Govt moves to set up fund as PPPs flop

AUTHORITIES have approved public private partnerships (PPPs) worth about US$4,2 billion since the Zimbabwe Investment and Development Agency (Zida) Act was enacted about four years ago, but lack of feasibility studies has seen many of the deals flop, officials said yesterday.

Speaking during an occasion to set up the project preparation and development fund (PPDF) to finance feasibility studies for PPPs in Harare yesterday, Chief Secretary to the Office of the President and Cabinet, Misheck Sibanda, said the package was meant to capacitate investors with funding for feasibility studies if they get into partnership with the government.

Zimbabwe has been pursuing PPP arrangements across sectors, including in airports construction and other infrastructure projects.

Sibanda, who spoke during a Zida technical training workshop on PPPs, said it was important that such investments took off.

He said since the enactment of the Zida Act, which regulates PPPs, 21 such projects had been processed and approved by cabinet.

“Notable projects approved and under implementation include the upgrading and modernisation of Beitbridge Border Post, the Bulawayo Electronic Parking System, ZETDC (Zimbabwe Electricity Transmission

and Distribution Company)’s Manhize transmission power line and revamping and upgrading of Zimparks lodges along the Zambezi River, amongst others,” Sibanda said.

“e PPP journey has not been without its challenges as a significant number of approved projects are failing to take off after approval due to several challenges which include failure to reach financial closure, limited resources to undertake bankable feasibility studies, conflicts due to misrepresentation of parties, lack of role clarity of stakeholders among other matters.

“To mitigate the project preparation challenge, the government has set aside PPDF under the Ministry of Finance and Economic Development with the sole purpose of financing the undertaking of feasibility studies,” he added.

Funds to be allocated to the PPDF will come from the national budget, according to Sibanda.

is is expected to bridge financing gaps in project preparation, which has remained the biggest challenge for most contracting authorities to finance projects.

“In the past, contracting authorities treated solicited bids as unsolicited as a way of transferring the responsibility of funding the undertaking of feasibility studies to the private party hence at the same time bringing on challenges associated with unsolicited proposals,” Sibanda said.

Zida is currently concluding the drafting of PPP regulations which will provide clarity on provisions of the Act and guide how projects would be processed, thereby accelerating implementation.

e Zida Act integrated the Zimbabwe Investment Authority Act, the Zimbabwe Special Economic Zones Authority Act and the Joint Ventures Act.

Zida chief executive officer Tafadzwa Chinamo said feasibility studies have always been a requirement of PPPs.

“Feasibility studies have always been a requirement of the PPP process ever since we started this whole thing of PPPs in this country. Why are they important? It’s equivalent to the business plan, so typically a PPP arises because a government entity or the government cannot undertake or provide a certain service, to provide certain infrastructure,” Chinamo said. “So, a feasibility study will explore all those things. What is to be done? What is the business that we are talking about? What is to be built and constructed and how much is it going to cost? More importantly, how is this private party going to recoup their investments? is is what it explores.”

He added that private partners should be convinced that they generate a return for their investment before entering into deals with government.

Chinamo said a feasibility study would address those questions.

Last week, Airports Company of Zimbabwe chief executive officer, Tawanda Gusha, said the firm was looking for PPP agreements to carry out several projects,

Gusha said PPPs would be ideal for projects like the relocation of Kariba Airport given the fact that there were other business considerations under way.

ese include the development of related facilities like golf courses and lakeside villas.

In January, Gusha told businessdigest that authorities were scouting for potential partners for the development of small airports across the country.

Mildret Kujinga, the marketing and public relations executive at state-run mortgage lender National Building Society, said some of the firm’s projects were also running under PPP arrangements.

“e value of our mortgage business has grown significantly,” Kujinga told businessdigest. “We are leaders in this market. We have gone a step further to deliver housing solutions focusing on Public Private Partnerships (PPPs), playing our part to reduce the national housing backlog,” she added.

“We have worked with corporates and pension funds and have used PPPs successfully. ere are various partnerships we have had with private developers and the government. We have aggressively pursued engagements with local authorities throughout the country. We are always on the lookout for suitable opportunities.”

e PPP journey has not been without its challenges as a significant number of approved projects are failing to take off after approval due to several challenges which include failure to reach financial closure, limited resources to undertake bankable feasibility studies ...