Project Finance & Infrastructure Lawyers in Nairobi | CS Advocates

Public private partnerships are regulated by the Public Private Partnerships Act 2021 and its regulations, with the framework administered through the National Treasury, which set out how projects are identified, prepared, procured, approved and implemented, and which institutions must be involved at each stage. A project must follow the prescribed pathway, and skipping or reordering a step creates approval risk that lenders will not accept. The framework also determines how risks are shared between the public entity and the private party. See the PPP Act 2021 for foreign investors.

Longer than most sponsors expect, because the process includes feasibility and due diligence, approvals through the institutional pathway, competitive tender, negotiation and then financial close. Each stage depends on documents and approvals rather than on goodwill, and a project that is not documented to lenders’ standards will stall at close rather than at tender. We set out the sequence and the dependencies so a sponsor can plan funding and resources realistically. See the PPP pathway.

Typically a package rather than a single instrument: security over project assets and land interests, charges over shares in the project company, assignment of project agreements and insurance proceeds, security over project bank accounts including a debt service reserve, and direct agreements with key counterparties that allow the lender to step in. Because project finance is limited recourse, the security package and the risk allocation in the project agreements are what the lender is really relying on.

In ordinary procurement the public entity buys a good, work or service and pays for it, and the contractor’s role ends at delivery. In a PPP the private party typically takes on design, financing, construction and operation over a long period, and is paid over time through user charges, availability payments or a combination, with the asset transferring back to the public entity at the end. That longer horizon is why the contract has to allocate demand, change of law, termination and handover risk in detail.

That is a negotiated outcome rather than a fixed rule, but Kenyan PPP documentation usually allocates change of law risk, delay events and relief events between the parties according to which party can best manage them. The critical work is in the definitions, because whether a specific event is an excusing cause, a compensation event or a plain default depends on drafting rather than on principle. It is worth testing the definitions against realistic scenarios before signing. See resolving construction disputes and construction arbitration.