The Government is set to overhaul the framework surrounding the implementation of new and existing Public-Private-Partnership (PPP) agreements, in a move aimed at speeding up essential infrastructure projects.
Under a new policy framework for Government shareholding in Public-Private Partnerships presented to Cabinet yesterday, Government will assess all current PPPs to identify non-performing partnerships and initiate re-negotiations, to ensure all projects are completed on time and within budget.
Non-viable partnerships will be recommended for termination.
The policy framework is expected to guide private sector participation in PPPs, as prescribed under the Zimbabwe Investment and Development Agency (ZIDA) Act [Chapter 14:38] and the Public Procurement and Disposal of Public Assets Act [Chapter 22:23].
Addressing journalists during a post-Cabinet briefing in Harare yesterday, Information, Publicity and Broadcasting Services Minister, Dr Jenfan Muswere, said the objective of the policy framework was to ensure value for money and to safeguard national interest.
"Non-performing Public-Private Partnerships will be assessed for viability or non-viability, with the viable ones being re-negotiated, while non-viable ones will be recommended for termination. Going forward, all Public-Private Partnerships will be guided by the policy framework and a manual subsequently issued," he said.
Dr Muswere said since the introduction of the Zimbabwe is Open for Business mantra, there had been an increase in private sector players, who wished to partner and do business with Government and Government-owned public enterprises in the rehabilitation of all major roads, railways and other related infrastructure.
The policy framework would ensure that the Government fully maximises benefits on new contracts, while the existing agreements also become viable for the nation's good.
The framework provides guidelines for PPPs for categories that include Infrastructure Development, Commercial Purposes, PPPs where Government holds an Asset and non-performing Public-Private Partnership projects.
"Public-Private Partnerships for Infrastructure Development are social or service projects such as roads, railways and border posts, where the asset remains with the Government. Revenue sharing arrangements under this category should be at least 30 percent minimum and Government should be represented in the management committee. Public-Private Partnerships for Commercial Purposes are when a commercial Government-owned company enters into a commercial arrangement with a private investor for profit purposes. The partnership will be implemented through the establishment of a Special Purpose Vehicle, with the Government having a minimum of 26 percent equity shareholding," said Dr Muswere.
He said in PPPs where the Government holds an asset such as land, a mining claim or national parks, the State's equity shareholding shall be a minimum of 26 percent, where a joint venture agreement would be entered into with the private investor.
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, said the policy framework was set to address various issues, including containing the budget deficits.
"We have demonstrated fiscal prudence over the last six years during the Second Republic so that is set to continue. With this policy we will seek to address that in many ways, not just on the issue of containing budget deficits. What is happening now is that we are spending quite a bit of budget on a cash basis to support our infrastructure development but I also want to be clear, this is what is also giving us the strong growth that we have seen. Infrastructure development is important; either we pay for it or we get the private sector to pay for it, but either way, it gives us good growth, but we want to have a shift now so that we can count on the private sector to come in and finance our infrastructure," he said.
"We are keen then to expand to make sure that more projects and opportunities benefit from this PPP arrangement and we have done better."
He said the Government was keen to share part of the revenue from such projects hence the provision for shareholding, which would be gradually increased with time.
"We have been implementing these production sharing agreements but it has not been systematic, it has not been captured in the framework, so what we have done now really is to put everything around the framework and umbrella, where we are clear now and all of this will go a long way in relieving the fiscus of some of the burdens which can cause certain risks in terms of monetary policy," said Prof Ncube.
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He said the move, which was good for stabilising the fiscus, would also be good for the stabilisation of the new ZiG currency, which was introduced recently.
Meanwhile, Cabinet yesterday approved the proposed Public-Private-Partnership between the Ministry of Transport and Infrastructural Development and Zwane Enterprises (Private) Limited for the upgrading, construction and tolling of the Old Gwanda Road.
Zwane Enterprises, a Zimbabwe incorporated company, will upgrade and construct the 120-kilometre Old Gwanda Road from Bulawayo City, through Matobo to Gwanda.
The road reduces the distance between Bulawayo and Gwanda by 6 kilometres, compared to the existing Bulawayo to Gwanda road via Esigodini and Mbalabala.
The company will undertake the project through a Build-Operate-Transfer arrangement. Construction of the road is expected to be completed in 12 months' time at a cost of US$110 million.
Zwane Enterprises will fully finance the project, and will recoup its investment through tolling points along the road.
