Gov't taps into PPP billions

Mbongeni Mguni | Friday November 9, 2018 12:19

Morupule B's costs went from P11bn to P14bn excluding opportunity costs. Fiscal authorities say the PPP model is unavoidable as revenues decline due to tapering diamond activities

While 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 government coffers.

However, with budget revenues expected to come under pressure in coming years with declining diamond revenues, fiscal authorities are eyeing PPPs as a viable funding alternative for required public infrastructure works.

In his State of the Nation Address on Monday, President Mokgweetsi Masisi said the Chobe Zambezi project would be delivered within six years, four years earlier than government had previously planned for the plus-900 kilometre pipeline.

The project will tap 495 million cubic metres of water annually from the Zambezi to feed irrigation schemes in Pandamatenga, as well as supply domestic use in the country’s South.

On Wednesday, Finance Ministry officials told BusinessWeek that the Chobe Zambezi project was one of 15 major public works to be undertaken via the PPP model.

The others include the long awaited Zambezi Integrated Agro Commercial Development project, which involves the provision of irrigation and water supply to 45,000 hectares, for up to seven crops and fruit trees. The water for the project is due to be drawn from the Chobe Zambezi scheme.

Other projects include Special Economic Zones’ facilities, land servicing in Kasane, Francistown, Ramotswa and Mochudi, establishment of a rehabilitation centre for up to 800 inmates at Lobatse and the construction of 4,000 high-density staff houses for secondary school teachers around the country.

The PPP model will also be used to expand the Three Dikgosi Monument in Gaborone to include 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”.

Other projects include the expansion of police and prison headquarters, a prison farm at Sepopa and construction of workshops for the Special Support Group. 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, the 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.