Management of Private,
Public Partnership in Reviving the Nation’s Infrastructure
Presentation by Oluwatoyin Sanni,
Managing Director,
UBA Trustees Limited
At
The International Management
Conference of the Nigerian Institute of Management, N.I.M.
Held at the
International Conference Centre,
INTRODUCTION:
This paper examines
the characteristics of Public-Private Partnerships (PPPs), their potential benefits and risks, challenges
faced by PPPs and recommends appropriate management methods, drawing from
International & Regional examples.
What is a Public
Private Partnership?
Public-Private
Partnership (PPPs) or P3) are arrangements between government and private
sector entities for the purpose of providing public infrastructure, community
facilities and related services. Such
partnerships are characterized by the sharing of investment, risk,
responsibility and reward between the partners.
Generally, these partnerships involve the financing, design, construction,
operation, maintenance of public infrastructure and services.
The rationale for
these partnerships is the need to harness the combined strengths of both the
public and private sectors to establish complementary relationships, on the
premises that both the public and private sectors have unique advantages in specific aspects of
service or project delivery.
The roles and
responsibilities of the partners may vary from project to project and various
forms are adopted. In some cases,
government contributes part of the capital requirement through tax revenues or
in kind (usually the transfer of existing assets, eg. Land or shareholding or
rights). Operation could be run jointly
with the private sector or under contracts.
In other types of PPP (notably the Private Finance Initiative (PFI)),
Capital investment is made by the private sector on the strength of a contract
with or concession by the government to provide agreed services or exploit
certain rights.
Typically, a
private sector consortium forms a “Special Purpose Vehicle” (SPV) to build and
maintain the asset. Parties to the
consortium would usually include a building contractor, maintenance company and
a bank lender. The SPV executes the
contract with government and subcontractors to build and maintain the
facility. (A typical PPP example would
be a hospital building financed and constructed by a private developer and then
leased to the hospital authority). The
private developer is the landlord, providing housekeeping and non medical
services, while the hospital authority focuses on its core competence –
provision of medical services.
It must be noted
that PPP is only one of a number of ways of delivering public infrastructure
and related services. It is not a
substitute for strong and effective governance and decision making by
government and that in all cases government remains responsible and accountable
for delivery services and projects in a manner that protects and furthers the
public interest.
FORMS OF PPPs
PPPs may vary in
any of the following:
i. degree of risk allocated between the
parties
ii. Amount of
expertise required on the part of each partner to negotiate contracts
iii. Potential implications for rate payers
ORIGINS OF PPPs
Concerns about the
level of Public Debt which grew rapidly in the 1970s and 1980s, drove
Governments to seek alternative financing and procurement methods for public
infrastructure and services. Governments
therefore sought to encourage private investment in infrastructure; supposedly
at “no cost to the public”. Whilst such
views have since been discarded, the search for alternative models persisted.
Key drivers of
these initiatives were:
i.
Improved risk allocation from the enhanced role of private
sector with a (“Core Investor”) taking responsibility for most aspect of
services provisions for a given project.
ii.
Maintenance of public accountability for essential aspects
of service provision.
Early Models:
Most early forms
were one-off deals, before John Major’s Conservative Government introduced the
PFI in the
Early Problems
1. Because of initial focus on
reducing Public Debt, early private infrastructure projects (in early 1990s)
led to provision of services at substantially higher rates than under standard
model of public procurement. Why? Private investors demanded and received a
higher rate of return than governments bond rate even though:
a) Public sector
still bore most or all of the income risk associated with the projects.
b) Most early
schemes turned out to be rather inferior to the standard model of public
procurement based on competitively tendered construction of publicly owned
assets.
Mitigants:
A key response to
these negative findings became:-
The development of
formal procedures for the assessment of PPPs in which the central focus is
“value for money” rather than just reduction in public debt. Value for money was achieved through an
appropriate allocation of risk. These
procedures were incorporated in the PFI and other counterparts from late 1990s
onwards.
