Provision of public infrastructure is naturally the responsibility of government and it is ordinarily funded through taxes and levies imposed on citizens. Given the ever-increasing demands from the general citizenry, the public purse will always fall short unless there are lazy public administrators, who fail to utilise their allocations or that budgets are overstated. In view of the general quality of money, it will always be not enough and the government has to choose from basically three common means of providing such infrastructure.
PURCHASING & SUPPLY: NYASHA CHIZU
General procurement can be funded directly from Treasury or the government may opt to borrow. The other option is to provide public infrastructure through public private partnerships (triple Ps).
There are generally two distinctions between public private partnerships and conventional procurement. The nature of the relationships are totally different where in public private partnerships, the role of the private sector is more pronounced in a project overshadowing the public sector.
A public private partnership is an intertemporal contract in which the parties, the government and the private sector bundles the designing in some cases, the financing, construction, maintenance and operation of a project for a limited time. By limited time, it does not imply a very short time, but merely relates to the specific timeframes that the parties agree to.
The distinction of limited time is clearly explained when we compare privatisation with triple Ps. Privatisation is for an indefinite period instead.
General procurement is a given in the provision of public infrastructure and it ordinarily follows public procurement rules. Public finance initiative in some cases are treated as private procurement where in some, they are treated as public procurement.
The general determinant is the party that pays the private sector player. Where the government is only facilitating a public market to the private player and where there are alternative sources and substitute products, the procurement process is mainly through the private practice.
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Citizens are not bound to procure from the government partner due to availability of options. The private player is inclined to adopt a competitive process to outpace competition.
There are cases when the public purse is empty and infrastructure projects are financed through private finance initiatives.
In such cases, general public procurement rules apply. There are variations with such an arrangement. One part of it is when there are many private players that can finance and implement the project.
The other hand is when there is one financier available and without capacity to implement the project, but there would be many players with capacity to implement. Public procurement rules applies in all instances.
Most projects in the energy and telecommunications sector have been implemented using private finance initiatives in Zimbabwe. Many such project where there are many funders with capacity to implement adopted a four stage evaluation. There is initially a pre-qualification followed by a tender process reviewing three stages of funding compliance, technical compliance and an evaluation of the project cost.
Cases where the pocket is only one without capacity or ties that can implement relates to some government to government loans. If the loans are coming from development partners, the competition is open to all eligible countries.
When the funds are from a specific country’s import and export bank, then the participation in that tender is limited to companies from the country’s bank.
The paramount issue is to effectively review the project regardless of the means adopted whether conventional procurement with funding from treasury, conventional procurement with funds from private funding initiatives or through public private partnerships.
The snare is on the cost associated with that capital in relation to the service that will be procured. Care is needed to ensure that the State is not unnecessarily mortgaged.
The idea is to provide affordable quality public service to the general public regardless of the procurement process adopted.
Nyasha Chizu is a fellow of the Chartered Institute of Procurement and Supply writing in his personal capacity. Feedback: [email protected] Skype: nyasha.chizu
