PPP Coordination

Facilitating Legislation

Public private partnerships are arrangements between the public sector and the private sector for the delivery by the private sector of certain public infrastructure and/or public services, which traditionally would have been provided by the public sector.

Public private partnerships covered under the Act include arrangements with the private sector partner in relation to either the design and construction of an asset where operation is linked to the design and construction element (which may include the provision of finance) or arrangements to provide services relating to an asset for a period of not less than 5 years.

The purpose of the State Authorities (Public Private Partnership Arrangements) Act 2001 was to verify that State authorities have the statutory powers to enter into new procurement arrangements. These powers supplement the existing powers of State authorities under relevant existing legislation. Traditional outsourcing of contracts or arrangements whereby the private sector designs and constructs an asset for the public sector are not covered in the Act.

The 2001 Act empowers State authorities to form companies and to enter into joint ventures for the purpose of a public-private partnership and gives State authorities the legal capacity necessary to contract with the private financiers of public-private partnerships. It  further provides that the functions of a State authority may be conferred under the public private partnership arrangement to the private sector, subject to the general control of the State authority.

State Authorities

The State authorities covered by the Act are named specifically in the Schedule.  The Minister for Finance, in consultation with the appropriate Minister, may amend the Schedule by adding or deleting a public authority by way of order, provided that a draft of the order is laid before both houses of the Oireachtas.

Where a State authority has formed a company or become a shareholder in an existing company formed and registered under the Act the appropriate Minister is authorised to give written directions to the State authority or the company in relation to the management, accountability, accounting and financial affairs of that company and to issue general guidance in relation to the formation of companies, It lists the matters upon which directions may be issued and provides that a State authority and a company must comply with directions issued to them.

Authority Powers

A State authority may arrange or provide for payments to a private sector partner, and the State authority has the power to contract with a person who has provided (or arranged the provision of) funding for the public-private partnership arrangement. This facilitates direct (or ‘‘step-in’’) agreements.

A State authority may form a company or become a shareholder in a company and may transfer an asset of the State authority to the partner. Under a PPP arrangement, such a transfer would generally be for a defined period only. An asset could include a series of different assets.

The functions specified in the public-private partnership arrangement may be conferred upon the partner and may be performed by the partner in its own name, subject to the control of the State authority. Notwithstanding this, the functions continue to be vested in the State authority and the relevant Minister’s responsibility for the performance of that function is not affected.

Local authorities or bodies may agree that their functions are performed by a lead local authority pursuant Roads Act, provided the relevant local authorities or bodies are State authorities at the time of the agreement.

A State authority may enter in good faith into a public private partnership arrangement and an arrangement with the private sector financiers of the public private partnership arrangement.

 NDFA

The government decided in 2005 to consolidate the multi-procurement delivery skills required for PPP procurement in a centre of expertise within the NDFA. This  commenced operation on a non-statutory basis in 2005.

The National Development Finance Agency Act 2002 establishes the NDFA.  Its purpose was to assist in providing cost-effective finance for priority infrastructure projects.  This is part of the PPP approach and is an alternative to upfront exchequer funding or inappropriate private-sector funding.

NDFA discharges is functions through the National Treasury Management Agency.  It recruited experts in the fields of corporate finance, risk assessment and delivery of major projects.

The functions of the NDFA include

• providing advice to state authorities, including government departments to assist in evaluating financial risks and costs
• ensuring the best financial package for each project.
• assessing optimal funding for public investment projects in the national development plan and other infrastructure priorities
• mobilising finance for projects including  design, build, and or operating PPPs where  this would be more cost-effective than private funding and in respect of conventionally procured capital projects where there are clear benefits to the exchequer offsetting any increased cost of NDFA funding relative to exchequer funding.

State authorities must seek expert advice from the NDFA on commercial and financial issues in the context of public investment projects.  The NDFA is to assess and recommend exchequer funding or private sector funding or arrange funding or a package involving a combination of public and private funding.  Responsibility remains with the relevant Minister or authority.  The Minister for Finance has a role in the formulation and development of policy on PPPs.

The Agency’s functions include

• advancing repayable loans, including equity,
• entering into other financial arrangements regarding projects approved by a State authority
• advising state authorities on the optimal means of financing major public investment projects, including PPP arrangements.
• providing advice to state authorities in all aspects of funding, refinancing and insurance,
• forming companies for the purpose of the PPP project

The Agency has the power to engage consultants, advisors, and service providers.  It is to perform its functions in compliance with guidelines issued by the Minister for Finance.

The Agency is to take account of policy directives made by the Minister for Finance regarding the financing of public investment policies and any detailed policy guidance regarding process, procedures and regulations of PPP.  This may include advice regarding consultancy services across the range of technical expertise required to undertake the projects.

NDFA Finance

The Agency may form special purpose companies to provide finance where it is of the opinion that this is necessary or expedient in order to perform its functions. No guarantee, loan or subvention is to be given to any company established.  The  State is to have no liability in respect of acts done by the company.

