The government of Ghana says it is committed to ensuring that Public-Private Partnership (PPP) projects in the country are affordable.
The Director of the Public Investment Division of the Ministry of Finance, Mrs Magdalene Apenteng told participants at a sensitization forum Wednesday October 21, 2015 that the government is committed to ensuring the affordability of PPP infrastructure projects.
Speaking at the forum for civil society organizations on PPPs, Mrs Apenteng said government has structures in place to mitigate the potential for high cost of PPP projects, and to ensure affordability for the common man.
“Affordability is one of the key issues in 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 realize that the amounts that have to be charged to the man on the street is very expensive, government has a way of coming in,” she said.
She added that government is finalizing the development of a Viability Gap Support Scheme which is expected to examine PPP projects that are economically viable but not financially viable.
She explained that some projects may be economically viable but may be very expensive for the project to thrive, by way of the post-completion utility fees that private partners would like to demand, which would add up to the cost of the project.
Mrs Apenteng said under the viability gap support scheme, government will offer a “construction grant” to facilitate affordability of the joint project by assisting the private partner to reduce the cost of the project.
“Construction grant means that if you are putting up a bridge for instance, government will give you a grant that will assist you to break the project cost down to the barest minimum that will be able to make anybody afford the payments that will come out of that particular project,” she said.
She also assured of transparency and accountability in PPPs and indicated that a draft PPP law has been put before Cabinet. She said “within the draft PPP law, the guidelines and the regulations make room for accountability and for access to documentation, disclosure and so on.
The Public Investment Division’s Director advocated PPPs for bridging Ghana’s infrastructure shortfall as has been done in countries like South Africa, Brazil and India, in light of Ghana’s fiscal challenges, particularly those attributable to borrowing to finance infrastructure, and the drastic reduction in concessionary financing arising from Ghana’s attainment of middle income status.
She disclosed that the Ministry of Finance and development partners are currently supporting state Ministries, Departments and Agencies as well as Metropolitan, Municipal and District Assemblies to establish functional units solely for PPP implementation.
According to a continental infrastructure report, Ghana’s infrastructure deficit will need spending of at least $1.5 billion per annum over the next decade. This includes $307 million annually for transport infrastructure, $1.255 billion annually for power and $435 million annually for water and sanitation. It is also estimated by the Ministry of Water Resources, Works and Housing, that construction of 170,000 housing units annually will be necessary during the period to address Ghana’s housing deficit.
By Emmanuel Odonkor