National PPP landscape

  • Overview

    Wazir Khan Mosque in Lahore

    Number of PPPs and Investment in PPPs

    • PPP Investment
      $ 6,758 M
    • Number of PPPs Reaching FC
    • Value of PPPs Reaching FC

    Revenue Model and Government Support to PPPs

    • Number of PPPs with Govt. Support
    • Number of User Charge PPPs
    • Number of Govt. Pay PPPs

    PPPs under Preparation and Procurement

    • Number of PPPs under Preparation
    • Number of PPPs under Procurement

    FC = financial closure, Govt. = government, M = million.

    Source: World Bank. Infrastructure Finance, PPPs and Guarantees. Country Snapshots. Pakistan. (accessed 1 September 2020).

    The public–private partnership (PPP) regulation in Pakistan is one of the government processes that shifted to the provincial level. As a result, the provincial governments have the primary responsibility of developing and implementing their own PPP policies and legislation. In this regard, the provincial governments of Punjab, Sindh, and Pakhtunkhwa have initiated key developments with respect to their individual PPP jurisdictions.1

    • Establishment of a PPP policy and law in the Province of Punjab. The Punjab PPP Cell was initiated to support and develop the regulatory framework for PPPs within the province. The PPP Steering Committee, established by the provincial government of Punjab through notification, is the competent authority to approve, reject, or send back for reconsideration the PPP project proposals submitted by government agencies. As per the Punjab PPP Act 2019, the provincial government of Punjab shall establish the Public Private Partnership Authority (PPPA) that is responsible for implementing all the provisions of the act, while the PPP Cell shall provide administrative and secretarial support to the board.
    • Establishment of a PPP policy and law in the Province of Sindh. The Sindh PPP unit was established with the primary function of enhancing the development of PPPs in the province.
    • Establishment of a PPP law and framework in the Province of Khyber Pakhtunkhwa. The PPP legal framework of the province was developed and governed by the Khyber Pakhtunkhwa PPA Act. At the end of 2020, the Khyber Pakhtunkhwa PPP Act 2020 was passed, amending the 2017 PPP Act, to support a more enabling regulatory environment for PPPs in the province.

    At the federal level, Pakistan did not have a PPP legislation until March 2017 when the Public Private Partnership Authority Act of 2017 (the Federal PPPA Act) was passed by the Parliament. Prior to the Federal PPP Act, private sector participation in infrastructure was propagated by the Pakistan Policy on Public Private Partnerships of 2010 (the 2010 PPP Policy). The 2010 PPP Policy detailed a set of guidelines for PPP development and the regulatory framework required to develop PPP projects. Pursuant to the 2010 PPP Policy, a statutory body, the Infrastructure Project Development Facility (IPDF), was established.

    Subsequent to the passing of the Federal PPP Act in 2017, the PPPA took that role from the IPDF to further the implementation of PPPs in the federal territory. In July 2020, an ordinance was passed to introduce an amendment to the 2017 PPP Law. In early 2021, the National Assembly approved this amendment, thereby enacting the Public Private Partnership Authority (Amendment) Act 2021 (PPPA Amendment Act 2021).2

    • National Framework for Enabling PPPs

      Types of PPPs

      Regulations in Pakistan at the federal level do not specify nor discourage any specific PPP types; it is silent on the PPP types. The provincial PPP regulations, however, identify specific PPP types in their respective laws.

      Types of PPPs in the Provinces of Pakistan

      Province Type of PPP
      Punjab Public–Private
      Partnership (PPP) Law
      Build–transfer, build–lease–transfer, build–operate–transfer, build–own–operate, build– own–operate–transfer, build–transfer–operate, contract–add–operate, develop–operate– transfer, joint venture, management contract, rehabilitate–operate–transfer, rehabilitate– own–operate, and service contract
      Sindh PPP Law Build–operate–transfer, design–build–finance–operate, and any other variant of PPP. Additionally, the following modes are identified in Part IV of the Sindh Public Procurement Rules 2010: service contract, management contract, lease contract, build–own–operate, build–own–operate-transfer, build–lease–transfer, build–transfer, rehabilitate–operate– transfer, and any combination or variation of the above modes or any other arrangement under PPP mode approved by the Sindh Public Procurement Regulatory Authority.
      Khyber Pakhtunkhwa PPP
      Build–operate–transfer, build–own–operate–transfer, design–build–finance–operate, and any other variant of PPP.


      Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.


