CAIRO: After two years of preparation, the People’s Assembly (PA) ratified the public-private partnerships (PPP) law on Monday.
The law seeks to enhance the role of the private sector in the building, operation and maintenance of infrastructure projects in Egypt.
Under the law, the government will be able to tender infrastructure projects to the private sector, and in return, the government will pay competitive fees over the life span of a project taken on by a private sector organization.
The core objective of the project will be to allow the government to increase its dependence on the private sector for the financing and operating of infrastructure projects, which should reduce the fiscal burden that the government currently faces and enhance the efficiency of all infrastructure projects.
Yomna El-Hamaky, Shoura Council member and head of the economics department at Ain Shams University, said, “This law will ensure that the quality of government services will be greatly improved and more efficient; …engaging in public-private partnerships will allow the government to finally have a means by which to decrease public expenditures and thus reduce in the long-term public deficits.”
She continued by explaining that major infrastructure projects such as water, building schools, sanitation, for example, require financing which the government clearly lacks.
Adding to El-Hamaky’s comments, Alia El-Magdy, professor of economics at Cairo University, remarked, “The government desperately needs and wants to build new infrastructure, such as roads, bridges, water projects and schools, but this requires substantial investment, which is not possible given the state of the government’s budget deficits.”
“Engaging in PPP projects will alleviate budget concerns as well as ensure that citizens receive high quality services that are properly managed in an efficient way,” she added.
Within the framework of a pilot program, two PPP projects were previously carried out: the first with support of the International Finance Corporation (IFC) for a water treatment plant in New Cairo and the other with Egypt’s Orascom Construction Industries (OCI) firm, in conjunction with Spain’s Aqualia, who also won a tender for a Cairo wastewater treatment project.
Already, the government has a long list of projects that it wishes to undertake, totaling LE 82 billion, reports indicate.
El-Hamaky and El-Mahgy confirmed that both domestic Egyptian and foreign firms would be involved in these PPP projects; however, El-Mahgy pointed out that it might be more likely to see domestic firms undertaking smaller projects, such as building schools, while joint operations between both domestic and foreign firms may be required for other projects of considerable size.
“In the short and medium term it should result in more spending, more hiring, and thus, more income for Egyptians,” El-Mahgy affirmed, “and of course, the infrastructure will be of better quality, meaning that the overall quality of life for Egyptians should be improved as well.”
Regarding safe guarding citizens interests when handing over control of key services to the private sector, El-Kamaly allayed any fears of an abuse of position by the private sector, highlighting that the government would be in a position of oversight and control, “by guaranteeing terms of reference, obtaining the best price through tendering and monitoring.”
