- 10 Marks
PSAF – May 2019 – L2 – Q5b – Public sector financing initiatives
Suggest three PPP arrangements for the power sector, detailing their implications on public monies, management, and residual assets.
Question
The power sector has been experiencing enormous challenges in recent times in terms of finance and management. The multi-million-dollar investment of government in the power distribution system seems not to achieve the desired results. In search of a remedy, the government has implemented several reforms in the sector, including corporatization of the agency responsible for power distribution to give it a business nature to drive efficiency. Some years thereafter, the problem of financial constraints coupled with corporate governance issues has surfaced stronger than before. The government has been advised to consider using Public Private Partnership (PPP) as a vehicle to revamp the power sector. The Minister for Energy has been tasked to develop a PPP proposal which leverages both private sector finances and management expertise to salvage the sinking power sector.
Required:
As an advisor to the Minister, present to the Minister THREE (3) PPP arrangements that can be used to achieve the objective of government, indicating clearly the effect of each of the proposals on public monies, management, and residual assets.
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