The Public Private Partnership Commission (PPPC) says the country’s efforts to industrialise key sectors through PPP projects are being undermined by a shortage of funds to finance feasibility studies.
PPPC chief executive officer Patrick Kabambe said this in Lilongwe on Friday during a stakeholders’ conference to discuss challenges affecting the implementation of PPP projects and find solutions to accelerate potential investments.
He said PPPC is struggling to sell projects to investors without feasibility studies in key infrastructure development.
Kabambe, however, said efforts are underway to find alternative financing options to complement government’s budget subventions.
He said it is difficult to sell projects in their concept form as investors need bankable projects to commit their resources for partnerships with government.
Said Kabambe: “There is need to have thorough feasibility studies that anticipate the risks and that would guide in structuring the agreements.
“But as you can understand, feasibility studies are not cheap and the commission has a budget line which is understandably limited.”
He said PPPC is discussing with the Ministry of Finance and Economic Affairs to identify other ways of getting financial support either from donors or others to have a good pool in terms of financing feasibility studies.
A diagnostic study of Malawi’s PPP environment conducted by United Nations Economic Commission for Africa (Uneca) shows that for the past two decades, Malawi has only implemented PPP projects worth $1.2 billion (about K2.1 trillion).
However, Uneca describes the country’s PPP legal framework as one of the best, but urged authorities to market the investment potential with a package of bankable projects to the international fora.
Speaking during the same event, Deputy Minister of Local Government, Unity and Culture Owen Chimanika said the new PPPC Act is a good instrument which should unlock more projects, but said government institutions need to prioritise feasibility financing in their budgets.
He said: “You cannot sell a concept, people are looking for bankable projects.
“That is why it goes back to us MDAs [ministries, department and agencies]. Can’t we even budget for feasibility studies of our projects?”
Chomanika said the new law, passed at the end of last year, has simplified the PPP processes and allows private investor financing of feasibility studies with a provision of rights on the projects in return.
Ministry of Trade and Industry Principal Secretary Christina Zakeyu said there is need for the country to finance feasibility studies for projects, urging support from development partners as potential alternative means of expediting PPP projects.
“Development finance institutions must support the PPPs in terms of identifying other projects that need feasibility studies because investors would not be interested in the projects without feasibility studies,” she said.
According to Kabambe, the new law has also simplified the complex processes to enable local councils to promote their infrastructure projects through the PPP framework.
He said there is an initiative to engage local councils to familiarise with the PPP framework and technical support to develop projects that can attract private sector partnerships.
Meanwhile, the PPPC has completed some feasibility studies on some projects that include the $743 million (about K1.3 trillion) Kam’mwamba Coal Fired Electricity Plant project, Lilongwe City International Bus Terminal, Malawi Investment and Trade Centre office complex, Wenela Modern Market in Lilongwe and Golden Sand Resort in Cape Maclear in Mangochi, among others.
Other projects in the pipeline, whose feasibility studies are underway or yet to commence, include a new $134 million (about K234 billion) railway project to the Northern Region, airport city in Lilongwe, Mulanje Cable Car Resort, Mzuzu and Blantyre international bus terminals, among others.
