay any fees for services performed by private parties under duly authorized Public-Private Partnership Agreements including but not restricted to user fees, subsidies, revenue shortfall guarantees and may appropriate monies for such purposes.

CHAPTER II
ORGANIZATIONAL FRAMEWORK

4. Policy Board.
(1) There shall be a Public-Private Partnership Policy Board in the Province to formulate Public-Private Partnership policy based on strategic goals and ensure its implementation in the Province.

(2) The Board shall consist of – i. Chief Minister Chairman ii. Minister or, as the case may be, Advisor for Finance Vice-Chairman ii-a. Minister or, as the case may be, Advisor for Law Member ii-b. Minister or, as the case may be, Advisor for Planning & Development Member iii. Chief Secretary Member iv. Minister or, as the case may be, Advisor of the concerned Department Co-opted Member v. Two Members of the Provincial Assembly of Sindh to be nominated by the Chief Minister Members vi. Chairman/Chairperson, Planning & Development Board, Planning & Development Department or Additional Chief Secretary, as the case may be Member vi-a. Senior Member, Board of Revenue, Sindh Member vii. Secretary Finance Member/Secretary vii-a. Secretary Law Member viii. Secretary of the concerned Department Co-opted Member ix. Director General Public-Private Partnership Unit Member x. Three members from the private sector to be nominated by the Chief Minister Members xi. Sectoral Specialist to be nominated by the Chief Minister Member xii. ¹⁵[Chief Executive Officer of Project Support Facility Member]¹⁵ xiii. Any other official of the Government department or entity owned or controlled by Government if nominated by the Chief Minister as co-opted member Co-opted Member

(3) The Board shall frame and approve Public-Private Partnership policies and accord final approval to all the projects selected for implementation under the Public- Private Partnership modality. ¹⁶[The]¹⁶ Board, however, shall not entertain a local government project without the consent of the concerned authority.

(4) The members other than ex-officio members shall be appointed for a period of three years and shall be eligible for reappointment. Each such member shall be appointed after careful consideration of actual or potential conflicts of interest. The Chief Minister may, in case it is found that a Member has any conflict of interest or he appears to have misused his position as member or is guilty of misconduct, remove him and appoint another member.

(5) The meetings of the Board shall be presided over by the Chairman and in his absence by the Vice-Chairman.

(6) The decisions of the Board shall be taken by the majority of its members present. In case of a tie, the presiding member shall cast the deciding vote. ¹⁷[The Board may also pass resolution by circulation to all members and is approved by a majority of members of the Board;]¹⁷

(7) All orders, determinations, and decisions of the Board shall be rendered in writing and signed by the Director General or any of the Directors ¹⁸[of the Unit]¹⁸ on his behalf subject to approval of Chairman or Vice Chairman, as the case may be.

5. Functions of the Board.
(1) ¹⁹[Without prejudice to the functions and powers assigned to the Board under any of the provisions of this Act, the Board]¹⁹ shall:-

I. ²⁰[formulate a Public-Private Partnership policy, and rules for the Government;]²⁰

II. supervise and coordinate implementation of the Public Private Partnership policy by the Agencies;

III. approve, reject or send back for reconsideration the project proposal submitted by an Agency within six(6) months;

IV. decide on any direct or contingent support for a project proposal submitted by an Agency;

V. approve, reject or send back for reconsideration the recommendation submitted by an Agency for the contract award to a private party;

VI. issue risk management guidelines, to assess that the government support for projects is included in the annual budget of the Province and that such support is fiscally sustainable, and establish procedures to implement such guidelines consistent with this Act;

VII. assist the Agencies in solving major problems impeding project preparation and implementation; VIII. approve funding for projects receiving support through the Project Development Facility;

IX. be the final deciding authority for all the projects; and

X. take all other steps necessary to give effect to the provisions of this Act.

(2) The Board shall frame and publish a clear and comprehensive Public- Private Partnership policy outlining criteria for selection of projects and giving general principles for selection of private parties. The policy shall work as the basis for allowing private sector participation in projects.

