When the PPPUE project started in 2002, the legal context governing PPP activities was unclear. There were no acts or government directives to guide municipalities and similar agencies.In 2004, as a result of project efforts, the PPP Policy (for local bodies) 2060 was passed followed in 2005 by PPP Guidelines (for local bodies) 2061. The Policy and corresponding Guidelines documents have helped in clarifying the PPP legal regime.

An amendment to the Local Self-Governance Regulations 2000 (pursuant to the Local Self Governance Act 1999) has also made provision for Public-Private Sector Partnership Promotion Committees in local bodies (corresponding very closely to PPP Committees established by PPPUE).

Regulation No. 157 in the latest revision to the Local Self-Governance Regulations 2064 (2007) has taken PPP as a procurement and fund collection modality for the local bodies of Nepal.