Chapter 4
Managing FCs—PPP Development Stage
The most important aspect of managing fiscal commitments (FCs) under public-private partnership (PPP) projects is deciding which commitments to accept in the first place. Several key aspects of this decision—such as structuring the PPP and allocating risks and responsibilities—are outside the scope of this report, as described in chapter 2. This chapter focuses on how the Government of Ghana (GoG) can ensure that the potential fiscal cost of a proposed PPP is well understood and carefully assessed as a PPP project is being developed, and that this assessment feeds into the PPP approval process. The PPP Policy sets out a clear process for approving PPP projects. Figure 4.1 summarizes the PPP approval process, which entails four approval stages. The first is approval by the sector minister of a PPP “pre-feasibility study” (PFS) (Approval I in the policy). This is followed by approvals for: the Feasibility Study (FS) (Approval II); bidding documents and evaluation reports (Approvals III-A and III-B); and the final contract and PPP management plan (Approval IV). As shown in figure 4.1, the latter approvals are granted by the relevant contracting authority (CA)—depending on the project size and other characteristics,1 this authority could be the Public Investment Division (PID), the PPP Approval Committee,2 Cabinet, or Parliament. The proposed PPP Law is expected to further embed the PPP approval process set out in figure 4.1.3 In particular, the PPP Law will help clear up some remaining ambiguities about how current public financial management legislation affects PPP approval requirements. As described in box 4.1, the questions of whether and when “guarantees” under PPP arrangements will require parliamentary approval are particularly relevant to managing FCs under PPPs. Sound FC management requires that assessment of the FCs under a proposed PPP feeds into PPP approvals at each stage. Accordingly, figure 4.2 augments the approval process of figure 4.1, highlighting the FC management process at each stage of PPP development and approval: • The PFS, prepared by the CA with support from Project Advisory Unit (PAU) for approval by the sector minister, should include an initial estimate of the 23