Cabinet approves several public-private partnership projects |22 June 2018

Interaction between the public and private sectors are expected to increase now that the Cabinet of ministers has approved a number of capital public-private partnership (PPPs) projects.

The projects were endorsed by the Cabinet in the course of its fourth ordinary meeting chaired by President Danny Faure on Wednesday.

The infrastructure projects up for PPPs include the construction of a water dam in Grand Anse Mahé, a tunnel project between Cascade and Grand Anse Mahé, and the reclamation of five areas around Mahé and Praslin. Another huge project that was additionally approved was the construction of a new Liquefied Natural Gas (LNG) power plant.

During a press briefing held yesterday, Bertrand Belle, economic adviser to the President, said the government is looking into alternative ways these projects can be financed instead of through its budget.

“In this regard, the government is seeking help from private investors on many of the projects as well as considering applying for certain loans.”

Mr Belle firstly explained that the construction of the LNG power plant is primarily to address the growing demand for electricity on Mahé.

“It has been deemed more feasible to use LNG instead of the heavy fuel oil because it will be cheaper to make use of LNG in the longer run,” Mr Belle said.

He explained that some of the current electricity generators -- which operate on heavy fuel oil -- have an economic life-span of up to the year 2020. Although these generators will not necessarily be put out of service, it will cost the Public Utilities Corporation (PUC) a lot to continuously maintain them.

The switch to LNG, however, will come with its own extensive cost since a study undertaken by PUC estimates that the project expects to amount to a whopping $200 million.

For the LNG project, the government is partnering with World Bank’s International Finance Corporation (IFC) -- an international institution that offers investment, advisory and asset-management services to encourage private-sector development in developing countries.

“If we are considering participation from the private sector, then the power plant will be a private one hence we need to liaise with IFC to help us set up a power purchase agreement which will benefit both the government and the private investors.”

The water dam project in Grand Anse Mahé on its side -- a project which was conceived more than a decade ago -- will cost around $80 million.

Mr Belle stated that the location for the project has been chosen because of its ideal topography which allows and facilitates for the construction of the dam barriers.

PUC had estimated that the dam will be able to provide 9,600 kilolitres of water per day.

“The construction of this dam will reduce our usage of the desalination plants which is relatively more costly,” Mr Belle said.

Meanwhile, the controversial tunnel project to link the east coast of Mahé, Cascade, to the west coast, Grand Anse Mahé, is predicted to cost around €54 million.

In his fifth presidential press conference, President Faure assured the public that the tunnel project would be financed through PPPs and this was reinforced by Mr Belle.

Mr Belle explained that one of the elements currently being considered is whether the tunnel would operate as a toll road.

To note, a toll road is a public or private road for which a fee is charged for passage.

“Since we are looking into public-private partnerships for the project, private investors are expecting to recover the costs of their investments one way or another,” he rationalised.

As for the reclaimed land projects, four are expected to be situated around Mahé (near Ile Aurore, Ile Hodoul, Roche Caiman and near Providence) and one off the coast of Grand Anse Praslin.

The projects will additionally help in replenishing the country’s diminishing coral fill stock.

Collectively, the reclaimed lands will amount up to €67 million.

During its meeting, the Cabinet also approved the final draft of the Control of Dogs Bill and the proposed plan for future development on La Digue as well as for economic development of Coetivy in sectors such as agriculture, tourism, environment and fisheries.

Cabinet further approved amendments to the Income and Non-Monetary Benefits Tax Act (1999) to include in the lists of exempt emoluments the compensation paid to an employee who resigns and to consider exemption on compensation in all cases of termination of employment other than dismissal.

The final Business Tax amendment bill relating to the domestic reforms as well as Base Erosion Profit Sharing (BEPS) related amendments in the offshore sector was also endorsed.

Lastly, the Cabinet considered the report of the Truth, Reconciliation and National Unity committee of the National Assembly and have advised that the legislation proposed in the report be gazetted so that it can be further debated by the Assembly.

Also on the press briefing panel were secretary of state for Cabinet Affairs Mohammed Afif, deputy Cabinet Affairs secretary for institutional affairs Johnny Bastienne and chief veterinary officer Dr Jimmy Melanie.