Risk Management in Transport PPP Projects
In the Islamic Countries
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Box 23 PPP Performance Monitoring in Mozambique
In the development results report of the EU-AFRICA Infrastructure Trust Fund – ITF for the
period 2007-2012, the European Investment Bank comments on the outcome of the investments
supported by the bank at the Beira Port Concession in Mozambique. The report comments the
positive impact of the financed works and namely dredging of the port channel. This resulted
indeed in an increase of traffic at the port. On the other hand, the report also comments on the
underperformance of this facility in terms of high turnaround times and high financial charges,
which are attributable to inefficiencies in the management and port operations (EIB, 2014).
In their Assessment of Public-Private Partnerships in Mozambique, Fischer & Nhabinde describe
the components of the Maputo corridor and namely the Maputo Port, Rassano Garcia railway line
and National Road N. 4 (TRAC) as successful cases under the technical and functional stand
points, these contracts resulting in increased capacity and throughput. The Beira Port is also
described in the report which in line with the above reference from the EIB is considered a
positive example in terms of infrastructure works and their impact. However operational issues
are also described which relate to administrative inefficiencies, particularly related to customs as
well as other handling and logistics related operations at the port. The report notices in this
respect that contrary to the Maputo Port, CFM at Beira Port is still acting port authority and
performs as both operator and regulator (Fischer & Nhabinde, 2012).
The example of the Beira Port Concession above emphasizes the importance of setting up and
making operational the Regulatory Authorities in monitoring the performance of the PPPs.
Particularly in terms of control and supervision of regulates services, monitoring activities by
the line Ministries may not be entirely effective. This recommendation is of particular relevance
in those cases where, like in Mozambique, the infrastructure manager and operator of the
railway and port infrastructure is directly involved as a partner in the PPPs. Furthermore, the
opportunity to separate the infrastructure manager, from the operators and regulatory body is
also relevant.
Bonus/malus schemes
According to publicly available information and PPP legislation, penalties and or bonuses do
not seem to be applied to the PPPs in Mozambique, which could either relate to the performance
of the SPV at the construction or operation stages (WB, 2018).
In case of underperformance, according to the Mozambican law, the procuring authority may
however terminate the contract if the delays are attributable to the contractor, in which case the
SPV loses the financial guarantees appropriately required by the public sector to mitigate risks
of underperformance by the contractor. Conversely, if the contract is terminated due to causes
attributable to the public sector the guarantees shall be returned to the private party.
Indemnifications are also foreseen that could apply to both parties depending on the
responsibility determining the termination of the contract.