The High Court has declared parts of Public-Private Partnerships (PPP) law unconstitutional, saying Parliament must have a say when PPP projects create financial obligations for the government.
The court has, however, given Parliament six months to amend the law before the declaration takes effect.
The case arose from a challenge to privately initiated proposals involving the GKIA and KETRACO projects. The two projects had been cancelled by the time the case was heard.
The government and other parties in the case argued that the case should therefore be thrown out because there was no longer an active project to stop.
But the court disagreed.
It said cancelling the projects did not end the bigger questions raised by the case. These included whether the process used to approve PPP projects was lawful, whether public money was properly protected and whether government agencies were being properly held accountable.
The main issue was whether the PPP law gives Parliament enough control over projects that could leave taxpayers with large bills.
The petitioners argued that some sections of the PPP Act allow the Executive and the PPP Committee to make decisions that should involve Parliament.
The court agreed with them to a certain extent.
It said Parliament has a constitutional duty to oversee how the government collects and spends public money
The court’s position is that the government cannot use a PPP arrangement to avoid parliamentary approval when the deal will eventually require taxpayers’ money or create a financial obligation for the country.
This could happen where the government is required to make payments to a private company, provide guarantees, contribute money to a project or take on debts and other liabilities.
The court said it does not matter that a project is described as a PPP or that private investors provide the initial money.
What matters is whether the government and, ultimately, taxpayers are taking on a financial obligation.
PPP projects are usually long-term arrangements between the government and private companies.
The court said such arrangements can affect public finances for a long time and therefore cannot be kept outside Parliament’s financial oversight.
The Constitution requires parliamentary control over public expenditure and public liabilities.
The court therefore declared Sections 59, 60 and 72 of the PPP Act unconstitutional, but only to the extent that they fail to provide for parliamentary approval where a PPP project creates government expenditure, guarantees, public debt or other public liabilities.
The ruling does not mean that Parliament must approve every PPP project individually.
Instead, the key question is whether the project creates a financial obligation for the national government.
If taxpayers’ money, government guarantees, borrowing or other public liabilities are involved, parliamentary approval is required.
The petitioners had also challenged parts of the law dealing with privately initiated projects, arguing that they could allow government agencies to avoid open competition when choosing private companies.
The court rejected this part of the challenge.
It said the law can allow different procurement methods where there is a proper reason to do so.
However, government agencies must still follow the Constitution.
They cannot use a privately initiated proposal as an excuse to unfairly favour a particular company or avoid transparency, competition and value for money.
Although the court found the three provisions unconstitutional, it did not cancel them immediately.
Instead, it suspended the declaration of invalidity for six months.
This gives Parliament time to amend the law and ensure that PPP projects involving public money or government liabilities are subjected to the required parliamentary oversight.
The case will return to court on May 11 to check whether Parliament has complied and to receive further directions.
APERIT FM, HII NI YETU
