Unlocking private investment in infrastructure: The PIDA Model Law Adeyinka Adeyemi Senior Advisor and Head, Regional Integration and Infrastructure Cluster Capacity Development Division October 4-5, 2017 UN-OHRLLS, New York, USA Expert Group Meeting on Financing Infrastructure Development 1
Private Investment ECA/NEPAD Challenges Response Plethora of Developed policies, laws continent wide There are many and regulations model law to challenges which inhibit enhance facing private sector investment in investment in transboundary investment and transboundary infrastructure curb its infrastructure in enthusiasm Africa, but the two challenges Comprehensive that have study of risks that Specific risks emerged from pertain to associated with experts and investment in investment in potential transboundary transboundary investors are: infrastructure in infrastructure in Africa Africa. Source: ECA, 2014, 2016, 2017 UNECA.ORG 2
The Investment Challenge For PIDA, $360 billion by 2040 • For PIDA PAP (51 Priority Action Plan projects), • $68 billion per year up to 2020. 95% of this sum will be on transport. African Governments spend about $45 billion • annually on infrastructure. 2/3 of that on maintenance. The $48 billion remainder can be reduced by • $17 billion if we rehabilitate existing infrastructure, target better subsidies and improve budget execution. Private sector investment is crucial • The PIDA model law can unlock private • investment. 3
The PIDA Model Law • Pursuant to the Assembly of the African Union Decision (Assembly/AU/Dec.563 (XXIV) • Aim is to implement and accelerate the Dakar Agenda for Action, in particular, private sector investment of the DFS Projects and to promote industrialisation of the African continent through the development of transboundary infrastructure . Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG
Objectives of the Law • Facilitate private sector investment and financing in Transboundary Infrastructure Projects; • Ensure transparency, efficiency, accountability and sustainability of Transboundary Infrastructure Projects; • Harmonise cross-border regulation of Transboundary Infrastructure Projects; and • Promote intra-African trade and open domestic markets to international trade. Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG
A Model Law framework in 8 sections and 23 Articles Free Movement of Appointment of the Procurement General Provisions Entities, personnel, project Regulator Good and Services ✓ Procurement ✓ Preamble and standards ✓ Transboundary objectives of the ✓ Guiding Infrastructure Project ✓ Free movement of Law principles of Regulator-African Forum entities ✓ Scope of the Law procurement for Utility Regulators ✓ Free movement of (AFUR) Personnel ✓ Functions of AFUR ✓ Immigration Environmental ✓ Powers of AFUR ✓ Free movement of and social ✓ Co-ordination of Local goods and services Dispute Resolution Activities standards Provisions ✓ Anti-Corruption and Transparency Standards Funds, Finance, Accounts and ✓ Guiding ✓ Settlement of Fiscal Regime principles on Investment Assurances Disputes Environmental and Protections ✓ State Immunity and social ✓ Miscellaneous standards Provisions ✓ Financing ✓ Operational ✓ Interpretation ✓ Equity and Non- ✓ Fiscal Incentives safeguards and Definition discrimination UNECA.ORG ✓ Investment Assurances and Source: ECA/NEPAD 6 foreign Exchange Measures
Selected Articles of the Model Law Section 3 Article 8 : Free Article 9: Free movement of Personnel Movement of Entities, Personnel, Goods and Services 2. Notwithstanding anything contained in (1) Any entity registered, incorporated or this [Law], the local content requirements permitted to carry on business under the contained herewith shall not apply to laws of any African Country may employment of senior management participate in Transboundary including, but without limitation, the Infrastructure Projects. finance director, managing director and other senior executive personnel charged (2) Nothing in this Act shall prohibit with day-to-day management responsibilities of the Project Vehicle. foreign participation (by way of share ownership, creditor relationship, capital contribution or otherwise) in entities 3. A Non-[insert name of country] national carrying on Transboundary Infrastructure engaged, employed, hired or contracted Projects. by the Project Vehicle, for the purpose of carrying out Transboundary Infrastructure 4)Any entity registered, incorporated or Projects, shall be guaranteed a right to permitted to carry on business under this enter, reside and work in [insert name of [Law] shall be exempt from complying country] in accordance with the relevant with any national legislation on the laws of [insert name of country]. establishment of businesses provided that such entity is registered for tax purposes in an African Country Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG
Selected Articles of the Model Law Article 11: Free Movement of Article 10: Immigration Goods and Services 1. The Government of [insert name of country] shall not unreasonably deny entry 1. The Project Vehicle and its sub- visa for any personnel or officer of [AFUR], contractors shall be exempt from working on a Transboundary Infrastructure payment of import duties, taxes and all Project. other duties, levies, or charges and 2. The Government of [insert name of other taxes of similar nature, in country] shall not unreasonably deny entry respect of Goods necessary for use in visa, expatriate quotas, etc. for any Project Transboundary Infrastructure Projects. Worker, working on a Transboundary Infrastructure Project. 2. No export duties, taxes or other 3. The Government of [insert name of duties, levies, charges or impost of a country] shall not unreasonably deny entry visa, for public officers from Ministries, similar nature shall be payable or Departments, Agencies of Parties of Origin imposed on the export of Goods used that have supervisory, regulatory, by the Project Vehicle in another administrative oversight in relation to a African Country hosting or co-hosting Transboundary Infrastructure Project on the Transboundary Infrastructure official visit duty to [insert name of Project country]. Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG
Selected Articles of the Model Law Article 13: Guiding Principles Article 12: Procurement on Procurement Standards 1. In carrying out its functions…, [AFUR] shall In the award of procurement have regard to the following principles: contracts and Concessions, [AFUR] a. maximise economy and efficiency in procurement processes; shall adopt procurement standards b. foster and encourage participation in and guidelines as set out in the procurement processes by suppliers and United Nations Commission on contractors having regard to the preferential order set out in Article 9(1); International Trade (UNCITRAL) Model Procurement standards, as may be c. promote fair competition among suppliers, contractors and concessionaires for the supply amended from time to time, and of the subject matter of the procurement; which is herein incorporated by d. promote the integrity of, and fairness and reference and set out in Schedule C public confidence in, the procurement process; and to this Law. e. achieve transparency and disclosure in the procedures relating to procurement in accordance with the World Bank Framework for Disclosure in Public Private Partnerships or such other framework as made be determined by [AFUR Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG
Selected Articles from the Model Law Article 16 (i): Equality and non- Article 17 (2) : Protection discrimination and Security of Investment National Treatment: The Government shall accord to investment by the project vehicle and /or investors, treatment not less “ The Government shall not directly favourable than that accorded to the or indirectly, by law or otherwise investment and associated activities of its expropriate, nationalise or take own nationals…” similar measures tantamount to expropriation or Most-favoured-nation Treatment : The nationalization…”(except): Government shall not subject investments by the Project Vehicle and/or Investors to If it serves as a public good; made treatment less favourable than that accorded to the Investments of nationals or on a non-discriminatory basis; is in entities of another country engaged in similar accordance with due process of the transboundary infrastructure projects, law and procedure and upon howsoever, including establishment, payment of prompt, adequate an acquisition, expansion, management, effective compensation. conduct, operation and sale or other disposition of Investments. Source : ECA/NEPAD, PIDA Model Law (2016 | UNECA.ORG 10
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