TYPES OF PPPs
|
Types of PPP |
Features |
Advantages |
Disadvantages |
|
1. Operations and Maintenance |
The government contracts with a private partner to operate
and maintain a publicly owned facility. |
· potential service quality and
efficiency improvements · cost savings · flexibility in structuring
contracts · ownership vests with government. |
·
collective
agreements may not permit contracting out ·
costs
to re-enter service if contractor defaults reduced owner control and ability to respond to changing
public demands |
|
2. Design-Build |
The government contracts with a private partner to design
and build a facility that conforms to the standards and performance
requirements of government. Once the
facility has been built, the government takes ownership and is responsible
for the operation of the facility. |
· access to private sector experience · opportunities for innovation and
cost savings · flexibility in procurement · opportunities for increased
efficiency in construction · reduction in construction time · increase risk placed on private
sector · single point accountability for the
owner · fewer construction claims |
· reduced owner control · Increased cost to incorporate
desirable design features or change contract in other ways once it has been
ratified · more complex award procedure · lower capital costs may be offset
by higher operating and maintenance costs if life-cycle approach not taken |
|
3. Turnkey Operation |
The government provides the financing for the project but
engages a private partner to design, construct and operate the facility for a
specified period of time. Performance
objectives are established by the public sector and the public partner
maintains ownership of the facility. |
· places construction risk on the
private partner · proposal call can control design
and location requirements as well as operational objectives · transfer of operating obligations
can enhance construction quality · potential public sector benefits
from increased efficiency in private sector construction · potential public sector benefits
from increased efficiency in private sector operation of the facility · construction can occur faster
through fast-track construction techniques such as design-build |
· reduced government control over facility operations · more complex award procedure · increased cost to incorporate
changes in design and operations once contract is completed · depending on the type of
infrastructure, financing risk may be incurred by the government |
|
Types of PPP |
Features |
Advantages |
Disadvantages |
|
4. Wrap Around Addition |
A private partner finances and constructs an addition to
an existing public facility. The
private partner may then operate the addition to the facility for a specified
period of time or until the partner recovers the investment plus a reasonable
return on the investment. |
· public sector does not have to
provide capital funding for the upgrade · Financing risk rest with private
partner · public partner benefits from the
private partner’s experience in construction · opportunity for fast-tracked
construction using techniques such as design-build · flexibility for procurement · opportunities for increased
efficiency in construction · time reduction in project
implementation. |
· future facility upgrades not
included in the contact with the private partner may be difficult to
incorporate at a later date · expense involved in alteration of
existing contracts with the private partner · perceived loss of control · more complex contract award
procedure |
|
5. Lease Purchase |
The government contracts with the private partner to
design finance and build a facility to provide a public service. The private partner then leases the
facility to the government for a specified period after which ownership vests
with the government. This approach can
be taken where government requires a new facility or service but may not be
in a position to provide financing. |
· improved efficiency in construction · opportunity for innovation · lease payments may be less than
debt service costs · assignment of operational risks to
private sector developer · improve services available to
residents at a reduced cost · potential to develop a “pay for performance”
lease |
· reductions in control over service
or infrastructure |
|
6. Temporary Privatization |
Ownership of an existing public facility is transferred to
a private partner who improves and/or expands the facility. The facility is then owned and operated by
the private partner for a period specified in a contract or until the partner
has recovered the investment plus a reasonable return. |
· if a contract is well structured
with the private partner, the government can retain some control over
standards and performance without incurring the costs of ownership and
operation · the transfer of an asset can result
in a reduced cost of operations for the government · private sector can potentially
provide increased efficiency in construction and operation of the facility · access to private sector capital
for construction and operations · operational risks rest with the
private partner |
· perceived or actual loss of control · Initial contract must be written
well enough to address all future eventualities · private sector may be able to
determine the level of user fees, which they may set higher than when under
government control · difficulty replacing private
partner in the event of a bankruptcy or performance default · potential for l government to
reemerge as the provider of a service or facility in the future · displacement of government
employees · labour issues in transfer of
government employees to the private partner |
|
7.
