Cabinet to Approve PPP Agreements

President Museveni has almost won the battle to have cabinet approve public private partnership (PPP) projects after Parliament’s committee on Finance, Planning and Economic Development endorsed the move by reversing its earlier decision wherein it wanted to hold such powers.

In its recent report to Parliament, the committee chaired by Robert Kasule (NRM, Kyadondo North) observed that the approval of agreements is the preserve of the attorney general.

“In order not to inundate cabinet with requests for approval, the minister [Finance] shall set a threshold of projects for which cabinet approval is required. This will ensure that larger projects and projects of strategic importance will only be signed after clearance by cabinet,” reads the committee’s report, which is slated for debate.

This conclusion could end what has been a contentious issue as the country enters into billion-dollar infrastructure-related projects with private players.

PING-PONG

On July 18, 2014, Parliament passed the Public Private Partnership Bill, 2012, after close to two years of debate. The president refused to sign the bill into law, instead preferring to send it back to the House in late September, where he asked for a review of clause 26, which in effect provided that an accounting officer shall not sign, amend or vary a public private partnership agreement without the approval of Parliament.

He argued that the above clause usurped the attorney general’s constitutional mandate, which is to the effect that “no agreement, contract, treaty, convention or document by whatever name called, to which the Government is a party or in respect of which the Government has an interest, shall be concluded without his legal aice.”

The president further said that this would not only hinder investors, but also introduce a parallel approval mechanism for PPP agreements, which would create delays in the implementation of projects.

Parliament reconsidered the bill for the second time and in early December 2014, passed the bill, and maintained its stand on clause 26. Parliament argued that it was in the public’s best interest that it retained powers to veto projects.

On January 7, 2015, the president again returned the bill for the second time and maintained his earlier ground.

COMMITTEE SCRUTINY

While reviewing the bill for the second time in early March, the committee looked at the constitution, Public Finance Management Act and the Public Private Partnership Act of Ghana for guidance.

According to its main report, which is yet to be debated, the committee changed its earlier position in favour of the president’s. Although Parliament wanted to provide checks and balance to executive powers on PPP agreements, it said that this would be achieved through providing that ” the relevant minister shall lay before Parliament any public private agreement or agreements within one month after it has been signed for parliamentary oversight.”

Besides providing that the auditor general shall report annually on PPP projects, the committee also recommended for the bill to provide that ministers, government departments and agencies indicate in their budget framework papers to parliament for the respective PPP projects they intend to undertake.

Speaking to The Observer on Friday, Kasule said his committee agreed with the president based on reason.

“We were not compromised…we think that the president is right,” he said.

OPPOSITION’S VIEWS

Five opposition members on the committee dissented from the committee’s position. The five MPs are Nathan Nandala Mafabi (Budadiri West), Geoffrey Ekanya (Tororo county), Odo Tayebwa (Ishaka municipality), Isaiah Ssasaga (Budadiri East) and Kevinah Taaka (Busia municipality).

In their minority report, they argued that considering the fact that PPP projects, in their nature, involve public expenditure, it made perfect sense to have them scrutinised by Parliament.

“Consider an example of a road constructed and citizens have to pay the toll fee to use that road for 20 years. But during agreeing on the PPP, the cost of the project was inflated… Parliament must review terms on which securing external financing (backdoor borrowing ) is based, and that does not amount to signing the contract,” the MPs argued, citing the example of the Bujagali power project which is a PPP, whose cost has increased gradually and the cost of electricity has not reduced.

Mafabi and his group questioned why the details of PPP projects should not be reviewed by Parliament yet it reviews all borrowing before the attorney general endorses the final signing of the agreement. “What is to be hidden in those projects that we should not know the terms and conditions therein but have financial commitments to be repaid by present and future generation?” the minority report reads.

The MPs also argue that passing clause 26 as suggested by the committee is in violation of section 43 (1) of the Public Finance Management Act, 2015, which provides that all expenditures to be incurred by the government on projects which are externally financed in a financial year shall be appropriated by Parliament.

D-DAY

Parliament is expected to convene anytime to take a decision on clause 26. It should be noted that since the bill has twice been returned to Parliament, the assent process shall not be required for the bill to become law if Parliament passes it with at least two thirds of the legislators.

Source : The Observer

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