Legal Framework on Public-Private Partnerships supplemented in the Republic of Guinea

The Government of the Republic of Guinea (the “Government of Guinea“) has recently released a number of long-awaited decrees, implementing law L/2017/032/AN dated 4 July 2017 on public-private partnerships (the “PPP Law“). Decree D/2021/041/PRG/SGG implements the PPP Law and decree D/2021/042/PRG/SGG organises the institutional framework of public private partnerships (“PPP”). Trinity is pleased to announce that partner Pierre Bernheim, in Paris, has advised on the drafting of the PPP Law and its implementing decrees.

By adopting this new legal framework for PPPs, the Government of Guinea has clearly expressed its commitment to encourage investment in infrastructure, its intention to strengthen the capacities of its institutions and its determination to control and monitor public investments and the financial commitments of institutions.

Except for mining and oil and gas projects, the PPP legal framework applies to all PPPs regardless of their sectors, designation, or contractual nature, thereby providing clarity and simplicity for sponsors.

This note outlines the steps and diligence that a sponsor has to complete for the development of a PPP. By way of background, the diagram below provides an overview of the institutional stakeholders contributing to the PPP sector.

Snapshot of the institutional stakeholders 

• PPP Committee. The PPP Committee’s primary role is to endorse the Government of Guinea’s PPP policy and to coordinate actions of the various entities. In this respect, the PPP Committee confirms the strategies and priorities proposed by the sectoral ministries. The PPP Committee is mainly composed of the ministers representing the various PPP sectors.  
• Ministry in charge of Finance. The Ministry of Finance is involved at several stages of the PPP procurement process to assess and approve the risks and sustainability of the financial commitments undertaken by the State and the contracting authorities.
• PPP Unit. Located within the Ministry of Finance, the PPP Unit promotes the development of PPPs in the Republic of Guinea and assists contracting authorities in the implementation of their PPP policy. The PPP Unit supports the adoption of good practices and encourages capacity building.
• Ministry in charge of Investments and PPPs. The Ministry in charge of Investments and PPPs is in charge of drafting, developing, and implementing the Government of Guinea’s policy on PPPs. This includes preparing legislations and regulations for PPPs, PPP programmes and investment plans. Within the Ministry, the entity mandated to lead on those matters is the Direction for PPPs. Although the creation of a Ministry of PPPs was not contemplated in the PPP Law, the Government of Guinea later decided to issue regulations setting up this new ministry[1].
• Contracting Authorities. Contracting authorities are in charge of identifying, preparing, procuring, and implementing PPPs. For each PPP, contracting authorities set up a “Procurement Committee” whose task is to assess and select the sponsors’ offers.
• Direction for Procurement Control (Direction Nationale du Contrôle des Marchés Public). The Direction for Procurement Control oversees the PPP procurement. The Direction for Procurement Control issues no-objection opinions on the choice and conduct of the procedure.
• Procurement Regulatory Authority (Autorité de Régulation des Marchés Publics). The Procurement Regulatory Authority is in charge of the control and regulation of PPPs and has two main functions Firstly, the Procurement Regulatory Authority collects, keeps, and publishes documents on PPP procurement procedures. Secondly, it rules on appeals lodged by private sector participants during the procurement and performance of PPPs.

Identification of needs and selection of PPPs

If the PPP is initiated by a Contracting Authority

The first step for PPPs initiated by a contracting authority is carrying out a feasibility study. A feasibility study is now mandatory for all PPP projects, including for direct negotiations, which was not the case previously. The purpose of the feasibility study is to assess the technical, financial, legal, socio-economic, and environmental benefits and risks of the PPP. In the feasibility study, the contracting authority also lists proposed investors to be involved in the PPP and proposes a procurement procedure.