(3) Notwithstanding anything contrary contained in the Act and any other law, for the time being in force, the Board may, if it deems appropriate, evaluate and approve an arrangement or restructuring proposal as a result of negotiation between the parties in relation to a Public-Private Partnership project, to address or provide remedial measures for a situation or an eventuality that was not envisaged or contemplated at the time of preparation or signing of Public-Private Partnership Agreement and may, if the Board deems appropriate, approve a proposal for innovation in any ongoing Public-Private Partnership project that adds value to and is in the interest of such project.

6. Public-Private Partnership Unit.
(1) ²¹[Government shall, by notification, establish the Unit in the Finance Department to promote and facilitate the development of Public-Private Partnership projects in the Province, assist an Agency in preparing and executing such projects, and act as a catalyst for Public- Private Partnerships. In the performance of its functions, the Unit may consult the Project Support Facility from time to time;]²¹

(2) To achieve the objectives in subsection (1), the Unit shall:

I. assist the Board in formulating, implementing the Public Private Partnership Policy and provide technical support to the Board and act as its secretariat;

²²[I-A employ such persons, as it deems necessary for the performance of functions and duties assigned to it under this Act, which shall be governed by the human resource policy and guidelines notified by the Finance Department, Government of Sindh, from time to time;]²²

II. develop operating guidelines, procedures and model documents for projects for approval by the Board;

III. develop technical and human resources to support Public-Private Partnership initiatives at the Agencies;

IV. provide technical support and ²³[assistance]²³ to the Agencies throughout the Public-Private Partnership process;

V. evaluate and prioritize project proposals submitted by the Agencies;

V-A ²⁴[submit all project proposals for consideration to Project Support Facility for the purpose of approval of funding if deemed appropriate by the Project Support Facility;]²⁴

VI. evaluate the type and amount of government support sought for a project;

VII. review the bid evaluation report submitted by an Agency;

VIII. prepare and regularly update a pipeline of projects; IX. ²⁵[prepare semi-annual review, annual consolidated reports and project completion reports on the Public-Private Partnerships in the province and submit the same to the Board;]²⁵ and

X. perform any other functions and duties which may be assigned to it by the Board.

(3) The Unit may procure for consideration or for free, technical and professional assistance and advice which it deems necessary from other governmental authorities, multilateral agencies, professional bodies and private firms. The Unit may also provide technical ²⁶[support and]²⁶ assistance and advisory services to the persons and entities in the Province and elsewhere for consideration or for free, as it deems appropriate.

(4) PPP Unit, however, may ²⁷[assist]²⁷ project structure activities mentioned at section 7 (2), either on the request of an agency or if the PPP policy Board assign this task to PPP Unit.

7. Departmental Public-Private Partnership Nodes.
(1) The administrative head of each Agency which seeks to implement a project on a Public-Private Partnership basis, shall form a Public-Private Partnership Node with the approval of concerned Minister consisting of officers from within the Agency or other Agencies as the case may be, which may include representative from the Finance Department, and independent technical and legal experts if deemed appropriate to develop the project.

(2) The Public-Private Partnership Node shall:

I. identify suitable projects and prioritize these within its sector or geographical area of responsibility;

II. ²⁸[procure the services of transaction advisors for project preparation and tendering, unless exceptional reasons exist for not doing so as recorded in writing, and recommend to the Board to enter into agreements for such services;]²⁸

III. supervise the preparation of the feasibility study and if its outcome is positive, submit the project proposal through the Unit to the Board;

IV. conduct a competitive tendering process in accordance with the Sindh Public Procurement Act, 2009 and the Rules made thereunder to select the private party;] V. carry out bid evaluation and submit recommendation on contract award to the Board;

VI. negotiate and sign the Public-Private Partnership Agreement;

VII. monitor and evaluate implementation and operation of the project;

VIII. ²⁹[Omitted;]²⁹ and IX. prepare periodic progress reports on the Agency’s projects to be submitted to the PPP Policy Board through Unit.