      Service Contracts

      Management Contracts

      Affermage or Lease Contracts

      Design-Bid-Build (DBB)

      Design-Build (DB)

      Build-Operate-Transfer (BOT)

      Design-Build-Finance-Operate-Transfer (DBFOT)

      Build-Own-Operate (BOO)


      Joint Venture

      Hybrid Contracts

      1. Build-Lease-Transfer
      2. Build-Transfer-Operate
      3. Contract-Add-Operate
      4. Develop-Operate-Transfer
      5. Rehabilitate-Own-Operate (ROO)

    • National Framework for Enabling PPPs

      Eligible Sectors for PPPs

      Regulations at the federal level are silent about any specific sector criteria for undertaking PPPs. However, the PPP Policy of 2010 lists a broad range of sectors, including, but not limited to

      • transport and logistics (federal, provincial, and municipal roads; rail, seaports, airports, and fishing harbors; warehousing, wholesale markets, slaughterhouses, and cold storage);
      • mass urban public transport (integrated bus systems, intracity and intercity rail systems);
      • local government services (water supply and sanitation, solid waste management, low-cost housing, health care and/or education, and skills development facilities);
      • energy projects (hydroelectric and captive power generation project, hydro and thermal power generation projects);
      • tourism projects (cultural centers, entertainment and recreational facilities, and other tourism-related infrastructure);
      • industrial projects (industrial parks, special economic zones, and related projects);
      • irrigation projects (some of these are combined with power generation); and
      • social infrastructure (education, culture, and health infrastructure).



      Transportation Infrastructure

      Road Infrastructure

      Main roads, collector roads and local roads, toll roads, toll bridges

      Rail and Mass Transit Infrastructure

      Railway facilities, urban mass transportation

      Waterways Infrastructure

      Infrastructure for crossing at sea, river, or lake

      Seaport Infrastructure

      Port facilities and passengers and cargo terminal Airport infrastructure

      Airport Infrastructure

      Airport facilities

      Logistics Infrastructure

      Warehousing, wholesale markets, slaughterhouses, and cold storage


      Water, Wastewater, and Solid Waste Management Infrastructure

      Water Resources and Irrigation Infrastructure

      Bulk water carrier pipelines, irrigation networks and water storage infrastructure (including its supporting structures, among others) reservoir, dam, and weir

      Water Supply Infrastructure

      Raw water unit, production unit, distribution unit

      Wastewater Infrastructure

      Centralized wastewater management systems including service unit, collection unit, processing unit, final disposal unit, water discharge pipeline, and sanitation Local wastewater management system including local processing unit, transport unit, sludge treatment unit, final disposal unit, water discharge pipeline, and sanitation

      Solid Waste Management Infrastructure

      Transportation, processing, final waste processing


      ICT Infrastructure

      Telecommunication Infrastructure

      Telecommunication network, passive infrastructure such as transmission media cable ducts

      IT and Informatics Infrastructure

      e-Government infrastructure


      Energy and Electricity Infrastructure

      Power Generation

      Power generation facilities

      Power Transmission and Sub-Transmission

      Power transmission, and main substation facilities

      Power Distribution

      Power distribution facilities

      Energy Conservation Infrastructure


      Other Infrastructure

      Zone Infrastructure

      Industrial projects including industrial parks, special economic zones, and related projects

      Tourism Infrastructure

      Cultural centers, entertainment and recreational facilities, and other tourism-related infrastructure


      Processing, storage, transportation, distribution

      Urban Facilities Infrastructure

      Land reclamation, Environmental management, Remediation and clean-up and Urban development

      Sports, arts, and culture facility infrastructure

      Sports recreation facilities

      Penitentiary infrastructure

      Traditional market

      ICT = information communication technology.

    • National Framework for Enabling PPPs

      PPP Institutional Framework


      Does the country have a national PPP unit?
      What are the functions of the national PPP unit?
      • Supporting the design and operationalization of the national PPP-enabling framework?

      • Helping develop a national PPP pipeline?

      • Supporting the arrangement of funding for project preparation (budgetary allocations, technical assistance funding from multilateral development agencies, operating a dedicated project preparation/project development fund)?

      • Guidance for project preparation to and coordination with the government agencies responsible for sponsoring the projects?

      • Making recommendations to the PPP Committee and/or other approving authorities to provide approvals associated with various stages of PPP process?

