Government steps up public financial and investment management reforms
Sri Lanka’s public financial and investment management reforms are now being expedited mitigating fiscal risks from large-scale projects.
The government is compelled to step up these reforms as the authorities are increasingly concerned about rising debt risks from potential abuses in the implementation of PPP projects, a senior Finance Ministry official said.
The ministry is working in collaboration with the World Bank on a new Public Financial Management Act to improve the budgetary process and control risks from PPPs, he added.
Although in the past there have been several PPPs successfully transacted in the port and power sectors, the current institutional capacity with respect to structuring and procuring PPPs is severely limited, a special report submitted to the Ministry revealed.
In recent years, a substantial number of public sector projects have been procured on an unsolicited bid basis which is a practice that can have adverse implications with respect to transparency and value for money considerations, the report made known to authorities.
The authorities are taking steps to better integrate all projects under the Public Investment Programme, with the National Agency for Public Private Partnerships (NAPPP), a dedicated unit established within the ministry.
The agency oversees fiscal risks and affordability of PPP projects, given Sri Lanka’s debt sustainability risks among other areas connected to it.
It is also important to ensure transparency and impartiality across all investment development projects, allowing investors to access the generous incentive regime under the Inland Revenue Act (IRA), while avoiding any ad hoc tax exemptions, the Ministry official pointed out.
These efforts will help Sri Lanka effectively manage large-scale capital projects, including ongoing development programmes under China’s Belt and Road Initiative, he said.
Responding to a request to comment on public financial and investment management reforms, Chairman of NAPPP Thilan Wijesinghe told the Business Times that these reforms will strengthen fiscal sustainability in the use of public private funds.
Under this initiative new guidelines on PPPs are to be introduced shortly and it is based on 1998 guidelines which are already being adopted, he said.
These new PPP guidelines to strengthen the project selection and appraisal process have now been finalised, he revealed.
The NAPP is trying to unify prospective projects under the 1998 guidelines, he said adding that therefore the current process of mobilising private sector financing through the use of PPPs will not be affected.
The National Procurement Council (NPC) has reviewed the 1998 guidelines and updated it in devising the new set of guidelines, he said.
Until the new PPP guidelines, which are currently under review by the NPC, are finalised, the existing guidelines of 1998 are being applied for ongoing PPP transactions, he said.
According to available data, Kandy Mahaiyawa Urban Housing Project, Pettah Multimodel Hub, Ekala Aero City Project, Convention Centre Port City, Medical Complex port city, School at Port City, Dedduwa integrated tourism development project, Colombo Port cruise terminal, renewable energy park in Pooneryn, Barge mounted power plant are some of the PPP projects in the pipeline.
Elevated Highway (NKB – Athurugiriya), Domestic Airline Service – Civil Aviation, Marine Drive Extension, Light Rail Transit System (LRT), Transit Smart cards, 300 MW Multi-fuel Combined Cycle Power Plant – Kerawalapitiya, Gohagoda Waste to Energy, Renewable Energy Park (Wind 350MW and 250 MW Solar), 100 MW Barge Mounted Power Plant and 500 MW LNG Power Plant were among the 31 ongoing PPPs.