(3) ³⁰[The Public-Private Partnership Node may, if deemed appropriate, seek guidance from the Unit for the performance of any of its functions, provided however, the ultimate responsibility shall vest with the Public-Private Partnership Node;]³⁰

8. Project Implementation Unit.
(1) For each Concession ³¹[awarded under this Act]³¹, there shall be a Project Implementation Unit, to oversee day to day implementation, particularly during the construction period, of the project in terms of the Public-Private Partnership Agreement and the laws in force.

(2) The Project Implementation Unit ³²[shall]³² be established, at the discretion of the administrative head of the Agency consisting of its officers. The administrative head may appoint outside officers, professionals and consultants to serve on the Project Implementation Unit if so required.

(3) The Project Implementation Unit shall also liaise between the Government departments or bodies or institutions and the [private company] for effective project implementation.

(4) The Departmental Public-Private Partnership Node shall be responsible to the administrative head of the Agency and shall provide it and the Unit with periodic progress reports.

CHAPTER III
PROJECT DELIVERY PROCESS

9. Public-Private Partnership arrangements.
Subject to obtaining all required approvals and completing the necessary due diligence and appraisal of the project and the prospective private party, ³³[such]³³ Agency may -

I. enter into a Public-Private Partnership Agreement with the private party, through its administrative secretary or officer with equivalent rank and status, for the performance of any of the various tasks related to design, construction, operation and maintenance of infrastructure facilities;

II. arrange or provide for a payment to the private party in accordance with the terms and conditions of the Public-Private Partnership Agreement;

III. enter into an agreement with any entity for funding or guaranteeing a Public-Private Partnership project;

IV. transfer, through the Administrative Secretary, an interest in a Public- Private Partnership project to a private party or subject to the approval of the Government, to a nominee of the private party by transfer, assignment, conveyance, lease, license or otherwise; V. enter into an arrangement with any other Agency, the Government Department or a body, board or entity owned or controlled by the Government for a Public-Private Partnership project; and

VI. subject to the Public-Private Partnership Agreement, assume or transfer an interest in a private party or a nominee of the private party by transfer, assignment, conveyance, sale, grant or surrender.

10. Project identification and preparation.
(1) An Agency shall identify and prepare a project, and shall complete this phase before tendering.

(2) The Agency shall identify and conceptualize potential projects from its master plans and other planning documents.

(3) The preparation of the projects shall consist of a feasibility study, initial environmental examination, environmental impact assessment in line with Industry international best practices if required, risk analysis, analysis of the need for Government support, stakeholder consultations, determination of the appropriate Public-Private Partnership modality, and preparation of bidding documents including a draft Public-Private Partnership Agreement.

(4) The Agency shall prioritize the projects within its sector and, or geographical area using criteria such as supply and demand gaps, social and economic benefits, financial attractiveness, risks and uncertainties involved, and readiness for implementation.

(5) The Agency shall submit each viable project proposal through the Unit to the ³⁴[Project Support Facility.]³⁴.

(6) ³⁵[If the Project Support Facility approves the project for financial support, the Agency shall submit such project proposal through the Unit to the Board for approval.

(7) If the Project Support Facility refuses to provide financial support to any project, the Project Support Facility shall provide its reasons for such refusal to the Agency. The Agency may submit such project proposal through the Unit to the Board to seek financial support from Viability Gap Fund. The Agency shall also set out the reasons for refusal by Project Support Facility and submit the basis for seeking support from Viability Gap Fund;

Provided that no such project shall be submitted to the Board under this sub-section after December 31, 2021.]³⁵

11. Project prioritization and approval.
(1) The Unit shall exercise quality control by reviewing the viability of the project proposals and completeness in terms of documentation.

(2) ³⁶[The Unit shall prioritize the projects and submit, on behalf of Agency, such projects to Project Support Facility and the Board for approval.]³⁶

(3) The Unit shall include approved projects in a priority list of the Province and widely publicize them.

12. Approval of government support.
(1) Requests for government support described in Section 15 shall be an integral part of the project proposals submitted by the Agencies.

(2) The Unit shall review and analyze all requests for government support with budgetary implications and shall evaluate the justification and eligibility for such support and the fiscal impact of the related direct and contingent liabilities.