      • Yes

      The Public Private Partnership Authority (also referred to as PPPA, the Authority, or P3A) was established by virtue of the PPPA Act 2017. It was notified in 2018 and rechristened P3A as per PPPA Amendment Act 20211 . The PPPA functions under the administrative control of the Ministry of Finance. Its mandate, among others, are to regulate PPP transactions; assist federal implementing agencies in developing, structuring, and procuring their infrastructure projects through private sector investment; and approve PPP transactions that provide value for funding solution to the public sector. The supervisory ministry has been changed from Ministry of Finance to Ministry of Planning, Development, Reforms, and Strategic Initiatives. The PPPA Amendment Act 2021 also elaborates on the powers of the PPPA, the extracts of which are provided below1 :

      • ensure that “qualified projects” are consistent with national and sector strategies;
      • ensure value for money by conducting an analysis to evaluate qualified projects in the manner as may be prescribed;
      • conduct appraisal and project risk analysis for qualified projects;
      • assess all funding requirements;
      • advise, facilitate, and actively support the implementing agency to develop and structure, as needed, the qualified projects at all stages of the project cycle such as identification, planning, tendering, bidding, contract award, and implementation;
      • standardize contractual provisions and develop sector-specific provisions and templates including a model PPP agreement for qualified projects;
      • analyze and assess annuity, user-based, hybrid, and other financial models for qualified projects; and
      • interact, collaborate, and liaise with international agencies.

      The PPPA Amendment Act 2021 also proposes establishing the Public Private Partnership Working Party (P3WP), which, among other things, is responsible for

      • granting approval of the project concept proposal submitted by the PPPA,
      • granting approval of the project qualification proposal submitted by the PPPA, and
      • performing other functions as may be prescribed from time to time.

      One of the key responsibilities of implementing agencies as per PPPA Amendment Act 2021 is to “monitor and implement the project in accordance with the public–private partnership agreement.” It is thereby clear that the implementing agencies are responsible for monitoring the PPP projects after the award of the project.

      For qualified projects, the power to monitor is assigned to the Board of P3A. One of the powers of the Board of P3A, as per the PPPA Amendment Act 2021, is “monitoring, in respect of qualified projects, the implementation of public–private partnership agreements, including in terms of the financial situation and the construction of physical assets and service delivery.”

    • National Framework for Enabling PPPs

      The PPP Process


      Does the PPP legal and regulatory framework provide for a PPP implementation process covering the entire PPP life cycle?
      Does the Feasibility Assessment Stage cover
      • Technical feasibility?

      • Socioeconomic feasibility?

      • Environmental sustainability?

      • Financial feasibility?

      • Fiscal affordability assessment?

      • Legal assessment?

      • Risk assessment and PPP project structuring?

      • Value for Money assessment?

      • Market sounding with stakeholders?

      Is the PPP procurement plan required?
      Is there a need to set up a separate PPP procurement committee?
      Is competitive bidding the only method for selection of PPP private developer?
      Is the prequalification stage necessary? Or does the PPP legal and regulatory framework allow flexibility to skip the prequalification stage? Prequalification is not mandatory
      Does the PPP legal and regulatory process provide the option to the preferred bidder for contract negotiations?
      Does the PPP legal and regulatory framework allow unsuccessful bidders to challenge the award/submit complaints?
      What is the maximum time allowed for submitting a complaint/challenging the award by unsuccessful bidders from the announcement of the preferred bidder? 15 Days
      Does the PPP legal and regulatory framework provide for transparency?
      Which of the following are required to be published?
      • Findings from the feasibility assessment?

      • Procurement notice?

      • Outcome of stakeholder consultations from market sounding?

      • Clarifications to prequalification queries?

      • Prequalification results?

      • Clarifications to pre-bid queries?

      • Results for the bid stage and selection of preferred bidder?

      • Final concession agreement to be entered between the government agency and the preferred bidder? And other PPP project agreements executed between government agency and preferred bidder?

      • Confidentiality

      • Yes
      • No

      Section 19 of the PPPA Amendment Act 2021 defines the aspect related to the agreement negotiation and indicates that:

      • The implementing agency shall, after all applicable approvals have been obtained in accordance with Section 17, invite the successful private party bidder for negotiation of the public–private partnership agreement on such terms and conditions as may be prescribed from time to time.

      The PPPA Amendment Act 2021 also provides the implementing agencies a scope for entering into negotiated procurement in cases where the federal government approves such a case. Section 20 of the PPPA Amendment Act 2021 states that:

      • Subject to the rules and regulations prescribed under this Act, an implementing agency may enter into a negotiated procurement of a project in case the Federal Government authorizes such an exception, for reasons to be recorded in writing, in the public interest.

