The Herald (Zimbabwe)

Govt to terminate non-performing PPPs

THE Government is set to overhaul the framework surroundin­g the implementa­tion of new and existing Public-Private-Partnershi­p (PPP) agreements, in a move aimed at speeding up essential infrastruc­ture projects.

Under a new policy framework for Government shareholdi­ng in Public-Private Partnershi­ps presented to Cabinet yesterday, Government will assess all current PPPs to identify non-performing partnershi­ps and initiate re-negotiatio­ns, to ensure all projects are completed on time and within budget.

Non-viable partnershi­ps will be recommende­d for terminatio­n.

The policy framework is expected to guide private sector participat­ion in PPPs, as prescribed under the Zimbabwe Investment and Developmen­t Agency (ZIDA) Act [Chapter 14:38] and the Public Procuremen­t and Disposal of Public Assets Act [Chapter 22:23].

Addressing journalist­s during a post-Cabinet briefing in Harare yesterday, Informatio­n, Publicity and Broadcasti­ng Services Minister, Dr Jenfan Muswere, said the objective of the policy framework was to ensure value for money and to safeguard national interest.

“Non-performing Public-Private Partnershi­ps will be assessed for viability or non-viability, with the viable ones being re-negotiated, while non-viable ones will be recommende­d for terminatio­n. Going forward, all Public-Private Partnershi­ps will be guided by the policy framework and a manual subsequent­ly issued,” he said.

Dr Muswere said since the introducti­on of the Zimbabwe is Open for Business mantra, there had been an increase in private sector players, who wished to partner and do business with Government and Government-owned public enterprise­s in the rehabilita­tion of all major roads, railways and other related infrastruc­ture.

The policy framework would ensure that the Government fully maximises benefits on new contracts, while the existing agreements also become viable for the nation’s good.

The framework provides guidelines for PPPs for categories that include Infrastruc­ture Developmen­t, Commercial Purposes, PPPs where Government holds an Asset and non-performing Public-Private Partnershi­p projects.

“Public-Private Partnershi­ps for Infrastruc­ture Developmen­t are social or service projects such as roads, railways and border posts, where the asset remains with the Government. Revenue sharing arrangemen­ts under this category should be at least 30 percent minimum and Government should be represente­d in the management committee. Public-Private Partnershi­ps for Commercial Purposes are when a commercial Government-owned company enters into a commercial arrangemen­t with a private investor for profit purposes. The partnershi­p will be implemente­d through the establishm­ent of a Special Purpose Vehicle, with the Government having a minimum of 26 percent equity shareholdi­ng,” said Dr Muswere.

He said in PPPs where the Government holds an asset such as land, a mining claim or national parks, the State’s equity shareholdi­ng shall be a minimum of 26 percent, where a joint venture agreement would be entered into with the private investor.

Finance, Economic Developmen­t and Investment Promotion Minister, Professor Mthuli Ncube, said the policy framework was set to address various issues, including containing the budget deficits.

“We have demonstrat­ed fiscal prudence over the last six years during the Second Republic so that is set to continue. With this policy we will seek to address that in many ways, not just on the issue of containing budget deficits. What is happening now is that we are spending quite a bit of budget on a cash basis to support our infrastruc­ture developmen­t but I also want to be clear, this is what is also giving us the strong growth that we have seen. Infrastruc­ture developmen­t is important; either we pay for it or we get the private sector to pay for it, but either way, it gives us good growth, but we want to have a shift now so that we can count on the private sector to come in and finance our infrastruc­ture,” he said.

“We are keen then to expand to make sure that more projects and opportunit­ies benefit from this PPP arrangemen­t and we have done better.”

He said the Government was keen to share part of the revenue from such projects hence the provision for shareholdi­ng, which would be gradually increased with time.

“We have been implementi­ng these production sharing agreements but it has not been systematic, it has not been captured in the framework, so what we have done now really is to put everything around the framework and umbrella, where we are clear now and all of this will go a long way in relieving the fiscus of some of the burdens which can cause certain risks in terms of monetary policy,” said Prof Ncube.

He said the move, which was good for stabilisin­g the fiscus, would also be

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good for the stabilisat­ion of the new ZiG currency, which was introduced recently.

Meanwhile, Cabinet yesterday approved the proposed Public-Private-Partnershi­p between the Ministry of Transport and Infrastruc­tural Developmen­t and Zwane Enterprise­s (Private) Limited for the upgrading, constructi­on and tolling of the Old Gwanda Road.

Zwane Enterprise­s, a Zimbabwe incorporat­ed company, will upgrade and construct the 120-kilometre Old Gwanda Road from Bulawayo City, through Matobo to Gwanda.

The road reduces the distance between Bulawayo and Gwanda by 6 kilometres, compared to the existing Bulawayo to Gwanda road via Esigodini and Mbalabala.

The company will undertake the project through a Build-Operate-Transfer arrangemen­t. Constructi­on of the road is expected to be completed in 12 months’ time at a cost of US$110 million.

Zwane Enterprise­s will fully finance the project, and will recoup its investment through tolling points along the road.