(3) Based on this review and analysis, the Unit shall make a recommendation to the Board for approval, rejection or reconsideration of the requested support.

(4) After approval of the Board, the Unit shall make necessary arrangements for including such support in the budget of the Province.

13. Selection of the private party.
(1) After the approval of the project proposal by the Board, the Agency shall select the private party for the project through open competitive bidding.

(2) The Agency shall not enter into direct negotiations with any person without open competitive bidding. Clarifications may take place during the bid evaluation process subject to principles of integrity, transparency and equal opportunity.

14. Change of control and transfer restrictions.
(1) If a Consortium is the pre-qualified person, it shall notify the Agency of all changes in the shareholding of the Consortium prior to contract award. Such changes may be approved by the Agency, provided they are carried out in conformity with the terms and conditions of the bidding and do not jeopardize the Consortium’s pre-qualification;

(2) If the consortium fails to comply with requirement of subsection 14(1), the consortium shall be disqualified

(3) After the contract award, the members of the Consortium may, with the prior approval of the Government and subject to conditions set forth in the Public-Private Partnership Agreement, voluntarily or involuntarily cause, permit or undergo any change of control; or transfer their interests in the private party to third parties, provided they are able to be replaced by an entity or entities at least as legally, technically and financially qualified to meet their project obligations.

15. Government support.
(1) Government support approved by the Board for a project may include any of the following:

I. Administrative support to the private party consistent with the private party’s responsibilities under the Public-Private Partnership Agreement in obtaining licenses and clearances from the Government departments or bodies or institutions, a public sector organization or an Agency, for the purposes of the project on such terms and conditions as may be prescribed; provision of utility connections for power, gas and water at project site; acquisition of land or rights of way necessary for the project; rehabilitation and resettlement of displaced persons directly required to execute the project; and any other administrative responsibility; II. Asset-based support such as leasing ³⁷[, licensing or grant of right to use]³⁷ land and / or infrastructure facilities owned by the Government or an Agency to the private party. The need for this type of support shall be determined on a case-by-case basis;

III. [Financial assistance through the Viability Gap Fund for the projects, which have not been approved by the Project Support Facility, shall be offered only for the projects which are economically and socially important but may not be viable financially if constrained by factors including, but not limited to, the affordable user fees, initial capital requirements and revenue needed to generate a fair return on investment for the Public-Private Partnership projects. Unless exemption is granted under section 19-A, the amount of such support shall be determined on the basis of bidding;

Provided that no support from Viability Gap Fund shall be provided to any new projects after December 31, 2021;]

IV. Government guarantees for political risks under the Government’s control such as changes in the Public-Private Partnership policy, delay of agreed user fee adjustments, early termination of the Public-Private Partnership Agreement with no fault of the private party, and expropriation; this type of support shall be made available for all projects; and

V. Government guarantees for other risks such as force majeure, demand risk, and default by an Agency on payments for works and services delivered by the private party (off-take risk); the need for this type of support shall be determined on a case-by-case basis as part of the risk sharing analysis undertaken during project preparation.

(2) All of the government support for the project shall be clearly indicated in the bidding documents and included in the Public-Private Partnership Agreement.

16. Preparation and negotiation of Public-Private Partnership Agreement.
(1) The draft Public-Private Partnership Agreement shall form a part of bidding documents.

(2) The draft Public-Private Partnership Agreement shall clearly define the legal relationship between the Agency and the selected private party, as well as their respective rights and responsibilities, including the specific government support for the project.

