Government has been urged to pass enabling laws that would facilitate the smooth functioning of public-private partnerships (PPPs) in the country.
Speaking at a major conference on PPPs organised by Standard Chartered bank last week, Philip Karugaba, the head of law firm ENSafrica Uganda, said uncertainties originating from regulations was affecting the success of PPPs.
Stanchart’s interest is that it would be one of the financiers of private players that enter into PPPs.
“We can’t unpack projects until regulations are in place. There must be supporting laws,” Karugaba said. “There is no regulation for toll roads, for instance.”
A PPP is a long-term contract between a private party and a government entity for providing a public asset or service in which the private investor bears significant risk and management responsibility. The remuneration is linked to performance.
Karugaba gave an example of SGS, a firm that signed a deal to inspect vehicles in Uganda, as a typical case of uncertainty facing private players doing business with government.
Parliamentarians are investigating SGS’ contract.
“The company signed a contract to inspect vehicles and ensure public safety but it has been stopped. I drove past its installations recently and they were deserted,” he said.
Uganda is in the process of developing several roads that users will have to pay some money to access. Karugaba said if these roads are opened without an enabling regulation, it would cause friction. Kampala-Entebbe expressway will be opened for public use mid-next year with government saying it is currently procuring a private operator. Karugaba said there is need for a road toll regulation before the road is opened.
Government recently adopted a policy that all contracts would be negotiated in Uganda shillings but then the permanent secretary in the ministry of finance and secretary to the treasury, Keith Muhakanizi, has exempted some companies from it.
Karugaba said the private sector does not want such uncertainties. PPPs are majorly liked for the efficiency that the private sector brings into government programmes. A recent World Bank economic update on Uganda said the country loses at least $300m (Shs 1tn) annually in deficiencies related to infrastructure projects.
One of the solutions for financing this gap, the World Bank said, would be for Uganda to embrace PPPs.
“If structured appropriately, PPPs can help mobilise resources to help fill these infrastructure gaps with the possibility of such arrangements bringing private financing, development and management as well as achieving higher levels of efficiency,” the report noted.
Government is currently trying to find solutions on how to restructure its debt in the Bujagali hydropower project in order to bring down the cost of power. One PPP that government entered into, which appears to have completely failed, is the Rift Valley Railways concession.
The WB said “after ten years, the concession does not appear to have fulfilled its obligations.”
Participants at the Stanchart conference noted there were opportunities coming up in the oil and gas sector, and the massive infrastructure projects that government is undertaking.
They said the country must sort its procurement disputes and streamline land acquisition concerns, which are some of the common challenges that PPPs face.