Africa-Press – Zambia. The New Dawn Government has signed a USD 577 Million concession agreement deal with Macro-Ocean Investment Consortium for the financing, construction, operation and maintenance of 327 Kilometers Ndola-Lusaka Dual Carriage Way.
At the Launch Ceremony held at Protea Hotel in Ndola, Ministers went to a great extent to demonstrate that Government “would not spend any money on the project” as this was a Public-Private-Partnership (PPP).
Ministers stated that the Concession Agreement has secured a revenue-sharing mechanism during the concession period. The road will have toll gates and upgrade of two weigh bridges being fully funded by the concessionaire from construction to maintenance.
Minister of Infrastructure and Housing, Hon. Charles Milupi said the concession will run for 25 years of which 3 years of construction and 22 years of operations and maintenance of the road. PUBLIC-PRIVATE-PARTNERSHIP
Public-Private Partnership (PPP) is a partnership between the public sector and the private sector, forged for the purpose of delivering a project or a service traditionally provided by the public sector.
In the road sector, whilst toll concessions are one form of PPP, tolls should not be considered synonymous with PPP, as there are many instances of publicly financed roads carrying tolls.
It is for this reason that Zambia High Ways now carry toll plazas and the roads remain publicly funded and do not have a private partner. FINANCING OF THE LUSAKA-NDOLA DUAL CARRIAGE WAY
Let us look at the financing structure of the Lusaka-Ndola Dual Carriage Way. Financing Instutions; National Pension Scheme Authority (NAPSA)-$300Million.
Workers Compensation Fund Control Board- $100million. Stanbic Banka Zambia Limited- $200million. Let us be clear, both NAPSA and Workers Fund Compensation Board are public pension schemes and are public institutions. This is a publicly funded project with $200million sourced by a loan contracted from a private bank by Government!
NAPSA was formed through an Act of Parliament to provide income security against the risk arising from retirement (old age), death and invalidity with a focus on adequacy of benefits while the WCFCB is a social security scheme responsible for compensating workers in respect of accidents suffered and diseases contracted during the course of their duty.
Clearly this is a strange. MODELS OF PPPS All models of Public-Private-Partnership are known. The purpose of entering into a PPP project is to free Government resources and provide for other urgent social needs but use the opportunity to access private sector financing to build public infrastructure.
The private sector then recovers their money through tolls or user charges of the road or Government takes the burden and picks up the tab as a public debt and pays the private partner through taxes.
Another well-known model is where the private sector finds the investment to finance, build, and operate the project. But Government or the Public partner then retains ownership of the assets after expiry of the lease period.
Infact, this is what is provided for in the Public-Private Partnership (Amendment) Act No 22 of 2020. But in this case, Government has found the money through pension funds and will supplement it with a loan from a private Bank.
Government will pay for the design, will hire a contractor to build the infrastructure, but will hand it over to a private partner to collect tolls or user fees for 25 years! What’s the role of the private partners in the Consortium?
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