Economy

Treasury seeks consultant to structure PPP projects

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The National Treasury building in Nairobi in this picture taken on March 15, 2023. PHOTO | DENNIS ONSONGO | NMG

The National Treasury is seeking to recruit an international consultant to advise on the structuring of Public Private Partnership (PPP) projects as part of a new 10-year plan designed to strengthen the implementation of public infrastructure projects in Kenya

This comes amid a turbulent macroeconomic environment characterised by surging financing costs (high-interest rates on debt), depreciating Kenya shilling, soaring project implementation costs, and high operation and maintenance costs which are making public infrastructure projects unattractive to private investments.

Read: State warned of the hidden risks in PPP project contracts

“The macroeconomic environment, the interest rate environment, the exchange rate environment are very critical for a very strong and successful PPP programme. These are critical elements in making PPPs affordable,” said Director General of the PPP unit at the National Treasury Christopher Kirigua in an interview.

“Investors only get into PPPs to make a return so they need to evaluate and understand the commercial viability of the projects from the word go.”

According to Mr Kirigua, the government is issuing an international tender next week seeking the services of an international consultant.

The National Treasury’s PPP Committee has approved a 10-year infrastructure plan seeking to reprioritise all government infrastructure projects to be funded either through collaboration with private investors or through public funds.

Under the proposed plan, Environmental, Social, and Corporate Governance (ESG) standards will be key considerations in project implementation, coupled with the expected returns and their economic and social impact.

“The mode of prioritisation will be based on the economic value, the social impact and the returns the projects will deliver for the country. The plan will focus on climate-smart infrastructure and environment, social and corporate governance (ESG) will be a key consideration on the prioritization plan,” says Mr Kirigua.

Read: How Kenya can use public-private deals to grow

The plan entails a countrywide consultation process that aims to review all government infrastructure projects and reclassify them based on their returns and their environmental, economic and social impact.

The consultant is expected to help reprioritise government projects into those to be funded by the taxpayers’ money and those to be implemented with the help of the private sector, depending on their economic returns.

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