      The PPP Act is silent on the PPP life cycle and processes. The PPPA Amendment Act 2021, however, indicates that the provisions of the act shall supersede other extant acts, and authorizes the implementing agencies to seek private sector participation in appropriate projects. The PPP Act also indicates that appropriate rules and regulations will be formulated under the act to facilitate the entrance of implementing agencies into contracts with the private sector players. Subsequently, the process flow for approvals and for bidding and contract award shall be prescribed. The act also includes a new chapter on the legal and contractual framework for PPPs.

    • National Framework for Enabling PPPs

      Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs


      Does the country have PPP Guidelines/PPP Guidance Manual?
      Does the PPP Guidelines/PPP Guidance Manual adequately cover the process, entities involved, roles and responsibilities of various entities, approvals required at various stages, and the timelines for the various stages of the PPP project life cycle?
      What are the templates and checklists available in the PPP Guidelines/PPP Guidance Manual?
      • Project Needs Assessment and Options Analysis checklist?

      • Project Due Diligence checklist?

      • Technical Assessment checklist?

      • Environmental Assessment checklist?

      • PPP Procurement Plan template?

      Does the country have standardizedmodel bidding documents for PPPs?
      • Model Request for Qualification (RFQ) document?

      • Model Request for Proposal (RFP) document?

      • Model PPP/Concession Agreement?

      • State Support Agreement?

      • VGF Agreement?

      • Guarantee Agreement?

      • Power Purchase Agreement?

      • Capacity Take-or-Pay Contract?

      • Fuel Supply Agreement?

      • Transmission and Use of System Agreement?

      • Performance-Based Operations and Maintenance Contract?

      • Engineering, Procurement and Construction Contract?

      Does the country have standardized PPP agreement terms?
      Does the country have standardized/ model tool kits to facilitate identification, preparation, procurement, and management of PPP projects?
      • PPP Family Indicator?

      • PPP Mode Validity Indicator?

      • PPP Suitability Filter?

      • PPP Screening Tool?

      • Financial Viability Indicator Model?

      • Economic Viability Indicator Model?

      • VFM Indicator Tool?

      • Readiness Filter?

      Is there a framework for monitoring fiscal risks from PPPs including the following?
      • Process for assessing fiscal commitments?

      • Process for approving fiscal commitments?

      • Process for monitoring fiscal commitments?

      • Process for reporting fiscal commitments?

      • Process for budgeting fiscal commitments?

      Are there fiscal prudence norms/thresholds to limit fiscal exposure to PPPs?
      Is there a process for assessing and budgeting contingent liabilities from PPPs?
      • aArticle 12A of the Public Private Partnership Authority (PPPA) Amendment Act 2021 assigns the responsibility of reviewing and managing fiscal risks in PPP projects to the Risk Management Unit. The article states that the responsibility for fiscal oversight and for evaluation of fiscal and contingent liability exposure for all qualified projects shall lie with the Risk Management Unit. Such evaluation shall be determined by the Finance Division in consultation with the PPPA.
      • Yes
      • No

      VFM = value for money, VGF = viability gap funding.

      At the federal level, the Government of Pakistan issued the Project Preparation/Feasibility Guidelines for PPP Projects in August 2007 and the Policy on Public–Private Partnerships in January 2010.

      Key Clauses Related to PPP Agreement

      The PPPA Amendment Act 2021 prescribes that every agreement shall be governed, construed, and interpreted in accordance with the laws of Pakistan and shall include the following key clauses: 1

      • scope of activities of the parties to the agreement;
      • duration of the agreement;
      • payment arrangements for the private party, including, where applicable, the factors based on which and the manner in which user charges or tariffs may be revised;
      • rights and obligations of the parties and the respective risks to be borne by each party;
      • penalties for noncompliance with the provisions of the PPP agreement;
      • dispute resolution mechanisms;
      • exit clauses specifying the procedure of early termination of the PPP agreement;
      • termination payments and compensations, if agreed and provided in the PPP agreement;
      • debt–equity ratio;
      • monitoring;
      • project insurances and treatment of insurance proceeds;
      • O&M requirements; and
      • reversion, transfer, or handing back of the project, wherever applicable, and all the associated assets to the implementing agency upon expiry or termination of the PPP agreement.


      Does the law specifically enable lenders the following rights:
      • Security over the project assets?

      • Security over the land on which they are built (land use right)?

      • Security over the shares of a PPP project company?

      • Can there be a direct agreement between the government and lenders?

      • Do lenders get priority in the case of insolvency?

      • Can lenders be given step-in rights?