The Agency may borrow monies in any currency subject to the consent of the Minister for Finance.  The aggregate borrowings are not to exceed  €5 billion. The Agency has power to enter contracts to fix or eliminate, or reduce risk, including interest rate, exchange rates, risk and the cost of borrowings and other transactions carried out in the course of that business.

The Minister for Finance may guarantee sums due by the Agency and payment of interest on monies borrowed.  Aggregate borrowings guaranteed may not exceed  €5 billion.

The Minister for Finance must prepare an annual statement showing particulars, payments under the guarantees and amounts paid.  Monies paid by the Minister for Finance under a guarantee must be repaid to the Minister by the Agency within 2 years from the date they are advanced.  If monies are not repaid, the amount outstanding will be repaid to the Central Fund as monies provided by the Oireachtas.  The Agency continues to remain liable to the Minister for the interest and principal.

The Agency performs its functions through the National Treasury Management Agency. The board of the Agency consist of a chairman and four ordinary members.  Ordinary members are appointed by the Minister for five year period.  The chief executive staff and other officers are to be appointed.  Consultants may be retained.

The Agency is subject to the usual obligations to maintain accounts.  Accounts must be submitted to the Minister to the Houses of the Oireachtas. The chief executive officer and chairperson may be required to attend the Committee on Public Accounts and other committees in relation to financial matters.

NTMA

The National Treasury Management Agency was established by  Act in 1990.  Its principal function is to manage the national debt.  It may be conferred with such functions as the Minster for Finance may delegate to it.  Its functions are performed under the control and the general superintendence of the Minister.

The Agency is to prepare and submit to the Minister a scheme for money proposed to be borrowed on behalf of the Minister for the exchequer in that year.  It is to review it from time to time as the case requires.  Schemes so prepared and submitted may be revised as required.  It is to specify the terms and conditions on which monies are borrowed by the Agency on behalf of the Minister or the exchequer.

It is to prepare and submit to the Minister an estimate of

• amounts of interest on the national debt,
• amounts due to any sinking fund for the national debt
• expenditure of the Agency in relation to the borrowing of monies.
• expenses of the Agency falling to be paid in that year.

It is to advise the Minister when requested in relation to the borrowing of money by agencies and entities in relation to borrowing terms and conditions.

Functions

It is to advise the Minister in relation to

• the management of the national debt and matters connected with it.
• foreign exchange and other markets for securities of the government,
• sale of assets held by the State or on behalf of the state including employment of financial institutions by the Ministers in connection with such sales
• the effects of such sales
• demand for securities issued by or on behalf of the State.

It is to advise the Minister on

• borrowing actual or proposed monies in the name of or on behalf of the Minister
• the total borrowings and implications for the national finance and economy  generally of different types of borrowing

It may for the purpose of the management of the national debt. It is to arrange payments to and from the exchequer account and give directions relating to the management in accordance with the law of the post office savings, bank fund and certain national accounts, including the capital services redemption account, national loan sinking funds account, national loans advance interest account and others.

The Agency is to establish and to maintain business relationships with institutions that engage in the investment of monies in stock, and shares and other securities or in lending of monies.

Whenever the Agency considers it necessary or expedient, it is to engage in one or more of the following, namely, collection, collation, preparation and communication and distribution to banks and other institutions of information, including statistics and forecasts in relation to the national debt, borrowing and repayment of money and interest thereon.

The government may revoke the delegation of power to the Agency or grant further powers.

There is provision for a chief executive and staff of the Agency.  There is provision for superannuation schemes.

The National Treasury Management advisory committee is to assist the Agency in relation to matters and functions conferred on it above.  Members may not be members of the Oireachtas and certain other officers.

The Agency is to keep accounts and submit them to the Minister for Finance.  They are to be submitted to the Oireachtas.  The Controller and Auditor General may report to the Dail in respect of the accounts of the Agency.

2007 Act

The National Development Finance Agency Act 2007 amended the 2002 Act to provide a statutory basis for expertise in the National Development Finance Agency to procure public-private partnership arrangements.  It sought to improve the capacity of the public sector to undertake PPPs funded by unitary payments from the Departmental or Agency votes.

The Act allows the NDFA to undertake procurement functions on behalf of Departments or Agency.  It updates the list of state authorities covered by the legislation. There is provision for addition of further Agency.

The NDFA may enter PPPs with a view to transfer the rights and obligations under the PPP to a state authority. It may alternatively act as an agent for any state authority in entering a PPP.  Generally, the NDFA will act as an agent for a state authority.

The NDFA is to draw up a code of conduct based on best practices to ensure good corporate governance in the performance of its functions in PPP matters.  They are to be approved by the Minister for Finance. The NDFA must have regard to Ministerial policies and guidelines in PPP in exercising its function.

There is provision for the signing of contracts by two staff authorized by the board as well as members of the board.  The NDFA carries out its functions through the NTMA.

Expenses incurred by the NDFA and its advisory functions in relation to specific projects may be charged and paid out of the vote of their relevant department.  The state authority’s PPP Arrangements Act 2002 is amended by adding the NDFA.