Lessons for uganda about PPP on road projects from Israel & Albania

Lessons for uganda about PPP on road projects from Israel & Albania

Public private partnerships (PPP) is delivering vital infrastructure to countries in a more efficient way and is becoming the preferred method of public investments worldwide. PPP is a collaboration between the public and private sectors, aimed at the implementation of projects or provision of services traditionally provided by the public sector.  Resources are scarce as there are many competing interests governments have to work on. Infrastructure is vital for the economy to thrive yet the budget for most countries cannot go round in providing it. If governments are to utilize their budgets to put up infrastructure it would be a hard ordeal as experience has shown that no country is capable of funding her infrastructure needs especially in the short term. PPP as a method of delivering services has been around for some time though it gained more traction in Europe in early 1980s. In fact, Britain was one of the first countries to adopt PPP and was to later popularize the idea to many other countries. Having proven to be a better alternative, many countries, with guidance from the World Bank and other international development partners have come to embrace PPP as the best alternative for long term financing of public infrastructure.

Uganda is ahead of many African countries in implementing projects under PPP because of its liberalization policy that supports this plan. The country has implemented PPP projects in energy, (electricity), Railways under a concessionaire (recently terminated) and most recent roads. Many more road projects are lined up to be constructed under PPP arrangement. UNRA Has announced that the first fully fledged toll road in Uganda – The Kampala-Entebbe Expressway will open on June 15th 2018. This is a major milestone in Uganda’s road infrastructure development journey. The road is one of a kind in terms of its unique features, design and purpose.  It is against this context therefore that we need to understand the circumstances in which PPP especially for roads was introduced in Uganda. We need to understand how it operates, its origin and how it has been implemented it in countries where it has been welcomed.

Today, we will focus on two roads that have been constructed under PPP in Israel and Albania. The Yitshak Rabin Road also known as Highway Six in Israel and Patriotic Highway in Albania. Yitzhak Rabin road has another name of Trans-Israel Highway because it traverses the greater central part of the country connecting the north to the south. Most sections of the road are six lanes double carriage. The 300km road that connects the two most important cities of Tel-Aviv and Jerusalem was named after former Israel prime minister who was murdered 1995 and is currently regarded as the best road in the Jewish state. The road was completed in 2004 at a total cost of 36 Billion Shekels (approximately 10 Billion Dollars).

The road is operated under a fully electronic free flow tolling system which allows motorists to use it and pay later.  The road is fitted with cameras that capture the details of vehicles whose data is then transmitted to the central system.  The systems sends invoice to the road user/motor vehicle according to times they used the road in a given month. It costs approximately 20 Shekels (6 Dollars) as toll for a motor vehicle moving from one end of the road to the other.  Considering the cost of living in Israel, this is affordable. The system is quite efficient as there are no inconveniences of motorists stopping to pay for the toll.  This saves time and removes the challenge of vehicles piling at the toll station. The main contractor of the road was an Israeli company called Derech Eretz Group which was also awarded the concession under a Build Operate and Transfer (BOT) arrangement by government for a period of 30 years. The highway has a total of 14 Interchanges, 94 bridges and 50 aqueducts.

Another example of a PPP road is the 137Km Albania-Kosovo Highway also known as “Patriotic Highway” whose construction started way back in 2006. The road connects the capitals of Pristina and Tirana for the two independent states of Kosovo and Albania.  It navigates through some of the poorest neighborhoods of central Europe. The total cost of constriction was Two Billion Euros. This sum was considered too expensive hence an independent investigation was conducted and concluded that there was fraud which led to cost escalation. The project initial cost was One Billion Euros. Construction of the road started in 2006 for the Albania section while the Kosovo section started in 2010.

The contractor, Bechtel-ENKA was accused of underhand methods and fleecing the two countries in hundreds of millions of dollars. The road project which has come to be one of the most controversial in Europe was awarded through non-competitive bidding. It was later found out by the investigation committee that the contractor did not have a design plan for the road! As if this was not enough, when the road was completed early this year authorities imposed high tariffs (toll fees) that were very prohibitive. This attracted massive protests where scores of both police and protesters were injured. The toll fees ranged from three dollars up to 25 dollars for single use of the road.

Uganda has a lot to learn from the two examples in Israel and Albania-Kosovo which were built under PPP. Concessions are complex undertaking which can bring forth good or bad results depending on how they are handled. Compelling stories have been told of how PPP has brought forth opportunities to countries the much needed infrastructure through seamless means by providing ready capital.  For others though PPP has left a sour taste in their mouth because they are either poorly negotiated or poorly handled altogether. From the examples above it is important that Uganda adopts a soft approach especially with regard to the road tariffs or tool fees. Hurrying to collect a lot money in a short time will most likely be resisted by majority Ugandans who still look at roads as a free public good which should not be paid for directly. There is need for government to approach the issue of tolling with caution and thoughtfulness since it is delicate and can lead to serious setbacks for an otherwise good project.