One of the additions of the implementing decrees is the importance given to financial assessment of the PPP. A persistent criticism on the previous PPP Guinean legal framework was the lack of evaluation, monitoring and control of the financial commitments of public entities[2]. In response, the Government of Guinea has sought to strengthen the financial evaluation of PPPs by requiring, in respect of  all forms of financial commitments, whether direct and indirect, the relevant contracting authorities to evaluate in detail, and over a period of time, the risks and sustainability of their liabilities. In addition, any substantial modification (i.e. more than 10% of the initial liability) after the feasibility study phase needs to be approved by the Minister of Finance. As a result of these new requirements, it is likely that sponsors will be expected to demonstrate greater financial rigour than what has been required to date.

Feasibility studies are then approved by the PPP Unit and the Minister of Finance.

If the PPP is initiated by the sponsor

In common with many of Guinea’s “peer jurisdictions”, the PPP Law authorises sponsors to submit unsolicited PPP proposals to contracting authorities. In Guinea, an unsolicited proposal may only be accepted if (i) the PPP is not already listed in the PPP Unit’s global PPP plan; (ii) no procurement procedure has been initiated with regard to this PPP and (iii) the PPP is aligned with the Government of Guinea’s PPP policy.

If after a prior assessment, the contracting authority considers the proposal may address some of its needs, it invites the sponsor to negotiate and sign a framework agreement. In this scenario the contracting authority does not conduct nor finance the feasibility studies (which should meet the same criteria as described above) and instead the sponsor undertakes the feasibility studies.

If the PPP has a total cost below 5 billion Guinean Francs

If the estimated cost of the PPP is below 5 billion Guinean Francs (circa EUR 420.000), the contracting authority may undertake a simplified feasibility study only. Upon the Direction for Procurement Control’s approval, the contracting authority can proceed with the direct negotiation procedure.

Procurement

In Guinea, there are two PPP procurement procedures.

Open tender

Open tenders are the general rule. They include two stages: (1) prequalification and (2) bidding. The contracting authority drafts documentation for each stage. The PPP Unit issues public calls for tenders. The Procurement Committee assesses the pre-qualification and final proposals.

Direct negotiations

Direct negotiations are undertaken more by way of exceptional and are limited to certain circumstances. A contracting authority may have recourse to direct negotiations with a sponsor when:

• the PPP implementation requires the use of a patent, license or exclusive rights only held by one sponsor;
• an open tender procedure was initiated but no candidate met the minimum requirements, or no candidate has bid for the project or the procedure was cancelled for public interest reasons;
• there is a pressing emergency which has  the characteristics of a force majeure event;
• the total cost of the PPP is below 5 billion Guinean Francs; and
• the PPP relates to national defence or security.

Negotiations are conducted on the basis of a draft PPP contract prepared by the contracting authority.

Negotiation and signature of the PPP Contract

Content of the PPP contract

The implementing decrees specify the mandatory clauses that need to be included in a PPP contract. Such clauses are intended to be in line with international best practices. A PPP contract shall include provisions relating to the purpose of the contract, term, land use, financial terms, obligations related to public service, risk allocation, ownership of the infrastructure, force majeure, change in law, sanctions, control, responsibilities, insurance, termination and termination compensation, dispute resolution.

The term of a PPP contract cannot exceed thirty years, unless  authorised by the Minister of Finance. The term may be extended in exceptional circumstances (without the need for a new procurement process) if an event of force majeure, a change in the law or a substantial economic imbalance has occurred during the performance of the PPP which gives comfort to investors.

To amend a PPP contract, the Parties should obtain a “non-objection” opinion from the Direction for Procurement Control.

Signature

After the publication of the provisional award of the PPP in the Official Gazette, the parties can finalise the terms of the PPP contract. The PPP needs to l be signed by the Direction for Procurement Control, the contracting authority and the sectoral Minister as also approved by the Minister of Finance.

The PPP contract comes into force once it has been published.

Authors: Pierre Bernheim, Béatrice Huon

[1] Decree D/2018/257/PRG/SGG on the attribution and organisation of the Minister in charge of investments of 19 October 2018 and PPPs and Order A/2019/218/MIPPP/CAB on the attribution and organisation of the Direction for PPPs of 6 February 2019.

[2] International Monetary Fund. Fiscal Affairs Dept., Guinea: Technical Report-Public Investment Management Assessment, March 21, 2019.