The Law on Public-Private Partnership (PPP law) was officially enacted on 18 November 2021 and abrogated the Law on Concessions (2007). PPP law includes 14 chapters and 48 articles and aims to attract investment of public infrastructure by offering incentives.

Scope and competent authority

The scope of this Law shall govern the management of the development and implementation of PPP Projects within all eligible sectors.

The Ministry of Economy and Finance as a competent institution for leading and managing the PPP mechanism.

Eligible sectors

Eligible sectors that are related to the construction and/or services for PPP projects include as follows:

− Public infrastructure and public services for the transport and logistics sector such as roads, bridges, rails, airports, ports, public parking and canals;

− Public infrastructure related to telecom, posts, information and communication technology (ICT), and digital technology;

− Production, transmission and distribution of electricity, oil and gas pipelines, and other public services in mines and energy sector;

− Clean water supply and sanitation infrastructure, sewage system, drainage system, restoration system, wastewater treatment, waste management and other public services for the environmental protection;

− Public infrastructure and public services related to the health sector, education sector, labor and vocational training sector, tourism sector, culture and arts sector, sport sector and social housing;

− Public infrastructure related to the industry, science, technology and innovation sector such as special economic zones (SEZs), small and medium-sized enterprises (SMEs) clusters, and technology and

innovation parks;

− Public infrastructure related laboratories, processing, product storage, and trade promotion;

− Public infrastructure and public services related to the agriculture sector and irrigation system;

Financial support

The government offers supports such as:

1. Viability Gap Financing (VGF): is the Royal Government’s subsidy provided to the Private Partner to reduce its capital expenditure, while increasing the financial viability of the project. The payment for such a subsidy shall be based on specific performance milestones after the commencement of construction and can be renewed for up to 2 (two) years after the completion of construction.
2. Availability Payment: is the payment made in full or in part for the service fees of the Private Partner for the operation of PPP project Asset(s), and/or the provision of public services to public users.
3. Government Contingent Liabilities: are the types of guarantees provided to the Private Partner or related entities in special cases in addressing potential impacts from unforeseen circumstances and/or risks as stipulated in the PPP contract.
4. Performance guarantee: is a type of guarantee that grants compensation in the event that the Implementing Agency or any other public entities have not fulfilled obligations as stipulated in the PPP Contract or relevant agreements.
5. Sovereign or political risk guarantee: is a type of guarantee that grants compensation in the event that political actions or the government policies resulted in adverse impact on the Private Partner, mainly including expropriation, nationalization and violence driven by the political activities.
6. Other guarantees: are other types of guarantees approved by the Royal Government of Cambodia in accordance with applicable laws and regulations.
7. Asset Contributions
8. Investment Incentives

Contract period

The PPP Contract shall specify the contract period and conditions to extend the contract period. The determination of the initial contract period shall be based on the factors of Project Asset(s)’ life expectancy and the duration the Private Partner requires to recover its cost of investment. The initial contract period shall not exceed 30 (thirty) years from the date of signing of the Contract. In case of necessity and based on the model of the PPP Projects, the Royal Government may determine the initial contract period beyond 30 (thirty) years.

PPP Models

1. Build-Operate-Transfer (BOT): The Implementing Agency grants the Private Partner a right for design, finance, construct, operate and maintain Project Asset(s) and collect fees, tolls, rentals and other user charges from users of the Project’s facilities or services for an agreed Contract Period as stipulated in the PPP Contract. After the expiry of the Contract Period, the Private Partner shall transfer all rights and benefits relating to the Project and the Project Asset(s) back to the Implementing Agency, in accordance with the terms of the PPP Contract. Variants of the BOT model include:

• Build-Lease-Transfer (BLT), wherein the Private Partner designs, finances and constructs the Project Asset(s) and after which leases the Project Asset(s) back to the Implementing Agency for a lease fee as stipulated in the PPP Contract. All other aspects of the BOT model remain the same under this variant.
• Build-Transfer-Operate (BTO), after the construction completion of Project Asset(s), the Private Partner shall transfer the title of the Project Asset(s) to the Implementing Agency. All other aspects of the BOT model remain the same under this variant.

2. Build-Own-Operate-Transfer (BOOT): The Implementing Agency grants the Private Partner a right to design, finance, construct, operate and maintain Project Asset(s) and collect fees, tolls, rentals and user charges from users of the Project Asset(s) or services for an agreed contract period as stipulated in the PPP Contract. The BOOT model is distinct from the BOT model, where the Private Partner owns the rights to the Project Asset(s) during the contract period. After the expiry of the contract period, the Private Partner shall transfer all rights and benefits relating to the Project and the Project Asset(s) back to the Implementing Agency in accordance with terms and conditions of the PPP Contract.
3. Build-Own-Operate (BOO): The Implementing Agency grants the Private Partner a right to design, finance, construct, own and operate Project Asset(s) in perpetuity or for an indefinite period, in accordance with terms and conditions of the PPP Contract. The Private Partner shall be entitled to make commercial use of the Project Asset(s), including collecting fees and other incomes from users of the Project’s Asset(s) or services. Variants of the BOO model include:

• Rehabilitate-Own-Operate (ROO): This model has the same characteristics as BOO model, but the Private Partner shall obtain ownership rights of the existing Project Asset(s) for rehabilitation of that Project Asset(s);
• Modernize-Own-Operate (MOO): This model has the same characteristics as BOO model, but the Private Partner shall obtain ownership rights of the existing Project Asset(s) for modernization of that Project Asset(s);

4. Management Agreement/Operations and Maintenance Agreement (O&M): The Private Partner shall provide daily services relating to operations and maintenance of existing Project Asset(s) or other state assets owned by the Implementing Agency, in return for service charges payable by Implementing Agency or other parties in accordance with terms and conditions of the PPP Contract. In general, this agreement does not require the Private Partner to invest its own capital and hold any rights to the Project Asset(s) or other state assets. In the event that Project requires the Private Partner to invest their own capital, the Private Partner can recover such investment from payments from the Implementing Agency or other parties in accordance with terms and conditions stipulated in the PPP Contract.
5. Design-Build-Finance-Operate-Maintain (DBFOM): The Implementing Agency grants the Private Partner a right to design, build, finance and provide operations and maintenance services for the Project Asset(s) in accordance with terms and conditions of the PPP Contract. The Private Party shall have the rights to collect revenue through the provision of services mentioned from the Implementing Agency or other parties in accordance with terms and conditions of the PPP Contract. At the end of the contract period, the Private Partner shall transfer the Project Asset(s) back to the Implementing Agency.
6. Design-Build-Lease (DBL): The Implementing Agency grants the Private Partner a right to design, build and lease the Project Asset(s) from the IA, operate, and provide maintenance in accordance with terms and conditions of the PPP Contract.