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Govt launches PPP framework

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Government will this month launch a national Public Private Partnership (PPP) legal framework with an aim to draw investors into infrastructure projects and government enterprises widely seen as a fiscal drag.
PPP’s were first introduced in 1998 to fund infrastructure and public services after government’s commitments to the projects through the Public Service Investment Fund fell precipitously as a result of structural adjustment programmes.
Addressing an Infrastructure Development Forum on Wednesday last week, Deputy Prime Minister Arthur Mutambara said the country plans to commercialise some enterprises and privatise others through PPPs to forestall bankruptcies.
“We have done research on PPP’s and employed people from the private sector, to work on the new framework on 2010. But we still have not finalised the new framework with relevant ministers who should endorse it. We will be launching the document within the next month (August),” said Mutambara.
Under the proposed framework, the private sector would farm into the projects and state-owned enterprises with capital, technology and the human capital with government concentrating on infrastructure provision.
Government last year produced an investor prospectus, which listed projects and investment opportunities in several key sectors, including electricity generation, transport, water and Information Communication Technology.
The framework, developed from a PPP policy document of 2004, proffers a number of PPP arrangements such as Build Operate Transfer (BOT), Build Operate Own (BOO) and Rehabilitate Operate Transfer.
Zimbabwe views PPPs as the most viable option for SOE recapitalisation.
Traditional sources of financing collapsed during the last four year’s of its decade-long downturn.
According to DPM Mutambara, private players can take part in developing the country’s stock of infrastructure through concessionary debt financing, bonds and other bilateral and multilateral credit lines.
South Africa has successfully commercialised four major SOEs through PPPs, namely Transnet, Spoornet and Eskom.
To facilitate the PPPs, government will also be launching a One-Stop Investment Shop this month to cut lead times for investment applications.
. . . as decision on 77 SOEs nears
Victoria Mtomba
State Enterprises and Parastatals Minister, Gorden Moyo, says he would be taking 10 underperforming state-owned enterprises (SOE)s to Cabinet to decide on the most viable recapitalisation option for every one of them.
Moyo also said the government decision-making board would also determine the fate of parastatals, which currently operate as both player and regulator.
Though the SOEs concerned would not be named, those frequently named include TelOne, NetOne, the Grain Marketing Board, Zimpost, the National Oil Company of Zimbabwe, the National Railways of Zimbabwe, Air Zimbabwe and the Zimbabwe United Passenger Company (Zupco).
“I will be taking each and every parastatal to Cabinet for ministers to decide on them on which one to privatise or commercialise,” Moyo said. “We will then have some parastatals have public private partnerships and others leased in order to recapitalise the state owned enterprises.”
Moyo said parastatals had potential to contribute about 40% to Gross Domestic Product, but have failed to measure up due to challenges related to funding and poor management.
According to a World Bank report, Zimbabwe’s state enterprises have very low volumes of sales and low revenue collections owing to structural bottlenecks, inefficiency and the economy’s liquidity crisis.
A greater proportion are also both under-funded and heavily indebted, which undermines their resuscitation.
“There is no single Act that I administer, this is a weak ministry in terms of teeth to bite. It doesn’t have any enabling teeth,” Moyo said, stressing that legislation dealing with state-owned enterprises should be reviewed to give the State Enterprises and Parastatals ministry more control over the institutions.
He said his ministry would propose a subsidiary law to translate Cabinet decisions on the parastatals into legal provisions.
A number of SOEs have been operating without boards for the past five years, while others have also failed to produce audited reports for close to a decade.
He also urged the enterprises to adopt good corporate governance practices to enhance their chances of attracting partners.
“It doesn’t cost a cent for parastatals to adopt a culture of good corporate governance. We cannot continue having a culture of leakages and continue paying ourselves huge salaries when the economy is bleeding.
“Close to 60% of our parastatals’ problems will be solved by good corporate governance practices,” said Moyo.

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