Question Tag: Public-Private Partnership

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  • 30 Marks

PSAF – May 2019 – L2 – Q1 – Public Sector Financial Statements

Analyze financial ratios for a hotel transitioning to a public-private partnership.

National Hotel, an investment unit of the Ministry of Tourism and Environment, is fifty (50) years old. It has recently been restructured from a wholly-owned government hotel to a private/government partnership. However, being the largest hotel in the country and for security reasons, the government still retains 55% of its equity.

The board of directors has decided to reposition the hotel for better performance, needing external finances amounting to N180 million, consisting of a N100 million loan over ten years and an N80 million bank overdraft. All necessary supports have been provided by the government and private equity holders.

The summarized results for the last two financial years are as follows:

Income Statement

Year ended 30 September 2013 (N’000) 2014 (N’000)
Turnover 200,000 240,000
Cost of Sales (150,000) (184,000)
Gross Profit 50,000 56,000
Overhead Expenses (10,000) (12,000)
Profit before Tax 40,000 44,000

Statement of Financial Position

You have been engaged as a consultant to assist the hotel in preparing necessary documents and reports to achieve its objectives.

Required:
a. Calculate six relevant accounting ratios covering each of the two years: 2013 and 2014 in a tabular form. (12 Marks)

b. Interpret the result of the ratios calculated in (a) above to show the financial performance and position of the entity. (12 Marks)

c. Highlight four unfavorable factors about the hotel as revealed by your interpretation. (6 Marks)

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  • 10 Marks

PSAF – May 2017 – L2 – Q5b – Public sector financing initiatives

This question evaluates the feasibility of a public-private partnership (PPP) for constructing and managing libraries in rural areas and identifies associated risks.

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)

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  • 8 Marks

PSAF – May 2016 – L2 – Q4c – Public sector financing initiatives

This question explores the objectives and guiding principles of Public Private Partnership (PPP) agreements in Ghana.

i) State ONE objective of a public private partnership agreement?

ii) Explain THREE factors that the Government would consider before entering into a public private partnership agreement?

iii) Explain the following terms used as guiding principles in IPSAS 13 and 32 – Accounting for Public Private Partnership:

  • Service Concession Arrangement
  • Lease
  • Recognition of Revenue
  • Economic Life of an Asset

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  • 10 Marks

PSAF – Nov 2023 – L2 – Q4c -Public sector financing initiatives

Discuss PPP investment models and benefits for MTU in the context of developing university infrastructure under fiscal constraints.

Musko Technical University (MTU) is a public University in Ghana. The University has a student population of about Twelve Thousand (12,000). It relies on Government subvention and Internally Generated Fund in running its operations and developing public infrastructure. As a result of the fiscal challenges the Government is experiencing, it has reduced its funding support to the University. This problem together with low Internally Generated Fund has resulted in the University expending greater proportion of its Internally Generated Fund on Goods and Services which reduces spending on infrastructure development. Currently, the University needs a good Library, Lecture Theatre and Hostel facility for the smooth running of its operations. The University is aware of the new Public Funding Initiative called Public Private Partnership (PPP). Fortunately, it has been approached by a South African investor who wishes to enter into a PPP contract with the University to build 8,400-unit capacity hostel facility in the University within two years. This arrangement is expected to reduce students’ internal accommodation deficit from 90% to 20%. Currently, the University’s challenge is how to maintain their control on the Hostel Facility after the construction under PPP.

Required: i) Explain THREE (3) PPP investment models suitable for addressing the needs of MTU. (6 marks)
ii) Discuss FOUR (4) benefits MTU may obtain from such initiatives. (4 marks)

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  • 6 Marks

PSAF – Mar 2023 – L2 – Q4b – Public sector financing initiatives

Explains key principles of Public-Private Partnership, including value for money, risk allocation, ability to pay, and competition.

Explain the following principles of Public-Private Partnership:

i) Value for money
ii) Risk allocation
iii) Ability to pay
iv) Competition
(6 marks)

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  • 20 Marks

PSAF – March 2024 – L2 – Q4a – Public Financial Management, Public Procurement

Explain procurement irregularities and conditions under which procurement processes can be canceled; discuss PPP risks.

a) In a recent Auditor General’s Report to Parliament, several Ministries Departments and Agencies were cited for various financial management irregularities. Included in the report were Stores and Procurement irregularities covering the following:
i) Uncompetitive Tendering
ii) Unplanned Procurement
iii) Contract splitting

Required:
Explain the above irregularities in the context of the Public Procurement Amendment Act, 2016 (Act 914). (6 marks)

b) Under the procurement laws of Ghana, a procurement entity may for specific and justifiable reasons, cancel the procurement proceedings before the expiry of the deadline for the submission of the tenders.
Required:
Outline FOUR (4) conditions under which a procurement entity may activate this provision under the Public Procurement Amendment Act, 2016 (Act 914). (4 marks)

c) University of Communication is a Public University in Ghana. The University has a student population of about Forty Thousand (40,000). The University is located in a very populous environment, and the community lacks a modern Hospital that could provide good health care for the students and the community at large. Due to financial constraints, the University can currently boast of only one clinic that barely serves the full health needs of the students. The University intends to use the Public-Private Partnership (PPP) arrangement to construct an ultra-modern hospital in the University to provide the full health care of the University community.

