The challenges facing Sierra Leone’s public infrastructure are well documented. By some assessments, addressing them will require a sustained expenditure of $258– 478 million per year (Sierra Leone’s Infrastructure: A Continental Perspective, Nataliya Pushak and Vivien Foster, 2011).
Based on that figure, we have an estimated annual funding gap of $58 to $278 million per year, most of it associated with water, power transport and agriculture. To address this the Government has been actively pursuing greater partnership with the private sector by strengthening the enabling environment for PPPs.
In 2010 the Government passed the PPP Act. The country’s PPP unit was initially set up in 2011 to collaborate and provide technical support to Ministries, Departments, Agencies (MDAs) and local councils in engaging the private sector to deliver public sector services. Abu Kamara, took over the running of Sierra Leone’s PPP Unit in 2013 and shepherded the PPP Act through parliament in September of 2014. This sets out the responsibilities of the contracting authority and provides for the resolution of disputes, as well as covering the facilitation, conclusion and implementation of PPPs.
With the recent signing of the Bumbuna II HEP PPP deal, Insight Magazine felt it was time to catch up with Abu Kamara to find out how PPPs are delivering infrastructural development in Sierra Leone, and what other projects are in the pipeline.
He says that budgetary constraints, and an acknowledgement of private sector efficiencies and know-how are two of the principal reasons for the PPP approach to funding infrastructural projects. “At their core PPPs bring a business-like rigour and private sector efficiencies to big infrastructural projects. Around 70-80 percent of PPP financing comes from debt finance – this means that an additional layer of scrutiny comes from the banks.
“Sierra Leone, like governments around the world, faces budgetary constraints. These impact on our ability to deliver new infrastructural projects. PPPs help to reduce the burden on direct government debt liabilities, which in turn frees up public capital to spend on other government services. They create access to other forms of nance, and because the private partner takes on the risk of financing, designing, constructing and maintaining the project, the Government’s exposure to risk is also reduced.
“The downside is that PPP arrangements inevitably take longer to put in place than standard procurement procedures. A mega project can run from 300 million to a billion dollars and for that amount of capex, the private partner will want to ensure the rigour of their analysis and feasibility studies. This can cause tension in an environment like ours with urgent infrastructural needs, which is impatient for results.”
Making the PPP process in Sierra Leone more responsive to these needs is a priority. A team which includes the development arm of the Ministry of Finance and Economic Development and the Public Investment Unit as well as the PPP Unit, evaluates projects from the various Government ministries, departments and agencies (MDAs), with the aim of developing a long term infrastructural development plan and identifying projects with PPP potential. “The intention is that we can take the initiative, package PPP deals, and go out to market with them on a competitive basis”.
Social as well as economic benefits are an important indicator of success says Kamara. He quotes a colleague who says that PPPs should come with a fourth ‘P’ - which stands for people. “Look for example at a project for a deep sea transhipment container port that we are currently working on. It will be able to berth 150 cargo vessels and will create over 20,000-30,000 jobs. The Bumbuna II hydro project will create 2,500 jobs in the construction phase. These big projects are transformational– they stimulate manufacturing, create jobs and improve livelihoods,” he explains.
The Unit also encourages community PPPs. Kamara points to a DFID funded waste and recycling service in Bo and Makeni, which is providing jobs, keeping the cities clean and promoting recycling. “We hope to replicate the scheme in Kono and Kenema,” he says.
Where the risks of a project are higher than returns, development partners can step in, if the project is delivering vital services. One example is work the Unit is currently doing on setting up diagnostic centres. “The capital required to set up well-equipped diagnostic centres and run them as commercial enterprises, would put their services beyond the reach of average Sierra Leoneans. Under these circumstances, bringing a development partner in with a grant for the initial capex, and then charging fees for opex makes their services more affordable,” he explains.
There is a full pipeline of PPP projects, dominated by the energy sector. “Energy is a powerful driver of economic growth,” he says, “and it has taken close to 55-60 percent of my working time.”. As well as Bumbuna II, he has the TCQ Freetown Heavy Fuel Oil project almost at completion stage. Together these two will bring in an additional 200+ MW. Smaller solar projects, which should be completed mid next-year are intended to add another 50 MW to the grid.
Transport is high on the priority list, with the aforementioned transhipment port on the horizon, and phase two of the Bolloré concession already underway. The unit is also working closely with the agricultural sector “to see how best we can develop large- scale commercial farms that can take care of our domestic consumption,” he says. Under this sector, the Unit is in the final stages of concluding a PPP deal for an extensive oil palm plantation in Mattru.
Kamara highlights the local content requirements of every PPP deal, which are structured to encourage the maximum use of local content and technology transfer. “As much as possible, we encourage linkages with local industries and the private sector and promote Sierra Leonean participation in private sector consortia,” he says. “After all, the end goal of all this is to grow our economy and develop the skills and capacity of Sierra Leoneans.”