Guidelines sought for public–private partnerships in Malawi

The World Bank is inviting expressions of interest from eligible consulting firms or consortiums with experience in working in developing-country conditions to carry out a study that will develop the procedures, guidelines and regulations for public–private partnership (PPP) programmes in Malawi.

Malawi is moving towards the privatisation of power generation, transmission and distribution; water and sanitation; refuse disposal; prisons; pipelines; hospitals; stadiums; tourism facilities; air-traffic control; vehicle fleet management; information systems; telecommunications; toll roads; and billing systems, besides others, using the PPP model.

The World Bank is the major financier of the PPP programme through its public–private infrastructure advisory facility.
An official at the World Bank’s Malawi office, Ingrid Chikazaza, says the main task of the consultant to be engaged will be to develop principles and guidelines to aid in the preparation and implementation of a PPP programme.

“The importance of these procedures is to ensure that the implementation of PPPs is well structured and that PPPs are procured in the most cost-effective and competitive way. The procedures should be produced in the form of manuals,” says Chikazaza.

He says interested firms must provide information indicating that they are qualified to render the required services.

“Staff to be proposed for the tasks must have an understanding and first-hand experiece of PPP transactions . . . and must be able to work in a developing-country environment,” says Chikazaza. The World Bank is working on the establishment of PPPs in Malawi in liaison with the Malawi government’s Privatisation Commission (PC).

The PC is currently working with the South Africa-based Southern African Development Community Banking Association in implement- ing an initiative in Malawi to enhance the knowledge and capability of key public-sector officials in the development and implementation of PPPs.

Commission CEO Jimmy Lipunga says PPPs are expected to accelerate infrastructure development.

“A PPP is not a divestiture because it does not involve the transfer of ownership and control of State assets to the private sector. “The essence of a PPP is the allocation of project risk to the parties best equipped to manage these categories of risk. Generally, political risk is allocated to the public-sector partner and commercial risk is allocated to the private-sector partner,” says Lipunga.

He explains that implementation of the PPP programme will help to improve the delivery of public services by creating opportunities for greater private-sector participation in the economy.

“We intend to achieve this by transforming the role of the government from that of provider and regulator to that of facilitator in order to attain its developmental goals in partnership with the private sector,” says Lipunga.

Malawi has already made advances in its efforts to involve the private sector in the running of the power generation, transmission and distribution sectors that have resulted in the unbundling of the State-owned monopoly, the Electricity Supply Corporation of Malawi (Escom), into three business units – generation, transmission and distribution – which are to be privatised separately.

With funding from the World Bank, the Malawi government has engaged international consulting firm PricewaterhouseCoopers (PwC), to validate the existing strategy of concessioning out to the private sector the transmission business unit only as recommended by earlier studies.

The studies recommended that the generation business unit should remain in government hands but that independent power producers should be permitted to roll out their operations and compete with Escom’s generation business unit.

“The PwC consultancy will confirm if this is the most suitable option for Malawi’s needs while ensuring that the electricity sector remains an attractive option for private-sector investment,” says Lipunga.

The Malawi government and the World Bank have also been advertising for several consultancies for reforms in the water and sanitation, and aviation sectors.

The ongoing reforms in the water and sanitation sector will culminate in the involvement of the private sector in the running of the water boards, starting with the major ones –the Blantyre and Lilongwe Water Boards.