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Fifty mega projects earmarked for public-private investment

Fifty mega projects earmarked for public-private investment

Following the establishment of a new Public Private Partnership (PPP) body backed by a proclamation and an implementation regulation, it has announced the selection of 50 mega projects potentially suitable for a public-private joint-venture investment.

Haji Ibssa, director of communications and public relations with the Ministry of Finance and Economic Cooperation (MoFEC), told reporters this week that the governing body of the PPP has held its second working meeting this Wednesday and identified potential investment areas for the government and private sector partnership. Yet, the details are yet to be made public, Haji told The Reporter.

Across the state owned enterprises, some 50 mega projects have been identified as having the potential for future investment under the PPP framework. Out of those, 26 projects are slotted for immediate launch and implementation, Haji said.

Currently, the African Development Bank (AfDB) has provided USD 1.7 million support for the PPP program including hiring international consultants to identify and study the potential mega projects. So far, two senior World Bank Group (WBG) (as part of the Bank’s technical support package to Ethiopia) consultants have been commissioned to advise and define the nature of the mega projects.

A newly written directive which has been enacted to enforce the PPP proclamation provided for the structure of the PPP governing Board. Hence, according to the directive, nine members—seven from public and two from private sector—constitute the PPP Board. The individual Board members are yet to be disclosed. 

It is to be recalled that pursuant to the directive of the executive committee of the ruling party Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF), the government of Ethiopia has decided to fully and partially privatize some of the State Owned Enterprises (SoEs) in Ethiopia. The Ethiopian Airlines Group, Ethio Telecom, the Ethiopian Electric Power, the Ethiopian Shipping and Logistics Service Enterprises and Ethiopian Railway Corporation are some of the major SoEs set for partial privatization, the state still retaining the majority share.

In related news, the communication director also discussed the severe budgetary restriction the government is facing in the just concluded fiscal year. The government of Ethiopia has always been entangled with budget deficits; but the conditions have been far worst in the past two fiscal years.

During the last fiscal year, the deficit stood at 53.8 billion birr. One of the contributing factors is the declining trend in the tax collection performance. Last fiscal year alone, some 50 billion birr was not collected by the tax authority, according to Haji.

Out of the 237.4 billion birr revenue target which comprises of both tax and non-tax sources, only 180.6 billion was achieved; this performance is merely 76 percent of the target. For the current budget year, the revenue plan went higher at 346.9 billion birr. Out of this, some 80 percent is expected to be generated from tax revenue.

However, those close to the matter see these targets simply as unattainable since the impact of the political turmoil in the last two years is yet be fully realized in the economy. Insiders at the tax authority assume that uncertainties in the business environment could prove difficult. Furthermore, they argue the political situation of the country in recent years will significantly put pressure on the tax pool.