About PPPs and infrastructure projects – Lubinda Habazoka
For a country to develop, it is very important that the leadership is open to different views more especially from circles they consider not to be closer to them.
One other aspect to leadership is not to come in with a preconceived idea because it becomes very difficult to adapt or change when circumstances call for such.
I would like to discuss two things:
- the recently advertised Ndola dual carriageway
-public infrastructure procurement projects
Now that the post election dust is settling I would like to call upon all foot soldiers, keyboard warriors, party supporters to go back to the barracks of life so that the country can have sober discussions and develop in unity because after all, Zambia is what unites us.
About the PPP Ndola Lusaka Dual Carriage way
There was heavy backlash that the PPP was prized at $1.2bn and that the project stinks corruption. Criticism came in that the private party proposed to build hotels and other amenities and that to a lot of people smell like corruption. In my opinion, the whole issue has got to do with the understanding of the word PPP and how these are tendered. A PPP is a type of off balance sheet funding where government uses the private party to fund build operate and then transfer back to government a fully functioning facility. The aim of a PPP is to use private money to do a project that is handed over to government after a certain period of time. During the concession period, the private party runs the facility to recover the money they have invested in, make some profit and then return to government a fully functional facility.
When tendering a PPP, governments chose the proposal with the most features. Let’s take for example the Ndola Lusaka dual carriageway. Government gives the following terms: build a road, charge toll fees, recover your money, then give the road back to us. Government says all this should be done in day 20 years.
So in that tender you have 2 companies: one says they will build the dual carriageway and toll gates, filling stations, hotels, shops, truck stations etc for $1.2bn. This party says that they will recover their money from tolls, hotels, truck stations, filling stations and other features. Then a second company bids for $600 and says all they will do is a road and they will get their money from toll fees.
The question is which company do you pick?
Answer: You pick company A with a $1.2bn because both companies will own the project for 20 years but one will only transfer to you only the road while the other one has pledged to build other features like hotels which you shall inherit. In a PPP, you chose a project with the most features. A project with most features is usually more expensive but because of more features, the private party is more likely to get back their money within the concession period.
Mind you government doesn’t spend not even 1 ngwee so where is the corruption??
About public infrastructure project procurement
I have heard on TV that a lot of Zambians were given road contracts, paid advance payment and they ran away. This is where technocrats are supposed to be brave and advise the appointing authority correctly. No down payment is given to a company without that company putting in a down payment guarantee. What happens is that against the downpayment, the contractor get more like insurance (in layman’s language). If the contractor doesn’t begin works after after being paid advance payment, the only thing government does is to go and cash in that guarantee to recoup their money. So in all government projects, government can’t lose money.
I just thought of adding my views to these two issues.
My fellow technocrats let’s advice accordingly for the betterment of our country