Business News of 2013-12-17

PPP implementation makes steady progress

The country is making steady progress towards the fast delivery of public services through a collaboration between the public and the private sector.

This observation comes just after about a year of adopting a public private partnership (PPP) policy.

The efforts include the identification of critical public infrastructure about which feasibilities studies would be carried to enable the government and sector ministries package the projects and invite the private sector to participate.

At a roundtable with selected sector ministers and officials from ministries, departments and agencies on December 10, the Minister of Finance, Mr Seth Terkper, named some of the projects as the dualisation of the Accra-Takoradi Highway; the Boankra Inland Port and Eastern Railway Line; the Western Corridor Roads as well as development of infrastructure at the National Sports College.

Others were the establishment of a national airline, the expansion of the Accra-Tema Motorway and the development of model markets, lorry parks and various community infrastructure projects.

The meeting was to sensitise the ministries about the policy and what was required of them, as well as how they could identify projects, conduct feasibility and design the projects properly.

MDAs are also expected to come out with more of such projects which could involve the private sector within a PPP arrangement so as to ensure the efficient use of public resources in closing the infrastructure gap.

The government approved a PPP policy in 2011 to encourage private sector participation in the provision of public infrastructure, which the World Bank Group estimates would cost the country about US$1.5 billion every year for the next decade.

PPPs are contractual arrangements between a public sector and private entity (entities) for the delivery of public services, with a significant transfer of risk to the private sector over a period of time.

“Principally, a PPP enables the government to provide better infrastructure and services through the use of private sector financial, human and technical services, thereby freeing government resources for other equally important uses,” Mr Terkper explained.

Already, the 2014 Budget has set up an Infrastructure Fund, into which proceeds from 2.5 per cent value added tax would be channeled. These funds would also be shored up with independent borrowings on the local and international bonds market with which it would match private funds within the space of PPPs.

The advantage here is that instead of channeling, say, a US$100 million into a single project, the government can leverage the funds with the help of private capital to deliver between five and 10 projects (that is between 1:5 and 1:10).

Mr Terkper, whose ministry is coordinating the PPP activities, announced a comprehensive capacity building programme with the support of development partners to equip both public and private sector entities on PPP processes.

The World Bank has granted a US$30 million facility for a number of interventions including capacity building at the Public Investment Division of the Ministry of Finance; pipeline preparation of projects and transaction advisory support as well as project management, monitoring and evaluation.

Currently, the bank is supporting the government to appoint transaction advisors for a number of the projects enumerated above.