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PPP directive gets green light

The Ministry of Finance & Economic Cooperation (MoFEC) has finally approved the Public-Private Partnership (PPP) directive.

The directive, which has now become effective for the new budget year, has introduced the establishment of a dedicated directorate which will oversee the implementation of PPP. For the directorate office there will be a director general who will be assigned to lead the office.

Moreover, the director general will also be the secretary for the Board of PPP which will include institutions such as the Ministry of Public Enterprises, the National Bank of Ethiopia, and the National Planning Commission.

Each member of the Board will represent one vote. The Board – among other things – will have the power to approve different projects which fall under PPP schemes. The projects could fall under energy sector, health, education, road and public services where the government will partner with the private sector.

In the process of approving project which will fall under PPP agreements, the Board will look into things like whether the projects are inclined with the policy of the country; value for money of the project and access to finance. After approval, the projects have to pass through bid process. The Board will convene every three month.

The rest of the responsibility of taking the projects into bid processes and awarding of the project to the respective investor will fall under the director general of the PPP directorate.

During the bid process, the government will give priority for local private investors, if the involvement of local investors in the project is significant. In doing so, for instance, in a certain project, if the local investor’s share of capital is more than 50 percent and fulfill other requirements that show high involvement of the local in respective projects, the investor will get additional points during financial evaluation in the bid process.

In addition to an open bidding process for partnership between government and the private sector, the projects partnerships could be established, via open discussion, direct negotiation where the government will initiate the projects and invite the private sector to take part in. On the other hand, the private players can also propose projects to the government to work on PPP agreements.

This particular directive, signed by Abraham Tekeste (PhD), minister for Finance and Economic Cooperation, has become effective months after discussions were held with different stakeholders.

“We are now at the initial stage of the implementation of both the PPP proclamation and directive,” Haji Ibsa, communication director for the Ministry told The Reporter.