Thursday, October 28, 2021

Botswana not making use of PPPs

In 2010 finance ministers in the SADC region created the SADC public-private partnership (PPPs) network to serve as a support structure of deliverance.

However, Botswana is yet to deliver projects of that nature and Morupule B 600MW power plant, initially pursued as a PPP, is facing difficulties. 

Morupule B power plant, a national power generating asset, is currently undergoing a sale process as was recently communicated by the Botswana Power Corporation (BPC) Chief Executive Officer (CEO), Stefan Schwarzfischer 

An interrogation of the PPP policy suggests that Morupule B might not have been considered for sale if government had availed the right environment for the involvement of the private sector to deliver the plant. 

The PPP policy is that due to the challenges in delivering public services infrastructure an alternate means of financing is needed so as to provide opportunities for efficiency gains in the form of better quality and more cost effective delivery of services by private sector participants. By so doing it is expected that government can as a result channel its scarce financial resources into other areas where direct public investment and intervention is needed.  

One could identify that Morupule B is where it is today because over time the financial burden became too much for government to continue carrying which prompted a desperate situation for government. 

Morupule B, as Schwarzfischer confirmed, was the obvious sale target as it has over the years created a deep financial pothole in government coffers especially that it was loan financed. Selling it as emerged the best choice to overturn the financial abyss which the national power producing corporation, BPC finds itself in. 

Given the failure of the financing model used in Morupule B could provide an exemplary case to demonstrate that PPPs remain an alternative that government is yet to tap into so as to relieve itself from the financial deficiency it is dealing with at present. 

Perhaps if Morupule B had been financed as PPP the risk could have been properly identified and addressed without huge financial costs. 

Two weeks ago officers involved in the procurement process across different government departments convened to interrogate the PPP policy as a means of establishing a working model in support of PPP projects. 

Kogan Pillay, Head of the SADC PPP Network, shared experiences based primarily on the South African context. South Africa in comparison to Botswana has a number of projects which have been implemented through PPPs.

In Botswana the uptake of PPPs remains untapped. Pillay indicated that the establishment of the PPP network is to ensure uniformity of processes across the region which eliminates loopholes of abuse of the framework.

RELATED STORIES

Read this week's paper