In addition to the internally generated fund from the operations of the new hospital, it will also serve as a practical learning centre for the University. In this regard, the University has been approached by Trust Investors Ltd, a private company that intends to construct the ultra-modern hospital in the University to serve these purposes using a Build Operate and Transfer (BOT) arrangement. Negotiations are just at the preliminary stage, and you have been contracted as the consultant to assist the parties to enter into a successful PPP arrangement. The parties are eager to know the inherent risks they are exposed to under such an arrangement.

Required:
Write a report to the parties, outlining THREE (3) risks each that the two parties are exposed to. (10 marks)

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  • 10 Marks

PSAF – Dec 2023 – L2 – Q4b – Public sector financing initiatives

Explain Public-Public Partnerships and their advantages over Public-Private Partnerships.

Most often, public-private partnership is over-hyped in public sector management at the expense of public-public partnership which is also another powerful tool for improving public sector services.

Required:
i) Explain Public-Public Partnership. (2 marks)
ii) Explain FOUR (4) advantages of Public-Public Partnerships over Public-Private Partnership. (8 marks)

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  • 10 Marks

PSAF – Nov 2021 – L2 – Q4c – Public sector financing initiatives

Explain four typical types of Public-Private Partnership (PPP) contracts and their characteristics.

Public Private Partnership (PPP) arrangements can take different forms ranging from simple models to complex models. PPP arrangements may differ from one jurisdiction and economy to another. There are, however, typical types of PPP contracts that are common to all jurisdictions and economies.

Required:
Explain FOUR (4) typical types of PPP contracts.

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  • 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.

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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  • 10 Marks

PSAF – May 2020 – L1 – Q4b – Public sector financing initiatives

Explain different types of Public-Private Partnership arrangements.

A Public-Private Partnership (PPP) is a contractual arrangement between a public entity and a private sector party, with a clear agreement on shared objectives for the production of public infrastructure and services traditionally provided by the public sector. PPPs can have many different forms.

Required:
Explain the following types of Public-Private Partnership arrangements:
i) Operating and Maintenance Contract
(2.5 marks)

ii) Rehabilitate Operate and Transfer
(2.5 marks)

iii) Service Concession
(2.5 marks)

iv) Joint Venture
(2.5 marks)

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  • 30 Marks

PSAF – May 2019 – L2 – Q1 – Public Sector Financial Statements

Analyze financial ratios for a hotel transitioning to a public-private partnership.

National Hotel, an investment unit of the Ministry of Tourism and Environment, is fifty (50) years old. It has recently been restructured from a wholly-owned government hotel to a private/government partnership. However, being the largest hotel in the country and for security reasons, the government still retains 55% of its equity.

The board of directors has decided to reposition the hotel for better performance, needing external finances amounting to N180 million, consisting of a N100 million loan over ten years and an N80 million bank overdraft. All necessary supports have been provided by the government and private equity holders.

The summarized results for the last two financial years are as follows:

Income Statement

Year ended 30 September 2013 (N’000) 2014 (N’000)
Turnover 200,000 240,000
Cost of Sales (150,000) (184,000)
Gross Profit 50,000 56,000
Overhead Expenses (10,000) (12,000)
Profit before Tax 40,000 44,000

Statement of Financial Position

You have been engaged as a consultant to assist the hotel in preparing necessary documents and reports to achieve its objectives.

Required:
a. Calculate six relevant accounting ratios covering each of the two years: 2013 and 2014 in a tabular form. (12 Marks)

b. Interpret the result of the ratios calculated in (a) above to show the financial performance and position of the entity. (12 Marks)

c. Highlight four unfavorable factors about the hotel as revealed by your interpretation. (6 Marks)

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  • 10 Marks

PSAF – May 2017 – L2 – Q5b – Public sector financing initiatives

This question evaluates the feasibility of a public-private partnership (PPP) for constructing and managing libraries in rural areas and identifies associated risks.

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)

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  • 8 Marks

PSAF – May 2016 – L2 – Q4c – Public sector financing initiatives

This question explores the objectives and guiding principles of Public Private Partnership (PPP) agreements in Ghana.

i) State ONE objective of a public private partnership agreement?

ii) Explain THREE factors that the Government would consider before entering into a public private partnership agreement?

iii) Explain the following terms used as guiding principles in IPSAS 13 and 32 – Accounting for Public Private Partnership:

  • Service Concession Arrangement
  • Lease
  • Recognition of Revenue
  • Economic Life of an Asset

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  • 10 Marks

PSAF – Nov 2023 – L2 – Q4c -Public sector financing initiatives

Discuss PPP investment models and benefits for MTU in the context of developing university infrastructure under fiscal constraints.