Lease-Develop-Operate or Buy-Develop-Operate |
The private partner leases or buys a facility from the
government, expands or modernizes it, then operates the facility under a
contract with the government. The
private partner is expected to invest in facility expansion or improvement
and is given a specified period of time in which to recover the investment
and realize a return. |
· if the private partner is
purchasing a facility, a significant cash infusion can occur for the
government · public sector does not have to
provide capital for upgrading · financing risk can rest with the
private partner · opportunities exist for increased
revenue generation for both partners · upgrades to facilities or
infrastructure may result in service quality improvement for users · public partner benefits from the
private partner’s experience in construction · opportunity for fast-tracked
construction using techniques such a design-build · flexibility for procurement · opportunities for increased
efficiency in construction · time reduction in project
implementation |
· perceived or actual loss of control
of facility or infrastructure · difficulty valuing assets for sale
or lease · issue of selling or leasing capital
assets that have received grant funding · if a facility is sold to a private
partner, failure risk exists – if failure occurs, the government may need to
reemerge as a provider of the service or facility · future upgrades to the facility may
not be included in the contract and may be difficult to incorporate later |
|
8. Build – Transfer -Operate |
The government contacts with a private partner to finance
and build a facility. Once completed,
the private partner transfers ownership of the facility to the
government. The government then leases
the facility back to the private partner under a long term lease during which
the private partner has an opportunity to recover its investment and a
reasonable rate of return. |
· public sector obtains the benefit
of private sector construction expertise · public sector obtains the potential
benefits and cost savings of private sector operations · public sector maintains ownership
of the asset · public sector ownership and
contracting out of operations limits any government tax requirements · public sector maintain authority
over the levels of service(s) and fees charged · compared to a
Build-Operate-Transfer model, avoids legal, regulatory and tort liability
issues · under Occupiers’ Liability Act, tort liability can be avoided · government control of operational
performance, service standards and maintenance · ability to terminate agreements if
service levels or performance standards not met, although facility would
continue to permit repayment of capital contributions and loans and
introduction of new private partner · construction, design and
architectural savings, and likely long-term operational savings |
· possible difficulty in replacing
private sector entity or terminating agreements in event of bankruptcy or
performance default. |
|
9. Build-Own-Operate-Transfer |
The private developer obtains exclusive franchise to
finance, build, operate, maintain, manage and collect user fees for a fixed
period to amortize investment. At the
end of the franchise, title reverts to a public authority. |
· maximize private sector financial
resources, including capital cost allowance · ensures the most efficient and
effective facility is constructed, based on life-cycle costs · allows for a private sector
operator for a predetermined period of time · the community is provided with a
facility, without large up-front capital outlay and/or incurring for long
term debt · all “start up” problems are
addressed by the private sector operator · access to private sector
experience, management, equipment, innovation and labour relationships may
result in cost savings · risk shared with private sector. |
· facility may transfer back to the
public sector at a period when the facility is “work” and operating costs are
increasing · public sector loses control over
the capital construction and initial mode of operations · initial contract must be written
sufficiently well to address all future eventualities · the private sector can determine
the level(s) of user fees (unless the public sector subsidizes use) · less public control compared to
Build-Transfer-Operate structure · possible difficulty in replacing
private sector partner or determing agreements if bankruptcy or performance
default |
|
Types of PPP |
Features |
Advantages |
Disadvantages |
|
10. Build-Own-Operate |
The government either transfers ownership and
responsibility for an existing facility or contracts with a private partner
to build, own and operate a new facility in perpetuity. The private partner generally provides the
financing. |
· no public sector involvement in
either providing or operating the facility · public sector can “regulate” the
private sector’s delivery of a “regulated/monopolistic” service area · private sector operates the service
in the most efficient manner, both short-term and long-term · no public sector financing is
required · income tax and property tax
revenues are generated on private facilities, delivering a “public good” · long term entitlement to operate
facility is incentive for developer to invest significant capital |
· the private sector may not
operate/construct the building and/or
service “in the public good” · the public sector has no mechanism
to regulate the “price” of the service, unless it is a specifically regulated
commodity · the good/service being delivered is
subject to the government regulations · no competition, therefore necessary
to make rules and regulations for operations and to control pricing |
WHEN SHOULD PPPs BE CONSIDERED?
