By Peninnah Mbabazi,
Public Private Partnerships can be defined as a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears substantial risk and management responsibility, and remuneration is linked to performance. Crucially, in the provision of the public service, the private party specifically undertakes the primary responsibility to deliver the design, feasibility, construction and implementation, and operations and maintenance of the project.
Increased Debt Burden caused by PPPs
While there have been successful PPPs in developing countries such as Chile, of which some have been properly designed, procured, and managed. However, the same PPPs model is also contributing to mounting debt burdens and activities which shrouds fiscal impact. The evaluation of success is complicated by the difficulty of establishing a strong counterfactual which entails a picture of costs, benefits, and outcomes had another financing structure been used for major infrastructure projects.
Case of Lubowa Hospital
The readiness of Government to engage in PPPs, such as the Lubowa Hospital project. A project that will guarantee a loan for a private investor. Considering the nature of which this agreement was made between Government and FINASI. Placing in mind the rush process to seek approval from Parliament, no public open bidding for the project. These actions would demystify a shadowy PPP processes, most of which hide behind confidential negotiations to protect commercial secrecy. There are no public consultations, lots of false promises, and incredibly complex contracts, all designed to protect corporate profits.
Considering the Uganda health sector still needs to be revived fully, a number of plans made in the sector from upscaling health centers to renovation of regional referral hospitals. It is only fair to consider and guarantee Ugandans to be able to have full access to health care. As well as guarantee employment of skilled Ugandan doctors, young trainees will be catered to through this project.
Government should be able to emphasize payments are contingent on the private partner delivering according to performance standards agreed in the contract. If the performance falls below a minimum standard, payments can get reduced or withheld. If poor performance persists, the Government has the right to terminate the contract, and the project company and its investors and lenders may lose some or all of their investment. This is intended to be a major motivation for the private partner to perform as agreed.
PPPs once structured well can be an important engine of growth throughout the economy and a means by which poverty can be dramatically reduced, or, ideally eliminated, around the world by 2030. While this can be attained, there is need for Government to have a good deal of confidence in the potential impact and value for money of well-selected and well-structured PPPs, in the right conditions, to deliver the basic infrastructure and services required to improve lives of the citizens putting their needs first. Even though a country may want to attract the private sector to accelerate and improve its infrastructure development, there can be a range of obstacles in its way
The awarding of these concessions should be transparent, balanced and efficient. In involving the citizen to be able to also have ownership towards these projects is key. Heavy tariffs or fees will be imposed on the tax payers to be able to ensure guaranteed payment to the lender. As countries have varying degrees of institutional development, governance, or capacity in place, private sector engagement must be tailored to each country’s specific context. Foremost by meeting the needs first of the pro poor and marginalized citizens to accessible service delivery.
The writer is Uganda Debt Network’s analyst on policy and governance