      Does the law specifically enable compensation payment to the private partner in case of early termination due to:
      • Public sector default or termination for reasons of public interest?

      • Private sector default?

      • Force majeure?

      Does the law enable the concept of economic/financial equilibrium?
      Does the law enable compensation payment to the private partner due to:
      • Material adverse government action?

      • Force majeure?

      • Change in law?

      • aThere is no specific provision on material adverse government action in the Act; however, there is no prohibition on the same either. It may be inferred that the PPP Authority could include it based on the context.
      • Yes
      • No

      Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.

    • National Framework for Enabling PPPs

      Unsolicited PPP Proposals


      Does the PPP legal and regulatory framework allow submission and acceptance of unsolicited proposals?
      What are the advantages provided to the project proponent for an unsolicited bid?
      • Competitive advantage at bid evaluation?

      • Swiss Challenge?

      • Compensation of the project development costs?

      • Government support for land acquisition and resettlement cost?

      • Government support in the form of viabiity gap funding and guarantees?

      • Yes
      • No

      Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.

      The Public Private Partnership Authority (PPPA) Amendment Act 2021 reiterates that unsolicited proposals could be considered for further evaluation. Further details, including those related to procedures to evaluate and reward a private sector player, may be provided in the subsequent issuance of rules and regulations. The newly introduced Section 14A of the PPP Act states that:

      • A private party may submit proposal for a project on an unsolicited basis to the authority or an implementing agency in the manner in meeting such requirements as prescribed, which shall be subject to procurement procedures prescribed from time to time.

    • National Framework for Enabling PPPs

      Foreign Investor Participation Restrictions


      Is there any restriction for foreign investors on:
      • Land use/ownership rights as opposed to similar rights of local investors?

      • Currency conversion?

      PPP projects with foreign sponsor participation (number) 54
      • No

      As per the Pakistan Investment Policy 2013 (Investment Policy), all sectors and activities are open for foreign investment unless specifically prohibited or restricted for reasons of national security and public safety. Specified restricted industries include arms and ammunitions; high explosives; radioactive substances; securities, currency, and mint; and consumable alcohol. There is no upper limit on the share of foreign equity allowed, except in specific sectors including airline, banking, agriculture, and media. For corporate agriculture farming, foreign investors are allowed to hold 100% equity.

    • National Framework for Enabling PPPs

      Dispute Resolution


      Does the country have a Dispute Resolution Tribunal?
      Does the country have an Institutional Arbitration Mechanism?
      Can a foreign law be chosen to govern PPP contracts?
      What dispute resolution mechanisms are available for PPP agreements?
      • Court litigation

      • Local arbitration

      • International arbitration

      Has the country signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards?
      • Yes
      • No

      Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.

      Pakistan has no dispute resolution tribunal nor an institutional arbitration mechanism. It all depends on the arbitration clauses in the agreement. Article 18 of the PPPA Amendment Act 2021 relates to the settlement of disputes. The PPPA Amendment Act 2021 stipulates the provision of the PPP agreement for resolution of disputes between the parties. It also prescribes that the federal government require the private party to exhaust all domestic dispute resolution remedies including recourse to domestic courts before seeking international arbitration. The act provides the parties an option to refer the dispute to the PPPA for settlement through mediation.

      As to foreign jurisdiction clauses, the courts in Pakistan have held that these clauses are valid under Pakistan law. However, the jurisdiction provision will not be construed as ousting the jurisdiction of Pakistan’s courts but will be dealt with in the same manner as an arbitration clause in the event of legal proceedings being instituted in a court in Pakistan. Accordingly, in the event that any legal proceedings are instituted by a party in Pakistan, even when the contract is governed by the laws of a foreign country, the other party against whom the legal proceedings have been instituted can apply for stay of the proceedings in terms of section 34 of the Pakistan Arbitration Act 1940.


      There are two major statutory instruments that govern arbitration in Pakistan: the Arbitration Act 1940, which applies to local arbitrations, and the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011, which applies to foreign arbitrations. Neither of these are based on the United Nations Commission on International Trade Law Model Law.1

      Pakistan is a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Pakistan became a signatory to the convention on 30 December 1958 and it was ratified on 14 July 2005.2

      The New York Convention was first implemented under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance 2005, which was subsequently re-promulgated from time to time (Foreign Arbitration Ordinances), before it was enacted as the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 on 19 July 2011 (Foreign Arbitration Act). The Foreign Arbitration Ordinances, which are promulgated from time to time, and the Foreign Arbitration Act are substantially identical. In terms of Article V of the New York Convention, a foreign arbitral award will not be enforced where recognition and enforcement of the same would be contrary to the public policy of Pakistan.


