MOF expects strong public resistance to unfamiliar policy
CAIRO: The Ministry of Finance (MOF) is preparing new legislation to govern the relationship between the government and the private sector in future public-private partnership (PPP) projects to be offered, Ranya Zayed, MOF Public-Private Partnership Unit director said Wednesday.
The law, to be raised to the People s Assembly this year, will detail the responsibilities of each side to avoid the conflicts faced by PPP projects in the past and encourage the private sector to participate in executing public service projects, Zayed said. MOF has yet to announce when it expects to complete drafting the law.
Last year, the government made a concerted effort to increase PPPs in order to lift some of the burden off the national budget. Government-offered tenders included the construction and operation of 50 schools in a program aiming to build 2210 schools, fresh and sewage water treatment projects in Cairo and Borg El Arab worth LE 7 billion, and a LE 46 billion highway to connect Borg El Arab to Aswan.
Agreements governing already established PPP projects have allowed the government to relegate construction and operation duties of public infrastructure-building and service projects to the private sector for periods ranging from 15 to 40 years in exchange for annual rental fees. Upon contract expiration, the government maintains asset ownership unless both sides agree on renewal terms.
Speaking to the Shura Council s Economic and Financial Affairs Committee Wednesday, Minister of Finance Youssef Boutros Ghali said he expects PPPs will face strong public resistance.
[Resistance] is always expected when dealing with an unfamiliar policy based on free market and private sector forces, Ghali said.
Critics of PPP point to the years of failure of projects in garbage collection and hospital administration. Nihal Fahmy, political science professor at the American University in Cairo, says the success of the government s attempts to boost private sector s role in implementing public projects will depend on the participating companies.
We will not know for sure until we know which companies are participating, says Fahmy. Is the government s goal to reduce its responsibilities or involve a responsible private sector? If [the latter] is the goal then I do not see a problem with implementing such a deal.
Minister of Investment Mahmoud Moheiddin launched a widely-publicized campaign in 2006 to promote PPPs as means of accelerating economic growth and relieving pressure off the national budget.
Since 1991, the private sector has partnered with the government to implement 16 projects worth $6.2 billion (LE 35.7 billion), mostly in telecommunication but also including transportation, irrigation, sewage and healthcare, according to MOF figures.
Moheiddin points to the level of PPP achieved by other developing countries with comparable economies to Egypt such as Malaysia, which recorded 81 projects, over the same period, worth $38 billion and the Philippines, which recorded 78 projects worth $32 billion.