Treasury in the spotlight for overlooking AG in State deals

The National Treasury Building. [Samson Wire, Standard]

The National Treasury has turned to external legal advisors to support the government's ambitious public-private partnership (PPP) programme.

This is as it seeks to address the country's significant infrastructure gaps, despite an ongoing austerity drive.

The PPP Directorate, housed within the National Treasury and Planning, has launched a prequalification process to establish a roster of leading legal advisory firms that can be contracted on an as-needed basis.

The pre-qualification process seeks to identify legal firms that can provide a range of advisory services, including the review of feasibility studies, development of risk allocation matrices, negotiation support, and the structuring of PPP project agreements across sectors such as transport, energy, water and sanitation, agriculture, social infrastructure, and telecommunications.

"The PPP Directorate, National Treasury invites suitably qualified and experienced prospective legal service providers to form part of a panel of advocates for three years," said Treasury in internal documents seen by The Standard.

"The primary purpose is to establish a repository of legal advisory services consultancy firms available for contracting and utilisation on a need basis. This is to support the PPP Directorate in preparing or reviewing various legal documents (including but not limited to legal review of documents, project agreements or contracts related to different projects, initiatives and operations led by the PPP Directorate."

The decision to engage external legal experts comes amid an ongoing austerity push by the Ruto government, which is under pressure to live within its means in the face of fiscal constraints.

The government, in conjunction with the World Bank, has been implementing a five-year Infrastructure Finance and Public-Private Partnerships Project (IFPPP) aimed at increasing private investment in the Kenyan infrastructure market by improving the enabling environment and building capacity within the PPP Directorate.

This move comes as the Ruto government has made PPPs a priority mechanism to facilitate the development of assets and the provision of services.

Kenya has emerged as a regional leader in PPPs, having established a robust legal and institutional framework to attract private sector participation in the financing, construction, and operation of infrastructure projects.

The country's PPP programme has matured over the years, with several operational projects in the road and energy sectors, and a pipeline of initiatives across multiple sectors.

Under scrutiny

But the Treasury's decision to prequalify external legal firms to support its public-private partnership (PPP) programme has come under scrutiny, given the mandate of the Office of the Attorney General to advise the government on legal matters.

Experts yesterday raised concerns that the move could be seen as an attempt to circumvent the traditional role of the Attorney General's office, which is responsible for providing legal counsel to the government.

"The Office of the Attorney General has the primary responsibility for advising the government on legal issues, including those related to PPP projects," said Ian Nyoro, a public policy analyst. "Engaging external legal firms, while the Attorney General's office exists, could be perceived as an attempt to bypass the established legal framework in a time of austerity."

Treasury had said the prequalification process is aimed at building a repository of legal advisory services to support the PPP Directorate, which is tasked with implementing the country's PPP program. It reckons the PPP Directorate needs access to specialised legal expertise to effectively review feasibility studies, develop risk allocation matrices, and structure complex PPP agreements.

However, some experts argue that the government should instead focus on strengthening the capacity of the Attorney General's office to handle the legal aspects of the PPP programme, rather than outsourcing these responsibilities.

"The government should be investing in building the in-house legal expertise within the Attorney General's office, rather than relying on external firms," said Mr Nyoro.

"This would not only ensure consistency in legal advice but also promote the long-term sustainability of the PPP program."

Treasury's move to prequalify external legal firms is likely to face scrutiny, at a time Treasury is under pressure to demonstrate prudent use of public resources.

President Ruto on Friday last week proposed spending cuts and additional borrowing in roughly equal measure to fill a new budget hole caused by his withdrawal of planned tax hikes in the face of nationwide protests.