Principal-Agency Relationship in the Road Transport Sector

Implication of Public Private Partnership Project adoption for Uganda National Roads Authority

Abstract

This study was conducted to assess principal-agency relationship in the road transport sector and its implication on adoption of public private partnership (PPP) projects by the Uganda National Roads Authority (UNRA). Globally, PPPs provide avenues for financing projects in the roads sector by the principal and her agents. In 2015, UNRA as a principal adopted a policy to partner with some private sector players as agents to construct and maintain some national roads by using a PPP project arrangement. Despite the adoption of a policy to use PPP projects in the roads sector in Uganda, there were a number of concerns by the citizens on the use of the contracting out PPP project by UNRA (principal), working with a number of private companies (agents) to manage some construction and maintenance projects in the road sector. This study was guided by the principal-agent theory. The study aimed at establishing whether UNRA has adopted concession PPP projects; adopted leasing PPP projects; and, adopted the management contract PPP projects based on principal-agency relationship. The study adopted quantitative and qualitative approaches and a cross-sectional research design. Data was collected using self-administered questionnaires and document review methods. Quantitative data was analysed using descriptive statistics, while content analysis was conducted to appreciate the qualitative data. The study findings revealed that UNRA is likely to adopt the use of management contract PPP project in the roads sector based on the principal-agent relationship. It was concluded that a healthy relationship between the principal and the agents is required if PPP projects are to be effectively used to deliver high quality services in the roads sector. The study recommended that UNRA as a principal should ensure a healthy working relationship with private partners when planning, financing, implementing and maintaining PPP projects in the roads sector.