Interview: Charles Paradis
What types of public-private partnerships (PPPs) lend themselves to investors in the construction sector, and what measures might encourage these?
CHARLES PARADIS: All types of PPPs – also called partnership agreements or concession projects – are of interest to potential investors in Côte d’Ivoire’s construction industry. Currently, the need for these is especially acute in the road, railway and port segments.
That said, there are two important measures that would be conducive to these types of projects. First, given the country’s history of instability, the government should provide guarantees of minimum revenues to encourage and reinforce investors’ confidence in the country. Second, a modernisation of corporate law, as encouraged by the Organisation for the Harmonisation of Business Law in Africa, would be helpful in facilitating the presence of both Ivorian and international partners in project companies, which most of the time are rigid in their management, especially when it comes to boards of directors. As an example of financial incentives, the Henri Konan Bédié toll bridge project, Abidjan’s third bridge, has benefited from some tax and Customs exemptions. Such a situation is common for this type of project and is not unique to Côte d’Ivoire. Tax and Customs exemptions are part of the financial assistance terms that a state can make within a PPP. Those terms allow a country to limit its financial contribution to a project and avoid unnecessary subsidies.
What will be the fees charged for using the new toll bridge, and how will this be determined?
PARADIS: At the opening of the third bridge, after a detailed discussion, the government has decided to set the toll level at CFA500 (€0.75) for tourism vehicles (Class 1), CFA 1500 (€2.25) for transport vehicles (Class 2) and CFA3000 (€4.50) for heavy vehicles (Class 3). As data is collected over time, authorities also plan to adjust prices according to usage frequency on the bridge. In the early years of opening, we expect that traffic will quickly reach around 70,000 vehicles per day.
How can the quality of the road network in Côte d’Ivoire be enhanced and maintained?
PARADIS: The state of Côte d’Ivoire’s road network depends on two state-owned companies: the Roads Management Agency and the Road Maintenance Fund. The quality of the network therefore depends highly on the funds allocated to these public institutions. As for the Henri Konan Bédié toll bridge, its pavement design meets the highest international standards and the project was audited during the financial closing process. In addition, the financial model used takes into account the maintenance costs that will be needed throughout the duration of the concession.
To what extent are multilateral institutions involved in financing infrastructure projects in Côte d’Ivoire?
PARADIS: This can be summed up quite simply: no multilateral institutions, no projects. They are an essential component of infrastructure projects in Côte d’Ivoire, and have a prominent and leading role in conducting and obtaining financial close. Since the end of the political crisis of 2011, such institutions and backers have shown a renewed appetite for assisting Côte d’Ivoire.
How can Ivorian subcontractors improve their involvement in large-scale construction projects?
PARADIS: Due to political instability over the past decade, the Ivorian industrial subcontracting sector has suffered greatly. This caused, among other things, a significant loss of trained and qualified personnel. Today, many training courses have been established to bring local workers up to a sufficient level of expertise and to ensure quality project delivery. Not only do Ivorian subcontractors have a limited workforce, they also have limited financial capacity to invest in projects, and these capital constraints have an undeniable influence on their ability to win bids for large-scale projects. Therefore, it is something of a social responsibility that foreign construction companies are active in knowledge transfer and outsource some of their work locally.
Read More from OBG
