The public-private partnership (PPP) projects unit of the Ministry of Finance will offer five new projects to investors before the end of fiscal year (FY) 2015/2016. The total cost of the projects was estimated at between EGP 7bn and EGP 8bn, according to Ater Hanoura, head of the PPP Unit at the Ministry of Finance.
Hanoura spoke with Daily News Egypt on the sidelines of 3rd Annual PPP Investment Summit, and said Egypt is still new to this type of partnership. However, he added, the country has all the elements for a successful PPP system, which could ease the pressure off the state budget in terms of implementing projects.
What are the projects that will be offered soon?
We plan to offer about five new investment projects to investors with a cost estimated at EGP 7bn-EGP 8bn before the end of the current fiscal year. Those five projects come within a larger package of eight projects that we have been studying since July 2015, at a total cost of EGP 10bn.
We have already put forward three projects at a cost of EGP 2bn-EGP 3bn.The unit will offer 12 more projects during FY 2016/2017 that will cost between EGP 17bn and EGP 20bn.
What are the projects that have been offered already, and what are the new ones?
The five new projects include three projects for desalination of seawater in Safaga, El-Alamein and El-Tor, in addition to the Safaga port project and the river bus project.
As for the projects that have already been offered, they are for the mechanisation and modernisation of notaries and registry offices and the technological zone in Maadi.
The government is counting on the private sector in the implementation of the bulk of the targeted investments during the current fiscal year, as part of its plan to reduce the deficit and limit it to about 10% of the total GDP.
How can the state ensure that citizens will not bear the cost of developing services such as registry offices?
There will be no increase in the value of services provided to citizens, whether new or existing ones, once the private sector enters. Pricing will be agreed upon through a tender and a contract that prevents investors from raising prices before consultation with the government, which will only approve increases under large variables that raise the cost of production or offering services.
All services provided by the government need to be developed and updated. This is the aim of all PPP projects. We can do so through financial and technical studies that confirm that the cost of providing the service through the private sector is less than the cost if offered by the government, taking quality and speed into the equation.
What about the Real Estate Registration Offices project?
We have already launched those projects to modernise and develop the services provided to citizens without any change in prices.
The project aims to rehabilitate all notary offices nationwide and to even establish new ones to reach a total of 400 offices, in addition to developing the programmes they operate and the technology they utilise – at an investment cost of some EGP 560m.
The Commercial Register Project aims to develop 88 offices and digitise them, as well as to develop delivery services.
Staff of the real estate and commercial registry offices will provide services to citizens, and will not be replaced.
Investors will serve as a back office. They will be responsible for the provision of hardware, software, electronic network connectivity tools, as well as cleanliness and quality service delivery.
Investors will recover their money through a calculation method based on the idea of sharing revenues generated from the provision of services to citizens.
How can the government ensure the seriousness of investors to ensure that services are not halted?
We have two main methods in implementing PPP projects. The first is operation, while the second is exploitation. The private sector can implement, maintain, and operate something like power plants. In that case, the government will buy its production and re-distribute it to citizens. That means that the government will bear no penny in the construction and the production, but will only buy the production – according to a price agreed upon through a tender.
The government is paying the price for the service and then sells it to the citizen. If investors are late providing the service, they are warned several times. Financing banks can intervene to manage the projects instead of investors to guarantee the continuation of providing the service, or else the government can break the contract.
What about the other method and the types of projects that are compatible with it?
Exploitation here means that investors become providers of services, but the state intervenes to set the price, also based on studies and tenders to ensure that citizens will not bear additional cost. Transport projects are a good example for this, especially the river bus project. The contract will state that prices can change every two years. The state will depend on both types, based on the nature of projects.
Are there any updates in terms of the river bus project, and will it be affected by the new River Nile law?
The river bus will be offered before the end of this fiscal year. We have already specified locations for river ports, where we are currently consulting with the Nile Research Center to finalise proceedings. The new River Nile law will not adversely affect the project, as it aims to standardise procedures.
The project aims to develop, manage and operate the river bus facility in Greater Cairo. It includes the modernisation of the river transport fleet and adding new units to it, in 30 river ports, half of which are new.
What is the result of the re-examination of the draft for Safaga port?
The study has been finalised. However, it was delayed when the government recently announced it will implement the Golden Triangle project and the global logistics centre, as some of those projects’ activities are similar to the ports.
A number of investment activities, such as cereal silos, have been cancelled as they overlap with two draft projects; the Golden Triangle and global logistics centre in Damietta. The latest was aimed to establish a logistics area for cereal and grain trading, as well as building silos and factories for oils, which are the same activities planned for Safaga.
The Golden Triangle project, which is currently under consideration, may require special needs at the port that will be taken into account.
What about the conference; how is the attention it is receiving and the quality of participation?
European and Arab investment delegations will participate in the conference, next to Egyptian investors and representatives of major international investment banks, such as the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the African Development Bank, Alexandria Bank, the Housing and Development Bank, and QNB, in addition to the International Finance Corporation.
What about the other projects that will be discussed during the conference?
The government will announce 20 projects in the sectors of information technology, transport, industry, sports and energy and infrastructure.
Some projects will be held in collaboration with the Ministries of Communications and Information Technology, Sport, Environment, and Housing, as well as the Cairo Governorate. This comes within the efforts of these ministries to improve public services and increase the competitiveness of the Egyptian economy.
The projects will include the establishment of centres for innovation and development at the technological area, to export telecommunications services and information technology from Maadi. They also include four global sports stadiums in the cities of Sharm El-Sheikh, Hurghada, Luxor and Marsa Matruh.
For the first time in Egypt, two central cities will be established to recycle solid, petroleum, agricultural, medical and hazardous wastes, along with five plants in the water sector that include two plants for the desalination of seawater in the North Coast.
The third and fourth projects are aimed to increase the productivity of clean drinking water in Qaliubiya, while the fifth is to treat sewage water in Alexandria, and the establishment of two multi-storey underground garages in Sheraton and Abbasiya.
How do you view the PPP mechanism in financing projects, in terms of results?
The mechanism is good so far. Egypt has managed to put up four wastewater projects that are all currently underway. Seven more projects will be launched during the next period. England, the country that was first to come up with the PPP system, launched only 50 projects within the first eight years.
England has been operating through the PPP system for 35 years now. It has around 110 projects. This affirms that Egypt is on the right path. The PPP law was issued in 2010, and its executive rule was adopted in January 2011. Two revolutions took place since then, and the circumstances are still in unrest.