Investment promotion is central to Angola’s efforts to boost economic growth after three years of recession. But the level of state debt does not allow for major public investment. The solution may be public-private partnerships (PPP), which now have established guidelines.
The regulation on the new PPP law was recently published under Presidential Decree No 316/19, which already entered into force, according to legal database Legis-PALOP+TL. It stipulates provisions regarding the bodies, rules, development of procurement procedures, launching, monitoring, supervision, transparency and publicity of PPPs.
According to the law, the provisions of PPP contracts shall provide in particular for the adequacy of the term of the contract, compatible with the amortisation of investments made, which may not be less than 4 years nor more than 25, including any extension, in duly substantiated circumstances.
The risk breakdown shall be in accordance with the model matrix set out in the law, containing a brief description and a clear definition of the risk typology assumed by each partner.
After three years of recession, Angola’s economic prospects remain “poor,” according to the Economist Intelligence Unit. A fourth year of economic downturn is expected in 2020.
Owing to maturing fields and a lack of investment in recent years, oil output continues to decline – estimated by the government at 1.389 million barrels per day (bpd) in 2019, well below the current OPECimposed cap of 1.481 million bpd.
The Angola government’s policymaking has been driven by efforts to boost the role of the private sector in the economy – reducing reliance on oil – and bringing in more investment. But such efforts are constrained by the still-challenging operating environment in the country.
According to the new law, the state decision-making process on PPP contracts is the responsibility of the PPP Governance Body (OGP) which comprises the minister of Economy and Planning, as coordinator, who may invite the ministerial department holder responsible for the respective partnership project area. The minister of Finance is also part of OGP.
The OGP has a PPP Technical Commission (CTPPP) to support the performance of its functions, composed of a representative of the same ministries.
The new regulation also stipulates the main steps of the PPP hiring process, starting with a pre-feasibility study and preparation for launching a partnership, which the CTPPP will evaluate within 45 days after it has been submitted to the OGP by the government member responsible for the project area, responsible for the decision to initiate the study and preparation of the launch of the partnership.
If the opinion is favourable on the study, CTPPP recommends its approval and proposes the establishment of a project team and a project team will be formed by the OGP coordinator.
The project team will be responsible for submitting a reasoned report, with a proposal for a decision, for consideration of the CTPPP and the OGP will then decide on the approval of the launching of the partnership and its conditions, by means of a joint order of the holders of the ministerial departments, to be issued within 30 days from the presentation of such report.
In economic and financial matters, CTPPP records the estimated financial charges assumed by the public sector under the PPP, continuously monitoring the situation and evolution of the respective contracts.
By the 15th of the following month, the CTPPP submits to the OGP a report on the state of the estimated and assumed charges by the public sector, complemented by the elements it deems relevant in relation to the contracts and processes under execution.
The CTPPP has powers to supervise PPPs, without prejudice to the powers granted by law and/or contracts to other entities to supervise, control execution and determine audits of PPPs.
Angola is now one year into a three-year Extended Fund Facility (EFF), which aims to restore external and fiscal sustainability, improve governance, and diversify the economy to support sustainable, private sector-led economic growth.
In the most recent revision of the EFF, published last week, Tao Zhang, deputy managing director and acting chair for the IMF, says the Angolan authorities have maintained their commitment to the fund-supported programme “despite a challenging external and domestic environment.”
The completed review unlocked an additional US$247 million, bringing total disbursements to around US$1.48 billion, and granted authorities’ requests regarding several elements of the programme framework. Zhang’s statement outlines multiple examples of steps taken by the Angolan government toward achieving programme goals.