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Business News of Friday, 23 October 2015

Source: B&FT

PPP law to address infrastructure gap

Rashid Pelpuo, Minister of State at the presidencyRashid Pelpuo, Minister of State at the presidency

The draft Public Private Partnership (PPP) law, currently before Cabinet, will make room for accountability and transparency so as to ensure projects are executed by leveraging public and private sector resources in order to close the infrastructure gap and deliver efficient public infrastructure and services.

The Director of the Public Investment Division at the Ministry of Finance, Mrs. Magdalene Apenteng, speaking at a sensitisation forum for Civil Society Organisatiosns (CSOs) in Accra said: “The law will hopefully come very soon, and it will take care of accountability and bribery if it is fully passed.

“Within the draft PPP law, the guidelines and regulations make room for accountability and access to documentation, disclosure and so on.

“The law will support implementation of the national PPP policy that was launched by government in 2011. It is expected to give confidence to both local and international investors that would want to participate in PPPs with government.”

Under the law, Parliament will be the final approving authority for PPP projects -- subject to provisions of the policy -- to ensure protection of the public interest.

The PPP law, when passed, will ensure that gaps in the Public Procurement Act relating to PPP procurement practices and processes are addressed, and provide a clear definition of PPP projects and structures in such a way as to distinguish them.

The National Development Planning Commission (NDPC) has been mandated to prepare a national infrastructure plan for Ghana, and every PPP project initiated by contracting authorities will emanate from this plan.

The Attorney-General’s Department, with assistance and advice from the Legal Division of the Ministry of Finance, will ensure the conformity of all project agreements with the law.

The country’s development partners, including the World Bank and DFID, are supporting a project to move the PPP process forward with a total of US$30million over a five-year period. This is to assist in improving the legislative, institutional, financial, fiduciary and technical frameworks for PPPs, and develop bankable projects.

The focus of the project is to build capacity in the various government agencies and assist them in developing and delivering PPP projects in the various sectors, making them bankable and sustainable.

Ghana is presently faced with a huge infrastructure gap, and needs an average US$1.5billion per annum for the next decade to address it. This is required to bring the nation’s infrastructure to the recommended status for a middle-income country.

Studies on the country’s infrastructure requirements indicate that for the next decade government requirements for the transport sector alone average US$307 million annually to provide the needed infrastructure.

The power sector also requires on average an amount of US$1.255billion annually for the provision of the needed energy for accelerated development.

Water supply and sanitation are key vital social amenities, requiring an annual average funding of about US$435million. On the housing deficit, it is estimated that a minimum of 170,000 housing units will have to be built annually, spread over the next 10-year period, to reduce and curtail the current housing deficit.

Mrs. Apenteng said government is committed to ensuring the affordability of PPPs in infrastructure projects, and that it has structures in place to mitigate the potential for high cost of PPP projects in order to ensure affordability for the common man.

She added: “Affordability is one of the key issues for all of our policy directives in terms of getting PPPs in Ghana. We want to ensure that projects or services that are provided out of these projects are affordable to the young man or anybody on the street.

“In our analysis -- the technical analysis that we undertake -- we look at the affordability criteria, and that is when government decides to either come in or not come in. If we realise the amounts that have to be charged to the man on the street are very expensive, government has a way of coming in.”

She explained that PPPs have been used extensively in both developed and developing countries; such as the United Kingdom, India, South Africa, Brazil, and Cote D’Ivoire among others.

She mentioned that serious shortfalls in the provision of infrastructure still remain, as government continues borrowing to provide for them: including roads, hospitals, and schools among others.

Mr. Joseph Chognuru, Director, Financial Sector Division at the Ministry of Finance, told participants from CSOs that the PPP phenomenom is a new area and therefore requires more attention in order to make it a reality. “It is our duty to embrace it and provide the necessary coordination to support government in implementing PPPs for the benefit of our country.

“The Finance Minority will continue to build the capacity of all stakeholders involved to ensure a clear understanding of the PPP concept.”

He emphasised that developing countries in Africa, Asia, the Americas, and Middle-East do not need to re-invent the wheel.

“We should rather endeavour to learn from countries that have successfully implemented PPPs.

“We could achieve our ends by adopting and adapting the models, methods and best practices of leading countries with PPP skills and expertise, in a manner that suits our unique national characteristics.

“This way we are likely to optimise the PPP potential for the country, and also avoid the common pit-falls of PPP implementation which others have had to deal with,” he remarked.