UPLIFTING WEST AFRICA S INDUSTRIAL SECTOR THROUGH IMPROVED POLICIES AND PUBLIC PRIVATE PARTNERSHIPS

Transcription

1 UPLIFTING WEST AFRICA S INDUSTRIAL SECTOR THROUGH IMPROVED POLICIES AND PUBLIC PRIVATE PARTNERSHIPS Emmanuel. M. K. Amekor Manager Environment Volta River Authority, Ghana WUWA 2011 Abuja, Nigeria 29 th November 2011

2 Few Observations West Africa replete with many and varied industries Stunted growth in Industrialisation Low investment into major industries Traditional approach of Government doing it all Public Private Partnership Policies

3 What is Public Private Partnership (PPP)? The Oxford Dictionary of Politics defines PPP as : Agreement between government and the private sector regarding the provision of public services or infrastructure PPP is typically a long-term contract between the government and private sector companie(s) through which the private party provides the bulk of financing, assumes technical and operational risks, in return for revenues from consumers or the state.

4 What is Public Private Partnership (contd.) Purportedly, PPP is a means of bringing together social priorities with the managerial skills of the private sector, relieving government of the burden of large capital expenditure, and transferring the risk of cost overruns to the private sector. Rather than completely transferring public assets to the private sector, as with privatization, government and business work together to provide services.

5 Prime candidates for PPP : Normally, are the basic sectors of the economy power, water, transport, agriculture, infrastructure, etc. According to experts, PPPs would improve the quality of utilities and services while simultaneously promote employment and economic growth. Quality is hardly the driver for potential PPPs

6 PPP modules Some examples: 1 In some types of PPP, the cost of using the service is borne exclusively by the users of the service and not by the taxpayer. 2 In other types (notably the private finance initiative), capital investment is made by the private sector on the strength of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government.

7 PPP modules (contd.) 3 Government contributions to a PPP may also be in kind (notably the transfer of existing assets to the private partner). 4 In projects that are aimed at creating public goods like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors.

8 PPP modules (contd.) 5 In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by providing guaranteed annual revenues for a fixed period.

9 PPP Case Studies (I)-Nigeria Case 1: Kebbi State (culled from Daily Trust Nov 18, 2011) Kebbi State in created 1992, Public Private Partnership Committee formed to strategise industrial development Government provided free land divided into 80 plots for heavy, medium and light industries Neem seed Oil extracting plant to produce Neem oil for export and local consumption, and Arzaratine powder which is used in production of insecticides. 45 skilled personnel and 600 unskilled workforce are earmarked for employment. The factory is yet to be commissioned. WANTED: Investors!!!

10 PPP Case Studies (II) -Ghana Case 2: Public/Private Company Joint Venture Volta River Authority (VRA) and CMS Energy of USA, CMS provided capital outlay for the construction of a power plant in a Takoradi - Ghana. VRA provided land and shared operating facilities at its existing plant Power Purchase and General Services agreements signed between the two partners 220MW electrical power produced and fed into the national grid In this particular arrangement, the cost of using the service is being borne by the Ghanaian electricity consumer.

11 PPP Case Studies (III) -Ghana Case 3: Public/Private Company Collaboration Volta River Authority (VRA) and Sunno Asogli Power Plant (SAPP) SAPP provided capital outlay for the construction and operation of a power plant in Tema - Ghana. VRA provided fuel (Natural Gas) for operations Agreements signed between the two partners 220MW electrical power produced and fed into the national grid

12 PPP Policies Success of PPP depends to a large extent on the policies in place to give confidence to the investor Kebbi State: Government sponsored PPP committee approach? VRA SAPP approach: Two Public and Private companies collaborate? VRA CMS Energy approach: Joint Venture approach?

13 PPPs Which Way West Africa?? Issues worth considering Investor friendly policies? What level of security should be embedded in policies to protect the Private Sector? At what cost to the country? Ceding National Level of Government involvement (Politically interference?) Who pays for services provided under PPPs? Taxpayer, or Direct Consumer?

14 UPLIFTING INDUSTRIAL SECTOR THROUGH IMPROVED POLICY AND PUBLIC PRIVATE PARTNERSHIP WHICH WAY WEST AFRICA?