Musko Technical University (MTU) is a public University in Ghana. The University has a student population of about Twelve Thousand (12,000). It relies on Government subvention and Internally Generated Fund in running its operations and developing public infrastructure. As a result of the fiscal challenges the Government is experiencing, it has reduced its funding support to the University. This problem together with low Internally Generated Fund has resulted in the University expending greater proportion of its Internally Generated Fund on Goods and Services which reduces spending on infrastructure development. Currently, the University needs a good Library, Lecture Theatre and Hostel facility for the smooth running of its operations. The University is aware of the new Public Funding Initiative called Public Private Partnership (PPP). Fortunately, it has been approached by a South African investor who wishes to enter into a PPP contract with the University to build 8,400-unit capacity hostel facility in the University within two years. This arrangement is expected to reduce students’ internal accommodation deficit from 90% to 20%. Currently, the University’s challenge is how to maintain their control on the Hostel Facility after the construction under PPP.

Required: i) Explain THREE (3) PPP investment models suitable for addressing the needs of MTU. (6 marks)
ii) Discuss FOUR (4) benefits MTU may obtain from such initiatives. (4 marks)

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  • 6 Marks

PSAF – Mar 2023 – L2 – Q4b – Public sector financing initiatives

Explains key principles of Public-Private Partnership, including value for money, risk allocation, ability to pay, and competition.

Explain the following principles of Public-Private Partnership:

i) Value for money
ii) Risk allocation
iii) Ability to pay
iv) Competition
(6 marks)

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  • 20 Marks

PSAF – March 2024 – L2 – Q4a – Public Financial Management, Public Procurement

Explain procurement irregularities and conditions under which procurement processes can be canceled; discuss PPP risks.

a) In a recent Auditor General’s Report to Parliament, several Ministries Departments and Agencies were cited for various financial management irregularities. Included in the report were Stores and Procurement irregularities covering the following:
i) Uncompetitive Tendering
ii) Unplanned Procurement
iii) Contract splitting

Required:
Explain the above irregularities in the context of the Public Procurement Amendment Act, 2016 (Act 914). (6 marks)

b) Under the procurement laws of Ghana, a procurement entity may for specific and justifiable reasons, cancel the procurement proceedings before the expiry of the deadline for the submission of the tenders.
Required:
Outline FOUR (4) conditions under which a procurement entity may activate this provision under the Public Procurement Amendment Act, 2016 (Act 914). (4 marks)

c) University of Communication is a Public University in Ghana. The University has a student population of about Forty Thousand (40,000). The University is located in a very populous environment, and the community lacks a modern Hospital that could provide good health care for the students and the community at large. Due to financial constraints, the University can currently boast of only one clinic that barely serves the full health needs of the students. The University intends to use the Public-Private Partnership (PPP) arrangement to construct an ultra-modern hospital in the University to provide the full health care of the University community.

In addition to the internally generated fund from the operations of the new hospital, it will also serve as a practical learning centre for the University. In this regard, the University has been approached by Trust Investors Ltd, a private company that intends to construct the ultra-modern hospital in the University to serve these purposes using a Build Operate and Transfer (BOT) arrangement. Negotiations are just at the preliminary stage, and you have been contracted as the consultant to assist the parties to enter into a successful PPP arrangement. The parties are eager to know the inherent risks they are exposed to under such an arrangement.

Required:
Write a report to the parties, outlining THREE (3) risks each that the two parties are exposed to. (10 marks)

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  • 10 Marks

PSAF – Dec 2023 – L2 – Q4b – Public sector financing initiatives

Explain Public-Public Partnerships and their advantages over Public-Private Partnerships.

Most often, public-private partnership is over-hyped in public sector management at the expense of public-public partnership which is also another powerful tool for improving public sector services.

Required:
i) Explain Public-Public Partnership. (2 marks)
ii) Explain FOUR (4) advantages of Public-Public Partnerships over Public-Private Partnership. (8 marks)

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  • 10 Marks

PSAF – Nov 2021 – L2 – Q4c – Public sector financing initiatives

Explain four typical types of Public-Private Partnership (PPP) contracts and their characteristics.

Public Private Partnership (PPP) arrangements can take different forms ranging from simple models to complex models. PPP arrangements may differ from one jurisdiction and economy to another. There are, however, typical types of PPP contracts that are common to all jurisdictions and economies.

Required:
Explain FOUR (4) typical types of PPP contracts.

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  • 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.

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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  • 10 Marks

PSAF – May 2020 – L1 – Q4b – Public sector financing initiatives

Explain different types of Public-Private Partnership arrangements.

A Public-Private Partnership (PPP) is a contractual arrangement between a public entity and a private sector party, with a clear agreement on shared objectives for the production of public infrastructure and services traditionally provided by the public sector. PPPs can have many different forms.

Required:
Explain the following types of Public-Private Partnership arrangements:
i) Operating and Maintenance Contract
(2.5 marks)

ii) Rehabilitate Operate and Transfer
(2.5 marks)

iii) Service Concession
(2.5 marks)

iv) Joint Venture
(2.5 marks)

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