A public private
partnership may not be the best option for delivering a public service or project. Government should undertake a cautious
approach and examine all relevant factors and issues when considering this type
of arrangement. The different forms of
public private partnership vary in terms of how risks and responsibilities are
allocated. They also vary in complexity
and the degree of expertise required to successfully negotiate required
contracts.
Governments should
not assume that public private partnerships provide easy outs to difficult
servicing issues. They should expect
that increased transfer of risk will result in higher expectations for reward
by the private sector and that the negotiation of contracts may require a high
degree of expertise. The following
discussion provides an overview of some of the potential benefits and risks
associated with public private partnerships.
POTENTIAL BENEFITS OF PPPs
Public private
partnerships are not the solution for the delivery of all services. There are risks in proceeding with public
private partnerships without critically examining their suitability to specific
circumstances. However, government can
realize important benefits when public private partnerships are used in the
appropriate context.
Potential benefits
include:
1. Cost
Savings
Government may be
able to realize cost savings for the construction of capital projects as well
as the operation and maintenance of services,
for example, by combining design and construction in the same
contract. The close interaction of
designers and constructors can result in more innovation and less costly
designs. Design and construction
activity can be carried out more efficiently, decreasing construction
time. Overall costs for professional
services can be reduced for inspections and contract management activities and
risks of project overruns can be reduced by design-build contracts.
Private partners
may be able to reduce the cost of operating or maintaining facilities by
applying economies of scale, innovative technologies, more flexible procurement
and compensation arrangements, or reducing overheads.
2. Risk
Sharing
Government shares risk with a private partner. Risks could include cost overruns, inability
to meet schedules for service delivery, difficulty in complying with
environmental and other regulations, or the risk that revenues may not be
sufficient to pay operating and capital costs.
3. Improved Levels of Service or Maintaining
Existing Levels of Service
Public private
partnerships can introduce innovation in how service delivery is organized and
carried out. New technologies and
economies of scale often reduce cost or improve quality and level of services.
4. Enhancement
of Revenues
Public private
partnerships may set user fees that reflect the true cost of delivering a
particular service. Public private
partnerships also offer the opportunity to introduce more innovative revenue
sources that would not be possible under conventional methods of service
delivery.
5. More
Efficient Implementation
Efficiencies may be
realized through combining various activities such as design and construction,
and through more flexible contracting and procurement, quicker approvals for
capital financing and a more efficient decision-making process. More efficient service delivery not only
allows quicker provision of services, but also reduces costs.
6. Economic
Benefits
PPPs can help to
stimulate the private sector and contribute to increased employment and
economic growth. Local private firms
that become proficient in working in public private partnerships can “export”
their expertise and earn income outside of the region.
POTENTIAL RISKS OF PPPs
As with
conventional forms of service delivery, there are risks as well as potential
benefits associated with public private partnerships. Governments can reduce or eliminate the risks
by understanding what they are and addressing them through well-conceived
negotiations and contractual arrangements, and the involvement of stakeholder
groups.
Potential risks
include:
1. Loss of
Control by Government
Public
private partnerships, by their nature, involve a sharing of risks, benefits and
decision making between the partners.
Significant investments and risks by the private partner often provide
for greater involvement of the private partner in decisions concerning how
services are delivered and priced. This
often leads to concerns about who controls the delivery of services. In the final analysis, government has the
authority and responsibility to establish servicing standards and to ensure
that the public interest is protected.