(3) The draft Public-Private Partnership Agreement shall include but not limited to the following provisions, as applicable:

I. Type of project;

II. Term of the Public-Private Partnership Agreement;

III. Scope of work and services to be provided under the project;

IV. Main technical specifications and performance standards;

V. Environmental and safety requirements; VI. Implementation milestones and completion date of the project;

VII. Cost recovery scheme through user fees, including a mechanism for periodical adjustment;

VIII. Performance bonds for construction works and operation;

IX. Minimum insurance coverage;

X. Acceptance tests and procedures;

XI. Rights and obligations of the parties to the Public-Private Partnership Agreement, including risk sharing;

XII. Penalties and liquidated damages provisions for delays;

XIII. Type and amount of Government support;

XIV. Hand back requirements at the end of the term of the Public-Private Partnership Agreement, if any;

XV. Warranty period and procedures after the hand back;

XVI. Requirements and procedure for variations of the Public-Private Partnership Agreement;

XVII. Grounds for and effects of termination of the Public-Private Partnership Agreement, including force majeure;

XVIII. Compensation formula for early termination scenarios;

XIX. Procedures and venue for dispute resolution;

XX. Financial reporting by the private party; and

XXI. Supervision mechanism of the Agency.

XXII. Negotiation to address a situation or an eventuality that was not envisaged or contemplated at the time of preparation or signing of Public-Private Partnership Agreement subject to approval of the Board. XXIII. Innovation to add value to and in the interest of a Public-Private Partnership project subject to approval of the Board.

(4) The Agency shall not enter into a Public-Private Partnership Agreement unless the procedure specified in this Act has been followed.

(5) Contract negotiations for the conclusion of a Public-Private Partnership Agreement shall be completed between the Agency and the private party within six months after the contract award.

17. Project implementation and operation.
(1) Before signing the Public-Private Partnership Agreement with the Agency, the private party may establish, without changing its shareholding and subject to conditions set forth in the bidding documents, a special purpose company for implementation of the project, which shall assume all the rights and obligations of the private party.

(2) For major construction works, the private party shall prepare a detailed engineering design and implementation plan in accordance with the main technical specifications prescribed in the Public-Private Partnership Agreement and submit it to the Agency for approval prior to the start of construction.

(3) The private party shall carry out the construction for the project in accordance with the performance standards and specifications prescribed in the approved engineering design.

(4) To guarantee its performance in the construction works, the private party shall post a bond or furnish a bank guarantee, which shall be valid up to the end of the warranty period under the construction contract and acceptance by the Agency; for projects, which include operation by the private party, the private party shall post or furnish another performance bond or bank guarantee upon the acceptance of the completed works to guarantee compliance with the operating parameters and standards specified in the Public-Private Partnership Agreement.

(5) Within twelve months of the signing of the Public-Private Partnership Agreement, the private party shall achieve financial close for the project or as the case may be in the ³⁸[Public-Private Partnership]³⁸ Agreement, defined as a legally binding commitment of equity holders and lenders to provide funding for the entire investment. Any delay in reaching financial close beyond such period shall be reported by the Agency to the Board, with an explanation for the delay so that the Board can determine if the project is capable of being financed under the proposed Public-Private Partnership modality or whether other alternatives including traditional procurement should be considered.

CHAPTER IV
PROCUREMENT

18. Public procurement laws to apply.
(1) The procurement process shall be governed under Sindh Public Procurement Rules framed from time to time by the Government.

(2) The Agency shall ensure that the Sindh Public Procurement Rules have been followed in letter and spirit from the pre-qualification stage through bidding and contract signing. In all instances, the procedures shall be transparent with full disclosure of the procedures and results of the pre-qualification and bidding.

(3) In view of the special characteristics of procurement for Public-Private Partnership projects, the Board shall periodically review, with assistance of the Unit, the Procurement Rules which apply to Public-Private Partnerships, and seek any changes which are needed for successful operation of the Public-Private Partnership program.

(4) ³⁹[Omitted]³⁹

19. Award through open bidding.
Public competitive bidding shall be applied for the award of all Public-Private Partnership projects strictly in accordance with the provisions of the Act.

19-A. Power to exempt.
(1) Notwithstanding anything contrary contained in the Act and any other law, for the time being in force, Government may, on the request of the Agency and after recommendations of the Board, exempt the private party if it is a foreign government or an entity owned or controlled by a foreign government or its company incorporated under the laws of Pakistan, from the requirement of competitive bidding under the Act and from the operations of the Sindh Public Procurement Act, 2009 and/or any other law regulating public procurement and rules and regulations made thereunder, for the time being in force:

Provided that the exemption under this sub-section may be granted by Government if it is satisfied with the justifications of the Agency and recommendations of the Board for such exemption and the project has positive value for money, as determined by the consultant hired by the Agency.

