Delay Factors on Project Implementation Using Public-Private Partnership Delivery Method: The Case of Ethiopian Electric Power
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Date
2022-06
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Addis Ababa University
Abstract
PPP projects are practiced in most of developed countries whereas in developing nations such as Ethiopia, it is getting attention in recent years. As of 2018, FDRE MOF pipelined various PPP projects in various sectors. One of them is power sector which is from solar and hydro sources. It is high investment project schemes so that, it is believed to relief shortage of finance and incorporates the private sector. However, after projects being selected and pipelined, a significant delay observed after contract signed with the private entity before reaching financial close which in turn delayed the subsequent project implementation. The project company or Special Purpose Vehicle (SPV) agreed to provide finance 25% from his resources (shareholders) and 75% from financing sources (lenders and equity providers). Due to this and other issues the project showed lengthy delay.The research design is descriptive type and it has employed a quantitative data research methodology. Primary and secondary data were used in the study. Laws, rules, regulations, directives, and other periodicals and publications published and issued by public organizations were used as secondary data in the study. The researcher studied previous research works on PPP prepared by different authors. All the participants are from the public entities, which include from a total of ninety-two respondents, five participants are from the FDRE MOF and the remaining eighty-seven participants are from EEP. They were selected using a non-probable purposive selection. A Likert scale questionnaire on 39 delay factors derived from previous literature used and rated by responsive of 92 participants. In terms of validity, the questions are intended for the purpose of research objective i.e., to assess, identify, rank and attempt to reduce to principal factors using the statistical software SPSS and MS Excel. For reliability test, the questions tested and Cronbach alpha i.e., 0.945, showed above the threshold value of 0.7. The findings of the study showed that PPP power projects in Ethiopia have all 39 delay factors above mean importantly contribute to the delay of project implementation. Further, respondents indicated other issues related with convertibility to provide guarantee by public entity, less attractiveness by investors, coordination and institutional capacity of procuring entity, etc. Inadequate feasibility supposed to have subsequent impact of delay on project implementation and this mitigated at early stage by identifying the different interests and expectations of the stakeholders, identifying excessive risks associated with PPPs and allocation of risks, and in forecasting issues.
Key words: delay factors, Public-Private Partnership, delivery method, financial close