2. Increased
Costs
Not all
governments consider the true costs of providing services when establishing
their pricing policies for fees for services.
For example, the costs of overhead or administration and depreciation of
assets are often not included in the pricing of individual services. In some
cases, there are explicit subsidies for specific services. The delivery of services through public
private partnerships requires pricing policies and fees to reflect all relevant
costs. This can have the effect of
increasing user fees for specific services.
3. Political
Risks
The
combination of inexperience by governments and stakeholder unfamiliarity with
public private partnerships may result in higher political risks. Governments may wish to reduce potential
risks by initially entering into fewer, less complex, and better understood
public private partnership contracts.
4. Unacceptable
Levels of Accountability
Certain
government services are more sensitive than others in terms of public demand
for accountability and responsiveness.
With public private partnerships, the lines of accountability for the
provision of services are less clear to the public than under conventional
service delivery. This may result in public criticism of the partnership
arrangement and the private partner, or require increased involvement of the
government in ensuring compliance and responding to public demands.
5. Unreliable
Service
Private
partners may be prone to labour disputes, financial problems or other
circumstances that may prevent them from honouring their commitments. Public private partnership contacts should
anticipate such difficulties and put in place measures to deal with them.
6. Inability
to Benefit from Competition
Competition
among private partners to secure the right to enter into a public private
partnership is an important benefit for government. Competition leads to innovation, efficiency
and lower costs. Governments may not be
able to benefit from public private partnerships if there are only a limited
number of potential private partners with the expertise or ability to respond
to a request for proposals.
7. Reduced
Quality or Efficiency of Service
If not
properly structured, public private partnership contracts can result in a
reduction in service quality, inefficient service delivery or a lack of proper
facility maintenance. For example,
cost-plus contracts provide little incentive
for the private partner to maintain quality or increase efficiency. Governments may also need to consider the life-cycle cost
approach in establishing evaluation criteria for projects or services.
8. Bias in
the Selection Process
As with
conventional forms of service delivery, there is always the potential for
government to be accused of bias in selecting proponents. This may be more prevalent with public
private partnerships given that “low bid” may not always win the contract if
the government has established other criteria (e.g. value for money). The potential for accusation of bias can be
reduced through well-developed policy and procedures, and by ensuring
transparency in dealing with potential private partners.
9. Labour
Issues
Even
though collective agreements and labour laws apply to public private
partnership arrangements, there could be adverse reaction from labour unions or
government staff.
WHEN TO PARTNER WITH THE PRIVATE SECTOR
To justify the use
of a PPP structure, certain factors need to be established. Governments can consider partnerships with
the private sector where any of the following circumstances exist:
·
The service or project cannot be provided with the financial
resources or expertise of the government alone.
·
A private partner would increase the quality or level of
service from that which the government could provide on its own.
·
A private partner would allow the service or project to be
implemented sooner than if only the government were involved.
·
There is support from the users of the service for the
involvement of a private partner
·
There is an opportunity for competition among prospective
private partners
·
There are no regulatory or legislative prohibitions to
involving a private partner in the provision of services or a project
·
The output of the service can be measured and priced easily.
·
The cost of the service or project can be recovered through
the implementation of user fees.
·
The project or service provides an opportunity for
innovation
·
There is a track record of partnerships between government
and the private sector.
·
There are opportunities to foster economic development.
If none of the above
conditions exist, public private partnerships should not be considered.
THE AFRICAN EXPERIENCE
The
Objectives of the Reform
Ø Eliminate
bureaucracy
Ø Infuse efficiency
Ø Reduce fiscal drain
on public purse
Ø End un-economic
cross – subsidization between posts & telecoms
Ø Redress problem of
under investment
Ø Improve service
delivery
Ø Meet investment
needs for expansion
Ø Rid the enterprise
of political interference
Ø Rid it of
managerial ineptitude
Ø Improve service
quality
Ø Create enabling
environment to attract foreign investment from global information village.
Model Adopted
Gradual
approach starting with:
1.