(2) The benefits or support available to Public-Private Partnership projects under the Act, including but not limited to support from Viability Gap Fund or Project Support Facility, as the case may be, shall also be available to the project exempted under sub-section (1).

20. Unsolicited proposals.
⁴⁰[A person may propose a project to an Agency on its own initiative by submitting a project proposal, and will be subject to the procurement procedures as may be prescribed under Sindh Public Procurement Act, 2009 and any rules or regulations framed thereunder from time to time.]⁴⁰.

CHAPTER V
FINANCE

21. Financing.
⁴¹[(1) Financing of a Public-Private Partnership project may be in such amounts and upon such terms and conditions as may be determined by the parties to the Public-Private Partnership Agreement. Without limiting the generality of the foregoing, the private party or the responsible Agency may utilize any financial resources which may be available to them, including but not limited to:-

I. proceeds of debt including finance facilities, equity, or other securities or obligations;

II. funds raised by grant of leases or concessions;

III. any designated funds;

IV. grants from any source; and

V. voluntary contributions, whether financial or non-financial by a private party, including but not limited to, charity, philanthropic funds, gifts and legacy;

(2) The private party or the responsible Agency, as the case may be, may secure any financing with a pledge or assignment of, security interest in, or lien on, any or all of its property, including all of its property interests in the facility;

(3) Government or and Agency may enter in to an agreement with senior secured lenders of the private party pursuant to which, in the event of default of the private party, they or their duly appointed representative will have the right, but not the obligation, to step in and replace the private party or any of its contractors to cure the default and avoid termination of the Public-Private Partnership Agreement. Such agreement will be negotiated and signed at or before financial close;

(4) Government shall ensure that adequate resources are allocated including budgetary support and contingent liability funding in order to discharge all obligations undertaken by the Government or any Agency in respect of a Project.]⁴¹

22. Viability Gap Fund.
(1) The Government may establish a Viability Gap Fund to support Public-Private Partnership projects and finance the gap between project revenues constrained by affordability considerations and revenues needed to generate a fair return on investment for the Public-Private Partnership projects:

⁴²[Provided that support from Viability Gap Fund shall only be provided to such projects, which have not been approved by Project Support Facility for its financial support.

Provided further that no support from Viability Gap Fund shall be provided to any new projects after December 31, 2021.

(2) The Viability Gap Fund shall cease to exist on or after January 1, 2022, if so notified by the Government, in which case, all assets, liabilities, rights and obligations thereof shall stand transferred to Project Support Facility, without the need for any further action, deed or thing.]⁴²

22-A. Project Support Facility.
⁴³[(1) The Project Support Facility, as part of its objects, shall support Public-Private Partnership projects and finance the gap between the project revenues constrained by the factors including, but not limited to, affordability considerations, initial capital requirements and revenue needed to generate a fair return on investment for the Public-Private Partnership projects:

Provided, however, the financial support for any Public-Private Partnership shall be with the discretion of the Project Support Facility;

(2) With effect from the date notified by Government pursuant to section 22(2), all assets, liabilities, rights and obligations of the Viability Gap Fund shall stand transferred to Project Support Facility, without need for any further action, deed or thing;

(3) The Project Support Facility shall not provide any financial support to any project other than Public-Private Partnership projects under this Act nor its assets or funds shall be utilized for any purpose except as provided in sub-section (1);

(4) Government shall ensure that adequate resources are allocated and disbursed to Project Support Facility to meet the annual obligations undertaken by the Project Support Facility in respect of projects being supported by Project Support Facility;

(5) All of the Project Support Facility support for the project shall be clearly indicated in the bidding documents and included in the Public-Private Partnership Agreement.]⁴³

23. User fee.
(1) The Government may impose and revise, through a notification in the official gazette, single or multiple user fees for different uses of the Public- Private Partnership projects by different classes of the users.