    • National Framework for Enabling PPPs

      Environmental and Social Issues


      Is there a local regulation establishing a process for environmental impact assessment?
      Is there a legal mechanism for the private partner to limit environmental liability for what is outside of its control or caused by third parties?
      Is there a local regulation establishing a process for social impact assessment?
      Is there involuntary land clearance for PPP projects?
      • Yes
      • No
      • Unavailable

      Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.

      Local Regulation for Initial Environmental Examination and Environmental Impact Assessment

      The Pakistan Environmental Protection Act 1997 (PEPA) is the principal environmental legislation in the country. In all four provinces and at the federal level, environmental protection agencies were established under the provision of the PEPA.

      The environmental protection agencies carry out initial environmental examination (IEE) and environmental impact assessment (EIA) in their respective jurisdictions.

      At the federal level and for the provinces of Punjab, Khyber Pakhtunkhwa, and Balochistan, the process of applying for and obtaining the IEE and the EIA is regulated under the Pakistan Environmental Protection Agency (Review of IEE and EIA) Regulations 2000 (IEE and EIA Regulations).

      Local Regulation for Social Impact Assessments

      There is no local regulation for social impact assessments (SIAs) in Pakistan. In the province of Punjab, however, to assess the social consequences of PPP projects, guidelines have been issued by the Public Private Partnership Cell, Planning and Development Department, the provincial government of Punjab (collectively referred to as Punjab SIA Guidelines).

      Under the Punjab SIA Guidelines, SIAs can be undertaken as part of an environmental assessment process, or independently, if required, to better assess the social consequences, both positive and negative, of implementing a PPP project. However, no process has been defined for PPPs to conduct SIA and neither has a regulator been identified for carrying out the SIA .

      Other than Punjab, in all other provinces and at the federal level, no such guidelines have been developed. However, it has been observed that both Sindh and Punjab apply the Environmental and Social Management System when implementing PPP projects.

    • National Framework for Enabling PPPs

      Land Rights


      Which of the following is permitted to the private partner:
      • Transfer land lease/use/ownership rights to third party

      • Use leased/owned land as collateral

      • Mortgage leased/owned land

      Is there a legal mechanism for granting wayleave rights, for example, laying water pipes or fiber cables over land occupied by persons other than the government or the private partner?
      Is there a land registry/cadastre with public information on land plots?
      Which of the following information on land plots is available to the private partner?
      • Appraisal of land value

      • Landowners

      • Land boundaries

      • Utility connections

      • Immovable property on land

      • Plots classification

      • Yes

      Sources: Asian Development Bank (ADB) 2019. Public–Private Partnership Monitor. Second Edition. Manila.; ADB Pakistan Resident Mission Pakistan; and ADB Office of Public–Private Partnership.

      The numerous land laws in Pakistan are central to the PPP transaction and are relevant for local and foreign users or owners of land.

      The key regulations governing land in Pakistan are as follows:

      • The Transfer of Property Act 1882.
      • The Land Acquisition Act 1894.
      • The Registration Act 1908.
      • The Stamp Act 1899.
      • The Easements Act 1882.
      • Punjab Land Records Authority Act 2017.
      • The Colonization of Government Lands (Punjab) Act 1912.
      • The Colonization of Government Lands Act 1912 (in its application to the Province of Sindh).
      • The Land Revenue Act 1967.

      Various portions of land in Pakistan belong to the state. State-owned land in Pakistan may be leased, granted, or assigned to individuals or corporations for various purposes. In most cases where state land is used by non-state entities, the land remains in the possession of the state with rent payable from the tenants to the state, such as in a leasing arrangement where such land is leased out to private developers on the terms stipulated in the lease. The regulatory environment in Pakistan provides the procuring authority the ability to make available the necessary land or right-of-way to PPP project companies for the development of PPP projects.

      The rights, terms, and conditions pertaining to land are determined on a case-to-case basis.

      Acquisition of Land by a Foreigner

      In relation to the ownership of land, the federal government in exercise of its powers, under the Foreigner Act 1946, has ordered that no foreigner shall, directly or indirectly, acquire land or any interest in land or landed property in Pakistan except with the previous permission of the federal government or of the provincial government.

      Further, the Home Department of the provincial government of Sindh, according to its notification dated 1 November 2009, directed that no lease, rent, nor sale of any plot of land or property shall be made in favor of foreign nationals in the province of Sindh, without seeking the prior approval of the province’s Home Department.