Creation of enabling environment
2.
Fostering peripheral competition than licensing of wireless
mobile operators
3.
World Bank assisted Second Telecoms Project to improve
existing telephone service quality and increase number of available lines.
4.
In 1997, sale of 30% of GT to a strategic investor G-Com
Ltd, led by Telecom
Management Measures
1.
Performance agreement required distinct improvement in
conventional (International Telephone Union Standards) measures of telephone
services, e.g. Call Completion Rates and Fault per 100 Main Lines.
2.
Pecuniary Penalty for failing to meet targets in any review
period.
3.
Public open tender method
4.
Requirement of adequate financial strength and technical
competency by being existing providers of telephony services.
5.
Regulatory framework for the operating environment clearly
specified upfront.
6.
Duopolistic Structure for first 5 years, as government also
offered license to a second network operator, required to install 50,000 new
lines in 3 years.
Outcome of Reform – Score Card
Benefits
of competition seen in mobile telephony, data communications and sale of
terminal equipment are obvious, in reduced costs (cellular charges on in-coming
calls eliminated and deployment of cost control technology, e.g. prepared
cards.
However,
gaps observed were:
1.
Speed of expansion left many critics unimpressed though they
noted increased public pay phones in Accra Metropolis and improved timeliness,
accuracy of billings and I.D.D.
2.
Complaint of slow rate of strategic investment and that rate
of deployment of technology is sub-optimal.
Regulatory Learning Points
Ø Provision of level
playing field is key.
Ø Regulatory agency
needs clout.
Ø Who regulates the
regulator (a bureaucracy). Lessons from
developed countries. Avoid elaborate
regulatory schemes (like
Conclusions
from the African 3 Countries’ Experiences
1.
Pressure to dislodge bureaucrats and involve more private
participation needs to be sustained.
2.
Ideal regulatory regime is one that evolves a buffer between
operators and government (i.e. ensures that operators adhere to economic and
social objectives.
3.
Need to continually resolve disputes between competitors and
consumers and operators and monitors changing industry conditions.
4.
Competition is key, exclusivity may not be necessary/ideal
as an incentive.
PPPs
AND THE NATIONAL ECONOMIC EMPOWERMENT DEVELOPMENT STRATEGY (NEEDS)
The Federal
Government in its NEEDS Proposal, recognized variously the relevance of PPPs in
the following areas:
1. Domestic Deregulation &
Privatization - Public Private Partnership (Peer Review Mechanism)
NEEDS identified
the developing challenges facing
1.
(2001
– GDP $45 B, $300 per capital income per year
External
& Domestic Debt about 70% of GDP (now grossly reduced)
Real
Sector dominated by primary production sectors:
Agric - 41%
Crude Oil - 13%
Manufacturing - 5 – 7 %
2. High macro-economic volatility
3. Loss of International market share
4. Unsustainable public sector spending
5. Low Private
Sector Productivity, lack of diversification of economy due to infrastructure
deficiency, poor security of life and properties, corruption and rent sealing,
etc.
Key Strategies:
1. Privatize,
deregulate and liberalize key sectors of the economy
2. Develop
infrastructure, especially electricity, transport and water.
3. Address
problems of financing the real sector, mobilizing long term savings and
investment.
4. Target
programmes to promote private sector growth and development.
5. Key Medium Term Strategies
6. Develop efficient Capital Market.
2. Empowering
People:
Private Sector
Participation in education sector (greater private sector involvement).
Establish good
quality privately owned educational institutions.
3. Promoting
Private Enterprise
Strategic Thrusts:
1. Redefine role
of government as facilitator and promoter in the economy.
2. Create Public
Private Participations – active interaction with private sector in an on-going
basis for continuing feedback – through structured interactions with private
sector at all levels.
3. Progressively
reduce governments direct role in economic and business activities –
Accelerated privatization of major utilities (while ensuring access by all,
avoiding exploitation, etc through consumer protection laws, regular fine tuning of strategies , etc to
protect consumers from monopolistic and
unfair trade practices that may result from privatization).