(2) The Government may exempt, through notification in the official gazette, certain classes of users from payment of the user fees.

(3) The Government may entrust the private party with collection of user fees.

(4) The Government shall set the user fees at levels that ensure the financial viability of the project and fully cover the operations and maintenance expenses, plus a fair return to the private party. Notwithstanding the foregoing, if the Government elects to maintain the user fees at levels below levels that would ensure financial viability as described herein, then it shall compensate the private party for the difference through the Viability Gap Fund.

(5) Unless specified otherwise in the bidding documents, the Agency shall determine, through bidding, the user fees which shall be adjusted periodically during the term of the Public-Private Partnership Agreement based on a formula using official price indices set forth in the Public-Private Partnership Agreement.

24. Reports and audits.
The Agency shall include appropriate reporting and audit requirements in the Public-Private Partnership Agreement, taking into consideration the nature of the project, its business structure, the source of financing and the financial commitments of the Government to the private party. ⁴⁴[The Agency, if deemed appropriate, may retain outside consultants and auditors for the purposes of this section.]⁴⁴

CHAPTER VI

Other Issues

25. Power to prescribe standards.
The Government may -

I. prescribe and enforce performance standards for a Public-Private Partnership project, including standards of performance for a private party with regard to different aspects of the services to be rendered to the users and the Government;

II. prescribe quality standards, including standards for the materials, equipment, processes and resources used, or persons employed, during all stages of the project to ensure sustainable delivery of services and adherence to the prescribed quality standards;

III. ⁴⁵[link entitlement to support from the Viability Gap Fund, support from Project Support Facility, subsidy, annuity and other compensation and benefits with meeting certain performance standards as it may deem fit;]⁴⁵

IV. issue and enforce accounting guidelines for proper accounting of the projects; and

V. prescribe any other standard for regulating the Public-Private Partnership projects.

26. Indemnity.
(1) The private party or its sub-contractor shall, subject to subsection

(2), be responsible for, and shall release and indemnify the Agency, its employees, agents and contractors on demand from and against all liability for -

(a) death or personal injury;

(b) loss of or damage to property, including property belonging to the Government or Agency or for which it is responsible;

(c) breach of statutory duty; and

(d) actions, claims, demands, costs, charges and expenses, including legal expenses on an indemnity basis which may arise out of, or in consequence of, the design, construction, operation or maintenance of the assets; the performance or non-performance by the private party or its sub-contractor of its obligations under the Public-Private Partnership Agreement; or the presence on the Government’s property of the contractor, a subcontractor, or their employees or agents.

(2) The private party or its sub-contractors shall not be responsible or be obliged to indemnify the Agency for -

I. any of the matter referred to in paragraphs (1) (a) to (d) above which arises as a direct result of the private party or its sub-contractor acting on the instruction of the Agency;

II. any injury, loss, damage, cost and expense caused by the negligence or wilful default of the Agency, its employees, agents or contractors, or a breach by the Agency of its obligations under the Public-Private Partnership Agreement, or

III. any claims made under the Act in respect of the Government’s property.

27. Dispute resolution.
(1) If a dispute arises out of or relates to the Public-Private Partnership Agreement, or the breach thereof, and if that dispute cannot be settled through direct discussions, the parties shall first endeavor to settle the dispute in an amicable manner by mediation administered by an independent and impartial person appointed by the Board, before resorting to arbitration. Thereafter, any unresolved controversy or claim arising out of or relating to the Public-Private Partnership Agreement, or breach thereof, shall be settled by arbitration in the city of Karachi or any other place in Pakistan or as agreed to by the parties specified in the Public- Private Partnership Agreement. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

(2) Disputes shall be decided in accordance with the law in force in Pakistan.

(3) Notwithstanding anything contained in sub-sections (1) and (2) or any other provision of this Act, in government-to-government projects under section 19-A of this Act, or such other projects where foreign investment and/or lending is involved or purported to be involved, an agency or the government may agree to the seat of arbitration and venue outside of Pakistan and the applicability of rules of foreign arbitral institutions under the agreements to which it is a party, including Public-Private Partnership Agreement, subject to the recommendation of the Board and approval by Government.

