Sunday, 9 September 2018

PUBLIC PRIVATE PARTNERSHIPS AND POWER PURCHASE AGREEMENTS IN ETHIOPIA AND THE ROLE OF LEADERSHIP

(A high Level PPP Development Assessment Outcome)
Public private partnerships have become new normal in today’s business landscape across many countries. If properly managed, governments could benefit in mobilizing financial resources, technical knowhow, innovation and efficiency gains from the private sector in the delivery of public goods and services by effectively partnering with them.
Since 2017, Ethiopia has publicly announced that it would leverage PPPs as one of its strategic tools in its development agenda. The accompanying thesis make an assessment of the theoretical and historical developments of PPPs in general and its stage of development and application in the Ethiopian context. 
In the assessment, it is learned that the government of Ethiopia has committed resources by formulating a PPP policy, enacting a separate PPP law (Proclamation no 1076/2018) and outlining the institutional roles and responsibilities albeit an early development stages demanding further clarity and maturity.
For Ethiopia to achieve value for money in the PPP engagements, there are factors more of operational in nature that need to be tackled beyond setting the policy, legal and institutional frameworks. Regulatory issues; public institutions slow bureaucracy; low access to finance; low implementation capacity in the private sector, and the low capacity in the public institutions to identify priority projects, manage the PPP transactions and PPP contracts in their lifetimes are some of the constraints that would hold back the PPP development in Ethiopia as identified by this assessment.
This assessment suggests that understanding the importance and role of leadership and political commitment at the highest level of government and sustaining it during the life time of PPPs through supervisions, oversights and regular stakeholder interventions and discussions would help push achieve a successful partnership in PPPs.  Moreover, it also points out that PPPs will be implemented within the overall business constraints of the economy. Hence, improving the overall business and investment environments will help tackle most of the constraints in PPP development and implementation in the country.
The assessment further indicates that there is a good chance for the private sector to play a significant role in helping close the infrastructure gap Ethiopia is facing today working with the public institutions benefiting themselves and the government in the longer term. It is, however, going to be realized if they are in the best form and shape building both technical and financial capacity. 
The paper assessed the historical and the current status of PPP development and implementation in Ethiopia at a higher level; identified the gap in knowledge, the potential benefits and downside risks, the current drivers and the role of leadership; and highlighted better insights, to a successful development and implementation of PPP in the country.


This article was first published on Ethiopian Energy and Power Business Portal, EEPbp