The Public-Private Partnership (PPP) Unit in the finance ministry has called for more investment in feasibility studies and public-private partnerships to ensure value for money in project development.
While appearing before the Committee on Finance, Planning and Economic Development on Monday, 16 January 2023, Jim Mugunga, the Executive Director at the PPP Unit requested or Shs5 billion in funding for feasibility studies.
The entity's projected budget for the Financial Year 2023/2024 is Shs 3.5 billion.
Mugunga said that feasibility studies are invaluable in evaluating infrastructural development as they can help to identify any potential problems or risks that could arise during implementation.
He added that whilst the PPP Act provides for a project development facilitation fund that is to be used for conducting feasibility studies, the fund has never been realised.
According to Mugunga, who was presenting the unit’s budget framework paper before the committee chaired by Hon. Keefa Kiwanuka, government needs to do its feasibility studies and not simply rely on the studies by the developers and investors to have a comprehensive assessment of project ideas by analysing their technical, economic, legal, operational, and financial aspects.
He said they have learnt lessons from benchmarking several projects and that it was time for government to consider providing money for feasibility studies.
“That means we will rely more on ministries if they budget for the studies - this is how you get a project like Lubowa Specialised International Hospital, and all of a sudden you are at the whims of the proposer because you do not have your studies to justify the project costs and so on,” Mugunga said.
Mugunga also called on the MPs to move government towards supporting public-private partnerships which are important.
He said through such partnerships, the construction, and maintenance of buildings and roads are assured compared to projects that are concluded and simply abandoned with unforeseen costs and challenges.
Citing Soroti University as an example, Mugunga said the contractor built facilities at the campus with lifts to ease movement. However, the lifts are not operational because the university cannot afford the maintenance and fuel costs, a situation that a PPP would have taken into consideration.
Otuke County MP, Hon. Paul Omara, said the unit should indeed be supported to do feasibility studies to avoid losses that arise from entering partnerships without accurate information.
Elgon North County MP, Hon. Gerald Nangoli, questioned why government concentrated on oil roads with not a lot of activities and left out key roads which are used by Ugandans on a daily. He also wondered why major roads like the Entebbe Expressway have shortcomings like lighting which was not envisioned.
The deputy chairperson of the committee, Hon. Jane Avur, questioned why markets that do not fit the use of the public are constructed but roads are not.
The committee chairperson questioned if providing seed money for the fund will not go against government's decision to merge several other different funds.
Mugunga, however, said this can be included in the budget as additional funding and not the creation of a fund.
Distributed by APO Group on behalf of Parliament of the Republic of Uganda.