Govt fast-tracks PPPs as development budget tightens
Mbongeni Mguni | Friday January 22, 2021 16:43
Recent documents circulated in the country’s economic circles, estimate that recurrent spending in the upcoming 2021-2022 budget will be P50.7 billion, while development spending will reach P14.8 billion. The figures compare to recurrent spending of P55 billion and development spending of P16.4 billion estimated by the Budget Strategy Paper in October.
The National Development Plan 11 and its addendum, the Economic Recovery and Transformation Plan (ERTP) both have a list of priority projects for the years to 2023 and beyond, but these are expected to experience challenges depending on the duration and severity of the coronavirus' (COVID-19) impact on the economy.
While the government has had a PPP policy and framework in place since June 2009, few significant projects have taken place in the intervening years, meaning the dominant funding for major public works has remained the government balance sheet.
The Finance and Economic Development ministry last week published a list of 16 PPP projects it said it would focus on, noting that some were at the procurement of consultant stage while two were set to identify a private partner.
On Wednesday, Finance minister, Thapelo Matsheka told BusinessWeek the idea was to get projects started and moving to reinvigorate the economy.
“We just about lost 2020 as a planning or financial year because of COVID-19 and what is going to be important is to frontload more of these projects,” he said. “That’s the only way to kickstart the economy. “We want a multiplicity of projects away from the financial years so that they can run concurrently and we have a limited time till the end of NDP 11 in 2023. “We have to adopt a different approach.”
Matsheka said fast-tracking the PPPs would also move some of the technical costs off government’s balance sheet by engaging private sector capital and expertise. He said the PPP thrust is also to empower the private sector by engaging it in major public works.
The latest list published by the Finance ministry is nearly identical to a 2018 line up of PPP projects provided to BusinessWeek. The latest list, however, excludes plans to expand the Three Dikgosi Monument in Gaborone to include the construction of an “interpretation centre showcasing on the history and sovereignty of Botswana, an art gallery, restaurant and outdoor meeting event place with associated landscaping”.
It also excludes land servicing in areas such as Kasane and workshops for the Special Support Group, which were on the 2018 list.
The latest list instead includes the construction of a State Theatre for the performing arts sector as well as the much-anticipated Coal to Liquids project, the Tshele Hills oil storage project, Gaborone wastewater and reclamation, several roads and railways and others.
The Zambezi Integrated Agro-Commercial Development Project (ZIACDP) still headlines both lists and is denoted as one of two that are at a more advanced stage of implementation. According to the ERTP, the ZIACDP requires that the existing feasibility study for this project be updated and the project is structured for implementation on a PPP basis.
This week, the ministry floated a tender for transaction advisory services in respect of the ZIACDP, with a site visit for bidders set for February 4 in Kasane and Pandamatenga.
It is expected that the ZIACDP, when complete, could cost upwards of P16 billion and involve a pipeline of about 900 kilometres or more. The project will tap 495 million cubic metres of water annually from the Zambezi to feed irrigation schemes in Pandamatenga, as well as potentially supply domestic use in the country’s South at a later stage.
PPP involves a contractual arrangement between a governmental institution and the private sector, where the private sector party provides public infrastructure and/or infrastructure-related services.
Typically, government’s contributions, over and above equity in the venture, may include subsidies, incentives, provision of service, the cost of providing the service and others. The private sector is often asked to contribute up to 80% of the project’s funding.