THE need for additional financial resources to expand public infrastructure and service delivery calls for government/private sector cooperation through public/private partne
rships (PPP), acting Finance minister Herbert Murerwa said this week.
Murerwa was addressing a press briefing at the launch of the public/private partnerships policy and guidelines.
He said PPP’s major goal was to promote sustainable economic growth through collaboration between government and the private sector in the management and development of infrastructure.
“Government on its own cannot meet the increasing requirements for critical capital projects due to resource constraints and the growing demand for social services on the budget. Government, therefore, recognises the critical role of the private sector in the provision of the country’s public infrastructure,” Murerwa told journalists.
Government made a provision of $5 trillion or 18,2% of total expenditure for capital development in the 2005 national budget.
Murerwa said areas of possible co-operation between government and the private sector include air and rail, energy and power generation, water works and highways, among others.
The minister also told journalists that the partnerships would embrace arrangements such as concessions, management contracts, joint ventures, part privatisation and private finance.
Under concessions, the government grants rights to a private operator or concessionaire to provide infrastructure or services upon terms and conditions agreed with the private operator.
“In this arrangement, the private operator develops and/or manages a project/facility, assuming the commercial risk and the investment obligations related to expansion, rehabilitation of the existing facilities as well as building any necessary new facilities,” Murerwa said.
He said concessions would refer to projects under such arrangements as build-operate-transfer (BOT), build-transfer-operate (BTO) and build own-operate (BOO), build-lease-transfer (BLT), rehabilitate-operate-transfer (ROT) and rehabilitate-own-operate (ROO).
“The scope of the partnerships extends to other development projects, traditionally undertaken by central government, local governments and other governmental agencies, in accordance with the relevant laws and by-laws.”
On incentives, Murerwa said government would, in accordance with the Finance Act of 2000, offer five-year zero percent tax, 15% tax for the second five years and 20% tax for the next five years on income for investors engaged in approved BOT arrangements.
“Over and above these incentives, the Minister of Finance may allow additional tax benefits on a case by case basis. Other incentives will extend to duty exemptions, depending on the nature of the project.”
Murerwa added that indigenous companies and contractors “which submit equally advantageous bids, with competitively matching price and technical specifications, as those of a foreign bidder, shall be given preference”.
Key players in the processing of PPP proposals will be the line ministries and local authorities, the inter-ministerial committee on public private partnerships, the cabinet committee on investment and development and the cabinet.