      Protection Provided under the Constitution and the Economic Reforms Act 1992

      Although the fundamental right to acquire or dispose a property, as provided in Article 23 of the Constitution, is not available to a foreigner, Article 24 of the Constitution, among other things, provides that no person shall be compulsorily deprived of his property saved in accordance with law, and no property shall be compulsorily acquired or taken possession of, saved for a public purpose and saved by the authority of law which provides for compensation. This protection provided by Article 24 is available not only to a citizen but also to a foreigner, whether a natural person or an artificial person.

      Grant of Wayleave Rights

      In Punjab and Sindh, the private partner shall be granted the right-of-way for the implementation of the project by way of government support. The PPP Act of Khyber Pakhtunkhwa prescribes that the private partner, upon the request of the contracting authority, under the terms of the law and the concession contract, shall be assisted to enjoy the right to enter upon, transit through, or do work, or fix installations on the property of third parties, as appropriate and required for the implementation of the project. In Khyber Pakhtunkhwa, any compulsory acquisition of land for a project is carried out in accordance with the Land Acquisition Act.

      Land Registry with Public Information on Land Plots

      In Pakistan, land matters are administered by the Revenue Department of each provincial government. A Revenue Department of a provincial government comprises of several officials including a Provincial Board of Revenue that overlooks any matters relating to or arising out of land, such as the maintenance of a record of rights for each province.

      In case of transfer of property through sale, pursuant to the Transfer of Property Act, to confirm the right and title of the transferor in the property, the transferee or its counsel must review the transferor ownership documents and verify title to property.

  • Government Support for PPP Projects


    Project Funding Support
    Is there a dedicated government financial support mechanism for PPP projects?
    What are the instruments of government financial support available under this government financial support mechanism?
    • Capital grant

    • Operations grant

    • Annuity/availability payments

    • Guarantees to cover

    • Currency inconvertibility and transfer risk

    • Foreign exchange risk

    • War and civil disturbance risk

    • Breach of contract risk

    • Regulatory risk

    • Expropriation risk

    • Government payment obligation risk

    • Credit risk

    • Minimum demand/revenue risk

    • Risk of making annuity/availability payments in a timely manner

    What are the caps/ceilings for the government financial support under each of the abovementioned government financial support instruments?
    Is there a minimum PPP project size (investment) for a PPP project to be eligible for receiving government financial support?
    Are there minimum equity investment requirements which the private developer should meet for availing any of the above government support mechanism?
    Are there minimum financial commitment requirements for the private developer equity before the government support could be drawn?
    Is the government financial support required, usually the bid parameter for PPP projects?
    Are unsolicited PPP proposals eligible to receive government financial support?
    Are there standard operating procedures for providing government financial support to PPP projects?
    • Appraisal and approval process

    • Budgeting process

    • Disbursement process

    • Monitoring process

    • Accounting, auditing, and reporting process

    Who are the signatories to the government financial support agreement? Implementing agency after requisite approvals, including the Risk Management Unit and the private sector
    Who is responsible for monitoring the performance of PPP projects availing government financial support?
    • Independent engineer?

    Board of Federal P3A,
    • Government agency?

    government agency,
    • Ministry of Finance?

    Risk Management
    What are the other forms of government support available for PPP projects?
    • Land acquisition funding support?

    • Funding support for resettlement and rehabilitation of affected parties?

    • Tax holidays/exemptions?

    • Real estate development rights?

    • Advertising and marketing rights?

    • Interest rate/cost of debt subventions?

    • Other subsidies and subventions?

    Can the other forms of government support be availed over and above the government financial support through various instruments listed above?
    • Yes
    • No
    • Unavailable

    P3A = Public Private Partnership Authority.
    Sources: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila.; and Government of Pakistan, Public Private Partnership Authority. 2020. Public Private Partnership Authority (Amendment) Act 2021. Islamabad.

    Presently, the government has the discretion and authority to provide guarantees, on a case-by-case basis, to projects to provide comfort to the private sector. The PPPA Amendment Act 2021 further details the nature of support mechanisms, including the guarantees that could be extended to PPP projects.

