Senior Minister, Yaw Osafo-Maafo, has asked that the Public Private Partnership (PPP) bill, currently before Parliament, be returned to Cabinet for a review before it is finally passed into law.
Cabinet, he said, needs to make additional input and necessary changes to help address the current infrastructural demands, he said.
He said this at the initial market sounding event for the Accra – Tema Motorway Upgrading Project, which brought together investors, project financiers, investor analysts, construction consultants, civil engineers, legal practitioners, officials from the Ghana Highways Authority, the Ministry of Roads and Highways, the Ministry of Finance and the Ghana Infrastructure Investment Fund.
“The recent reports in the media about some private sector players hiding behind PPPs to defraud the state is very worrying,” he said. “This, therefore, calls for proper reforms in the PPP modalities in any PPP arrangement government is entering into. With the expected passage of the PPP law in the very near future, it is envisaged that the private sector will be assured of security for their investments.”
The PPP law, when enacted, will support the implementation of the national PPP policy that was launched by the government in 2012. It is expected to give confidence to both local and international investors who would want to participate in PPPs with the government.
Ghana currently does not have a specific legislation governing the implementation of PPPs; however, efforts are ongoing to enact a PPP Law.
Notwithstanding the absence of a specific PPP law, there have been efforts to provide for a framework for the implementation of PPP.
On June 3, 2011, a National Policy on PPPs was approved by the then Cabinet, to guide the implementation of PPP in the country.
Mr. Osafo-Maafo explained that PPPs are not a universal solution to underlying sector investment and performance problems, adding that PPP development requires sustained policy dialogue and the development of suitable legal, regulatory and institutional frameworks.
The development of road PPPs usually requires the government to assume demand risks and/or provide financial support, as it is usually difficult to charge tariffs that cover costs. The risk sharing structures need to be perceived as fair and manageable, he said.
He indicated that some infrastructure sectors such as power are more conducive to private sector participation and PPPs than the road and transport sectors. This is due to a range of reasons, including better potential for cost-recovery, lower levels of stakeholder resistance to private sector participation, greater institutional capacity, more progress with sector unbundling and utility restructuring.
This, he said, does not mean that PPPs in other sectors are without prospects. Government recognises the road sector’s importance to economic growth and has accorded it a high political commitment, with support for capacity development and other sector reforms.
“Government’s decision to encourage PPPs in the road sector is due to a number of reasons, including reduced budgetary support, access to capital, need for off balance sheet borrowing, innovation and transfer of risk,” he stated.
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.
Mr. Kwasi Amoako-Attah, the Minister of Roads and Highways, said PPP market sounding events are opportunities for the public sector to establish the market and to manage the private sector expectations on what will be achieved by the project.
“One of the key objectives of the government is to increase the efficiency and effectiveness of the development, management and maintenance of the country’s road network.
This is motivated by the recognition that the road network constitutes the single largest asset owned by the government, and that a less-than-optimal system for its management and maintenance generally results in huge losses for the national economy.
These losses occur not only in the form of road deterioration but also in increased vehicle operation costs which have to be borne by road users,” he said.