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Jun 20, 2011 | Projects/Developments

Cabinet Approves Public-Private Partnership In Project Finance

Cabinet has approved the public-private partnership (PPP) policy to provide more public infrastructure projects and deliver them speedily.

The areas where the PPP policy, which will later become law, will focus include general infrastructure such as roads and tourism facilities, utilities such as water, railways, energy, as well as social amenities such as schools and hospitals.

The development of the policy, which started last year, is in response to the increasing infrastructure gap in the country which, according to a World Bank study, requires an injection of not less than $2.5 billion annually for 10 years to close and the need to bring in private capital to provide public sector services and infrastructure.

This came to light in Accra on Thursday at the 19th Executive Business Luncheon organised by the Association of Ghana Industries (AGI) to sensitise members and the general business community to PPPs, how the country is moving in that direction and how the private sector can take advantage of the policy.

It was on the theme, “'Structuring successful PPP arrangements in Ghana — Critical factors the private sector must be aware of”.

The Head of the PPP Policy Unit, Mrs Magdalene Apenteng, explained that the government placed a lot of emphasis on PPPs as one of the surest ways of filling the infrastructure gap and also encouraging the indigenous private sector to participate in them.

She said the law would provide a range of instruments to support project preparation and financial viability of projects, including a project development facility, a viability gap scheme and an infrastructure finance facility.

The implementation of the policy will mean that the government will very much cut down on unsolicited proposals from private sector actors who may spot opportunities and want to explore them in partnership with the government.

An expert in PPP structuring, Mr David Ofosu-Dorte, a legal practitioner, who was the main presenter at the programme, warned the private sector to be wary of making unsolicited proposals to the government, which often happened because they knew people in the corridors of power.

He said the private sector should also take feasibility studies seriously, negotiate well and ensure that everything was done according to procedure and laid down rules, else they risked losing when governments or the person(s) they knew in power left office.

Mr Ofosu-Dorte, who is also the Managing Partner at AB and David, a reputable law firm specialising in business and projects in Africa, said it was important for private sector actors who wanted to enter into PPP with the government not to overlook negotiation.

They must also prepare with adequate finance and capital, use proper advisory services and be prepared for transparent processes.

Mr Ofosu-Dorte, who was a member of the PPP policy drafting team, was satisfied with the political will that had been demonstrated in the past few years on bringing PPPs to the centre stage of infrastructure finance and called on the private sector to take advantage of the opportunities that would be created.

The government, in both the 2010 and 2011 budgets, made categorical statements on its preparedness to use PPPs to deliver huge infrastructure and socials services and amenities.

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