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PPPs can reduce our public debt – Oundo
Bernard Oundo
What you need to know:
Four years ago, the Public Private Partnership (PPP) law was passed, with high expectations among others that it should allow for preparation and financing of critical infrastructure and such related projects between government and the private sector. With Uganda’s own infrastructure financing deficit estimated at $1.4 billion annually, PPPs are now aggressively being pushed as a frontier in enabling Uganda to bridge this funding gap, and perhaps escape the impact of its ballooning debt. Mr Bernard Oundo is one among the leading legal minds in Public Private Partnerships. Prosper Magazine’s Rainher Ojon interviewed him about his thoughts on this law.
What is your view on Uganda’s Public Private Partnership (PPP) legal framework?
I think it is commendable thus far in terms of how it is structured. We have the PPP policy in place. We have the PPP Act passed in 2015 and the PPP regulations which came into force in April 2019.
We also have the transparency and disclosure framework which is very vital for PPPs in providing transparency and disclosure through the PPP process. This is a good foundation now.
So where does this lead us?
What needs to be done is now to build capacity of the PPP Unit and contracting authorities. That capacity will enable us to have a pipeline of projects which we can use on the PPP model. If we don’t have a pipeline, then everything we are doing will not add-up and make sense. Going forward, focus must change from the legal and institutional framework to a pipeline of projects.
Can PPPs enable Uganda slow down on direct debt which is now at about Shs42 trillion?
One of the issues that several people have commented on is our debt and on whether using PPPs as an alternative financing and procurement method can help reduce the cost of infrastructure.
In PPPs, we do what is called the value for money analysis. Here, PPP advisers are supposed to calculate the cost of delivering that project using the traditional procurement method and compare that cost of delivering that project using the PPP model.
Alternative financing models such as PPPs can, therefore, assist in reducing national debt. Risk transfers are very important more so on infrastructure projects.
Are there any projects that have been assessed and considered under PPPs after the regulations came into place?
One of the flagship (PPP) projects we have is the 77Km Kampala-Jinja Expressway. I am certain they carried out a value for money analysis comparing the cost of building that road using the procurement method and the cost of building that road using a PPP. Only when you discover that the cost analysis in net present value will create a value for money, do you proceed with a PPP if the cost is less than using the public procurement.
It also reduces on the competitive tension, thus lowering costs.
What other incentives are needed to ensure that the private sector is encouraged to take on PPPs?
If you are the private sector and learn of a new road project underway in Uganda, you would like to be sure that your presence into such capital intensive projects has sustainability. That is why the project pipelines are now very important in order for PPPs to become attractive to the private sector.
Kenya, has done very well in assembling more projects for PPPs. Even within the wider context of the EAC (East African Community), a private sector play looks at possibility of continuity of similar (PPP) projects.
An artistic impression for the Kampala-Jinja Expressway. One of Uganda’s flagship (PPP) projects is the 77Km Kampala-Jinja Expressway. Courtesy Photo
What do you make of the outlook?
I think for emphasis, there is no short cut. PPPs are now a global trend. With our debt sustainability issues, it is now time for government to focus on such an alternative financing mechanisms.
Since we now have a legal and institutional framework in place, it is about implementation. If we have a pathfinder project, let us take that example, learn from it and learn from those mistakes as we wait to implement other PPP projects.
Law for Public Private Partnerships
The Public Private Partnerships Act, 2015 was enacted in August 2015. The Act is the prime law that regulates the development and implementation of PPPs in Uganda. It establishes the PPP Committee which directly oversees and approves all projects under the PPP modal and the PPP Unit which serves as the secretariat and technical arm of the Committee.
The Act also provides for the PPP processes and contains information on the procurement rules and methods that apply to Public Private Partnerships.
Who is Bernard Oundo?
Mr Bernard Oundo is a partner with Oundo & Co. Advocates, a legal and consultancy firm in Uganda that specialises in Public Private Partnership legal advisory services.
His work. Mr Oundo has played a lead advisory role on a variety of government privatisation and PPP projects including evaluation of project proposals, structuring of project financing, negotiating concession agreements as well as reviewing financial, legal and technical due diligence reports and feasibility studies.
Mr Oundo has also been the legal advisor to the Ministry of Finance, Planning and Economic Development with respect to the financing options for the implementation of cross border projects including a Standard Gauge Railway line, crude oil pipeline, transmission lines and oil refinery spanning four countries Uganda, Kenya, South Sudan and Rwanda under the Northern Corridor.