28. Termination of the Public-Private Partnership Agreement.
The Public-Private Partnership Agreement may be terminated in the following cases:

I. End of the term of the Public-Private Partnership Agreement. Upon completion of the term of the Public-Private Partnership Agreement, the private party will hand back any public property to the Government, free and clear of all encumbrances and in satisfactory condition as determined by the Government following an inspection. The procedures for the hand back and indemnities if any shall be set forth in the Public-Private Partnership Agreement.

II. Unilateral termination of the Public-Private Partnership Agreement by the Government acting in the public interest. Following notice and subject to the procedures set forth in the Public-Private Partnership Agreement, the Government shall compensate the private party for any investments made in the project, including any debts incurred and a sum which fairly represents the lost profit on such investments;

III. Default by the Agency under the Public-Private Partnership Agreement of its obligations and expiration of any cure period, causing the private party to rescind the Public-Private Partnership Agreement. Following notice and subject to the procedures set forth in the Public-Private Partnership Agreement, the Agency shall compensate the private party for any investments made in the project, including any debts incurred and the fair market value of the equity, or any amount that fairly compensates the private party for its lost revenues in accordance with the terms of the Public-Private Partnership Agreement;

IV. Default by the Private Party under the Public-Private Partnership Agreement. If the private party fails to comply with the agreed milestone activities, or fails to achieve the prescribed technical and performance standards, or commits any substantial breach of the Public-Private Partnership Agreement, the Agency shall give written notice of the breach and notice to terminate to the private party and following expiration of any cure period may: (1) take over the project and assume all related liabilities of the private party, including its debt obligations; (2) allow lenders of the private party to exercise their step-in rights and security interests as specified in the loan documents for the project and replace the private party on the same terms and conditions, subject to approval of the substitute private party by the Agency; (3) take over the project and auction the remaining term of the Public Private-Partnership Agreement through an open competitive bidding to interested qualified investors and apply the proceeds to pay the debts of the private party; or (4) invoke its other contractual remedies such as liquidated damages which fairly represent the degree of loss incurred by the Government.

V. The occurrence of a force majeure event in the Public-Private Partnership Agreement shall be grounds for early termination at the request of either party and shall allow for a reasonable allocation of the risk of loss between the Government and the private party. The allocation of the risk and compensation formulae to be applied in such instance shall be set forth in the Public-Private Partnership Agreement.

29. Immunity to acts done in good faith.
No suit, claim or other legal proceedings by a private party or by any person shall lie against the Board, the Unit, an Agency or an officer of the Board, the Unit, and other government officers or consultants, in respect of anything done or intended to be done in good faith and in accordance with this Act and other laws in force.

30. Power to make rules.
For systemic and transparent enforcement of this Act and towards meeting its objectives the Government may, by notification in the official gazette, make rules for carrying out the purposes of this Act.

31. Power to frame regulations and guidelines.
Subject to this Act and the rules made hereunder, the Board may approve regulations, procedures and guidelines to make operations under this Act, efficient, transparent and effective.

32. Act to override any other law.
The provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

SCHEDULE I

[See sections 2 (j)]

INFRASTRUCTURE SECTORS

Canals or dams;

Education facilities;

Health facilities;

Housing;

Information technology;

Land reclamation;

Power generation facilities; including Coal and power generation;

Roads (provincial highways, district roads, bridges or bypasses);

Sewerage or drainage;

Solid waste management;

Sports or recreational infrastructure, public gardens or parks;

Trade fairs, or cultural centers;

Urban transport including mass transit or bus terminals;

Water supply or sanitation, treatment or distribution;

Wholesale markets, warehouses, slaughter houses or cold storages;

Tourism and Resort Development;

⁴⁷[Health services;

Education Services;

Social Welfare;

Special Education;

Women Development,

⁴⁶[Agriculture, horticulture and livestock facilities and services,]⁴⁶

Or any other sector or service as the Board may approve to undertake in public private partnership mode]⁴⁷