    • administrative support to the private party consistent with its responsibilities under the PPP agreement and applicable laws for obtaining licenses and clearances from the government, a public sector organization or an implementing agency, for the purposes of the project on such terms and conditions as may be prescribed; provision of utility connections for power, gas, telephone and water at the project site; acquisition of land or rights of way necessary for the project; rehabilitation and resettlement of displaced persons directly required to execute the project; environmental impact assessment, safeguards, approvals, and any other local permissions and approvals;
    •  asset-based support to the private party, such as leasing, licensing or grant of right to mortgage and use land or infrastructure facilities owned by the government or an implementing agency;
    • financial assistance through the viability gap funding (VGF);
    • sovereign guarantees for political or other risks; and
    • any other support prescribed in respect of a qualified project, provided that any funding or financial support given through the project development facility shall not form part of project support.

    The PPPA Amendment Act 2021 specifies that the Project Development Facility (PDF) shall be mainly utilized to support the preparation of any proposals for qualified projects. These regulations describe the following sources for replenishing the PDF:

    • upfront grant-in-aid from the government (with PDF being a non-lapsable facility);
    • a pool of funds, including contributions from international donor agencies; and
    • an amount specified by the Board of Federal P3A (the fund may be replenished from time to time in the prescribed manner).

    Project Development Funding


    Project Development Funding
    What are the various sources of funds for PPP project preparation?
    • Budgetary allocations

    • Dedicated project preparation/project development fund

    • Technical assistance from multilateral/bilateral/and donor agencies

    • Recovery of project preparation funding from the preferred bidder

    At what stage of the PPP project, can the project preparation/development funding be availed by the government agency?
    • Pre-feasibility stage

    • Detailed feasibility stage

    • Transaction stage

    Is there a list of project preparation/project development activities towards which the project development funding can be utilized?
    Can the project development funding be utilized to appoint transaction advisors for PPP projects?
    Is there a specific process to be followed by government agencies to appoint transaction advisors?
    What are the payment mechanisms for making payments to transaction advisors?
    • Timesheet-based

    • Milestone-based

    Are there standard agreements and documents to avail project development funding?
    Who are the signatories to the project development funding agreements?
    • Yes
    • Unavailable
  • Maturity of the PPP Market


    PPP Project Statistics
    • Is there a national PPP database for the country?

    Is the distribution of PPP projects across infrastructure sectors available?
    Is the distribution of PPP projects across various stages of the PPP life cycle available?
    • No
    • Not Applicable

    PPP Project Pipeline


    Does the country publish a national PPP project pipeline?
    At what frequency is the national PPP project pipeline published?
    Is the national PPP project pipeline based on the national infrastructure plan for the country?
    • Yes
    • No
    • Unavailable

    The website of the Federal P3A publishes the list of ongoing and pipeline projects in Pakistan. Currently, the website describes only one project in the pipeline—the Construction of Water Transmission Pipeline, implemented on a PPP basis.1

    The PPP units in Punjab, Sindh, and Khyber Pakhtunkhwa provinces manage and update their PPP project pipelines. The updated PPP project pipelines for Punjab and Sindh are available online.

    The Planning Commission reviews and approves the Public Sector Development Program. The Planning Commission screens and proposes potential PPP projects from the program. This is in consultation and coordination with the PPP Authority, the line ministries, and other contracting authorities. The contracting authorities have various responsibilities in relation to planning, development, procurement, implementation, execution, and monitoring of PPP projects. They also coordinate the identification and screening of projects with their respective PPP units to determine whether that project would be suitable for development as a PPP within their respective jurisdiction.

    Sources of PPP Financing


    Sources of PPP Financing
    Who are the typical entities financing PPP projects in the country?
    • Private developers

    • Construction contractors

    • Institutional/financial/private equity investors

    • Pension funds

    • Insurance companies

    • Banks

    • Nonbanking financial corporations/Financial institutions

    • Donor agencies

    • Government agencies and state-owned enterprises

    What is the distribution of financing among these entities financing PPP projects?
    Does the country have the history/track record of issuing bonds by infrastructure projects?
    How many infrastructure projects private developers for infrastructure projects have raised funding through bond issuances?
    What is the value of funding raised through capital markets by PPPs?
    Does the country have a matured derivatives market to hedge certain risks associated with PPPs?
    Does the country have a national development bank?
    Does the country have credit rating agencies to rate infrastructure projects?
    Typically, what are the credit ratings achieved/received by infrastructure projects?
    Is there a threshold credit rating for infrastructure PPPs below which institutional investors, pension funds, and insurance companies would not invest in infrastructure PPPs?
    What is the typical funding model for infrastructure PPPs -- corporate finance or project finance?
    Are there regulatory limits/restrictions for the maximum exposure that can be taken by banks to infrastructure projects?
    • Yes
    • Unavailable