Question Tag: Government Guarantee

The Ministry of Education is currently considering public-private partnership as a means of improving educational infrastructure in the rural areas. The Ministry intends to use Public-Private Partnership to construct and manage modern libraries in rural areas to increase access to quality reading materials in a serene environment. The project would be fully financed by the private sector and will be built on lands secured by the government from the chiefs of the communities.

The private sector requires government guarantee to borrow externally to execute the project. Currently, public library services are free; however, the new project when executed through Public-Private Partnership would be on a “user-pay” basis. The average fees payable per user are estimated at GH¢20 per week and will be subject to an upward review from time to time. In order to stimulate private sector interest in the project, the Ministry intends to immunize the private sector against risks associated with the project. Meanwhile, the Ministry would insist that local materials and skills are employed in the construction and management of the library project. The project is also environmentally friendly as there will be little or no destruction of the forest vegetation. The project when completed will be of great benefit to the country as a whole.

Required:

i) Based on FOUR guiding principles of Public-Private Partnership under the national Public-Private Partnership policy, explain the feasibility or otherwise of the proposed library project by the Ministry of Education. (6 marks)

ii) Explain TWO sources of risks associated with the library project that should be allocated between the public sector and the private sector in the Public-Private Partnership arrangement. (4 marks)