4. Rapid
implementation of local content policy (especially in extractive and
construction industries) by forming business partnerships and linkages that
enhance learning and technology transfer.
5. Infrastructure
development
Recognizing
that
a. Private Sector
Participation in projects, e.g. roads, railways, port development.
b. Privatization
or concession of Nigerian Railways to rehabilitate and modernize it.
c. Private Sector
led Power Sector to achieve the following:
i. Expeditiously
implement electric power sector reform programme
ii. Generate
10,000 MV per day by 2007
iii. Develop
capacity to transmit/distribute higher level generated.
iv. Explore
alternative energy services, eg. Coal, solar, wind power and hydropower.
v. Deregulate for
increased private sector participation.
vi. Review
electricity tariffs.
6. Other areas targeted for increased PPPs
are:
a. Waste Management
b. Agriculture & Food
Security
c. Oil & Gas
– Local Content, including unbundling NNPC and privatizing its industries.
d. Solid Minerals
exploitation.
4. Changing
the way Government does its work
Redefining the role
of Government through the promotion of Public Private Partnerships is also
itemized as a key strategy for changing the way Government does it works. The large size of government and attendant
inefficient use of resources, distributed market signals, shuffling of private investment through impact on
inflation, interest rates & pattern of credit expansion have all been
recognized as a barrier to growth in Nigeria.
PPS are to be done
bearing in mind though the need for a measurement and monitoring mechanism for
inputs, outputs, processes and outcomes to achieve accountability for resources
used and results obtained.
Also a consensus
building and communication programs to educate legislature and grassroots is to
be adopted. Service Delivery Charters with checklists, processing deadlines and
other benchmarking are to be incorporated at all levels.
Management Initiatives
for recognized challenges
1. Appropriate and statutorily
backed regulating framework (an excellent example is with
2. Effective Regulator
with full autonomy.
3. PPPs are best managed under
a programmed and consistent plan and structure, e.g. the UK PFI which has since
been cloned by other jurisdictions due to its success record.
4. Structured & Systematic
review mechanism to achieve value for money, ensure objectives are met against
set performance benchmarks, service level agreement, etc.
5. Introduction of
Cross-Border Peer Review mechanism in assessing the performance of PPPs).
6. Active monitoring to ensure
Private Sector effectiveness, competition driven transparency drive the PPPs,
inspite of Government participation.
7. Embracing Structures that
avoid monopolies, recognizing that exclusivity may no longer be essential to
justify Private Sector Investment.
8. PPPs are most effective
within a framework of Economic & Public Sector Reforms that minimize the
problems of corruption, rent-seeking, etc that beleagure most developing
economies.
9. Increased and monitored
transparency through Private Sector modeled and monitored SPVs Structures for
managing project, Cash flows, (use of
Corporate Trustees) etc will enhance attractiveness of PPPs to the Private
Sector.
10. Continued growth of a
vibrant Capital Market is a significant need as investors in SPVs are assured
of exit avenues/access to off-takers when it suits their needs.
11. Continued efforts to improve
natural security, eliminate undue and excessive costs of doing business and
generally promote private enterprise will aid the management of PPPs in
CONCLUSION
PPPs are a
veritable vehicle for the development of the Nations infrastructure. However, there is need for effective
management of PPPs through an appropriate regulatory framework, appropriate
monitoring processes and peer review mechanisms, demand for value for money and
appropriate risk allocation.
SOURCES/REFERENCE
MATERIALS
1. ADB
Case Study in Private Sector Participation in Infrastructure in
2. PPP
Guide by British Columbia Ministry of Municipal Affairs: May 1999
3. PPP Guidelines
– Ministry of Finance,
4. Guidelines,
Note 15 – September 2006, Dong Andrew & Silriu Dochie - The Growing &
evolving business of Private Participation in Airport.
5. National
Economic Empowerment Development
Strategy (NEEDS)