The Ceylon Chamber of Commerce has submitted an extensive set of recommendations to the Government aimed at enhancing the Draft Public-Private Partnership (PPP) Bill, emphasizing the need for investor-friendly reforms that can catalyze private capital inflows and drive infrastructure and service delivery projects across Sri Lanka. The Chamber underlined that a strong PPP framework is essential in the current tight fiscal environment, as it can stimulate economic growth, create employment, and mobilize private investment to close the nation’s critical infrastructure gap.
Acknowledging Positive Features of the Draft PPP Bill
In its submission, the Chamber commended several provisions of the Bill that align with international best practices. These include mandatory value-for-money (VfM) and feasibility assessments, which require pre-feasibility and feasibility studies, cost–benefit analyses, and fiscal sustainability tests in line with OECD and World Bank standards. The Bill also strengthens transparency by mandating stakeholder consultation, public disclosure, and adherence to National Procurement Commission guidelines.
The legislation clearly outlines the allocation of project risks to the private sector while providing contractual safeguards such as lender and government step-in rights, refinancing benefit-sharing mechanisms, and structured contract management procedures. In addition, the Bill proposes the creation of a dedicated National PPP Agency (NAPPP) with defined policy, appraisal, and project registry functions. The Chamber noted that these measures could significantly enhance investor confidence and promote private sector participation in national development initiatives.
Areas of Concern and Recommendations for Reform
Despite these strengths, the Chamber identified critical areas requiring further attention to ensure the PPP framework is credible, transparent, and investment-friendly. A key concern is the independence of the National PPP Agency, with current provisions allowing significant ministerial control over board appointments, remuneration, and operational oversight. The Chamber recommended reducing ministerial influence, introducing Parliamentary or Constitutional Council oversight for board appointments, defining clear qualifications for members, separating CEO and secretary roles, and extending board tenure from three to five years to align with long PPP project lifecycles.
Transparency, Disclosure, and Public Trust
The Chamber emphasized the importance of transparency in building public and investor trust. Recommendations included the proactive publication of the national PPP project pipeline, feasibility study summaries, and signed contracts, with confidentiality limited only to trade secrets or intellectual property. The Chamber also proposed mandating annual PPP fiscal risk reporting, annexed to the national Budget, to enhance fiscal transparency and support informed public and investor scrutiny.
Project Evaluation, Procurement, and Institutional Governance
To strengthen project evaluation and approval, the Chamber recommended the establishment of dedicated Technical Evaluation Committees (TEC) and Commercial Evaluation Committees (CEC). These committees would assess technical feasibility, operational capacity, financial models, and risk allocation, aligning their authority with the Cabinet Appointed Negotiation Committees to ensure consistent decision-making and effective governance. The Bill should also provide a single-window mechanism to fast-track approvals for licenses, permits, and authorizations, cutting through bureaucratic delays that currently discourage private investment.
Unsolicited Proposals (USPs) and Competitive Safeguards
The Chamber highlighted weaknesses in the handling of unsolicited proposals (USPs), noting that current procurement guidelines allow direct negotiations without clear transparency rules. It recommended introducing clear, time-bound procedures for USP submissions, evaluations, and approvals, including the Swiss challenge mechanism used internationally in countries such as the Philippines and Colombia. Full disclosure of proponents and financing sources, along with competitive safeguards, would prevent conflicts of interest and strengthen investor confidence.
Contract Management, Flexibility, and Exclusivity
The Chamber urged flexibility in post-award contract negotiations, allowing controlled amendments to ensure complex projects remain viable while maintaining transparency and accountability. Step-in rights should be clearly defined, including triggers, timelines, and approval mechanisms, to safeguard continuity and protect public interests. Exclusivity clauses granted to private partners should be narrowly tailored, time-bound, and justified by VfM or fiscal tests, with mandatory public-interest reviews and disclosure of terms. Overbroad exclusivity could otherwise limit competition, create monopolies, and undermine affordability for users.
Dispute Resolution and Investor Protection
The Chamber noted that the Bill’s dispute resolution framework relies heavily on arbitration, with restrictive provisions that could deter international financiers. It recommended allowing flexibility in selecting arbitration forums for large-scale projects while explicitly recognizing mediation as a first-line or complementary mechanism. This approach would facilitate faster, cost-effective dispute resolution, preserve long-term relationships between public and private partners, and align with Sri Lanka’s treaty commitments under the Singapore Convention on mediation.
Environmental, Social, and Governance (ESG) Considerations
The submission emphasized that the PPP framework should integrate ESG standards alongside financial thresholds. This inclusion would help attract international funding, promote sustainable development, and ensure projects address long-term environmental and social concerns while supporting fiscal and economic objectives.
Legal Clarity and Non-Retroactivity
The Chamber recommended that the PPP Act serve as a standalone, comprehensive framework to avoid overlaps with existing legislation, including the Public Finance Management Act, Board of Investment Act, and Urban Development Authority Act. Clarifying the Act’s legal standing and harmonizing it with sector-specific laws would prevent operational confusion and provide a predictable regulatory environment for investors. Additionally, the Chamber stressed that existing PPP projects should not be subjected retrospectively to the new obligations of the Act, protecting investor confidence and avoiding legal and contractual complications.
Financial Structuring and Security Interests
The Chamber also provided detailed guidance on security interests for project financing. It suggested clarifying provisions to allow private partners to create security over contractual rights, receivables, cashflows, movable assets, and equity interests for both initial financing and refinancing, while restricting security over state-owned immovable property essential for public service. Enforcement of security should be subject to step-in and substitution rights to maintain continuity of service.
The Ceylon Chamber concluded by reaffirming its commitment to collaborate with the Government and relevant agencies to implement a transparent, credible, and internationally aligned PPP framework. Such a framework, the Chamber argued, is essential for mobilizing private investment on a large scale, fostering sustainable infrastructure development, and bridging Sri Lanka’s investment gap while maintaining public accountability.
