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Methods for comparing PPPs and other procurement approaches – The Moroccan experience

May 2008. Methods for comparing PPPs and other procurement approaches – The Moroccan experience. Hugues de La Forge Gide Loyrette Nouel – Naciri & Associé . PPPs AND OTHER NOTIONS .

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Methods for comparing PPPs and other procurement approaches – The Moroccan experience

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  1. May 2008 Methods for comparing PPPs and other procurement approaches – The Moroccan experience Hugues de La Forge Gide Loyrette Nouel – Naciri & Associé

  2. PPPs AND OTHER NOTIONS • Moroccan investors and public parties have been practicing concessions for many years now with major projects suchs as Jorf Lasfar Power Plant Concession or water supply and maintenance contracts such as in Casablanca or Rabat and more recently in Tanger or Tetouan; • Public procurement rules (recently modified by Decree of February 5th, 2007) do not offer a satisfactory basis for setting up PPPs as they do not allow a contractor to take part or whole of the risk of the goods and service operated either in terms of availability or traffic or even affordability; • There was a clear need for a specific framework to be implemented by the Moroccan legislator

  3. OVERVIEW OF LAW 54-05 - GENERAL • Law 54-05 dated february 14th 2006 called «Loi sur la Gestion Déléguée» proposes a legal device allowing either public entities (établissements publics) or local authorities to conclude partnerships for the performance of a public service or the construction and/or operation of public works associated to its performance; • Moroccan State is not concerned by this Law; • Tracks followed by the Law are more ambitious but not oriented in a PFI scheme such as Ordonnance dated June 14th, 2004 achieved in France;

  4. OVERVIEW OF LAW 54-05 - GENERAL • Indeed, the Law may be applied to almost any form of partnerships (concessions or «affermage» or «régie intéressée») it being understood that remuneration of the private party should derive from user’s contribution and/or operation’s profit in order to ensure contract economic equilibrium • This does not expressly allows (nor forbids) any form of remuneration through the grantor where in the absence of final buyer the goods and services need to be remunerated by the public party; • Legal framework implemented by Law 54-05 is definitely concession orientated.

  5. OVERVIEW OF LAW 54-05 – MAIN PROVISIONS • A set of imperative provisions will have to be incorporated in the project contract such as a limited duration of the contract, regime of financial streams, terms and conditions to ensure follow-up and control of the «délégation», penalties, a non contentious procedure before going to any Courts and a description of events giving rise to termination; • Non compulsory provisions can be summarized as follows : periodic review of the service, recourse to arbitration and securities on reversionary assets.

  6. COMPARING PPPs IN MOROCCO? • The bill of Law 54-05 originally provided for a compulsory pre-feasibility study (as per Ordonnance dated June 14th, 2004 in France) to be completed before a public service be executed trough a “délégation de service public”; • This study had to assess from a legal, economical and financial perspectives the potential outcomes of the Project and in particular the amount of expected investments, risks transfer and allocation; • Draft law also suggested to establish an “appraisal” and “financial projections” without providing fore more clarifications

  7. COMPARING PPPs IN MOROCCO? • For local authorities, decision to launch a project delegation was subject to obtaining first the prior approval of “Commission Consultative de Gestion Déléguée des Services Publics Locaux” • None of these provisions are maintained in the current Law • Note that Decree date February, 5th 2007 ruling Procurement Rules Laws invites the public entity before setting up any call for tenders or negotiation to define as clearly as possible the needs and specifications for the concerned project as well as an appraisal of costs of the project.

  8. Alger Belgrade Bruxelles Bucarest Budapest Casablanca Hanoi Hô Chi Minh Ville Hong Kong Istanbul Kiev Londres Moscou New York Paris Pékin Prague Riyad Shanghai Tunis Varsovie Contact(s) Hugues.delaforge@gide.com Naciri & Associés En collaboration avec Gide Loyrette Nouel 63, bd Moulay Youssef 2000 Casablanca Tel : + 212 (0) 22 27 46 28 Tel : + 212 (0) 22 27 30 16 E-mail : gln.casablanca@gide.com www.gide.com

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