WEDF 2012: Parallel Session I

Mr Noke Kiroyan, Chairman of the International Chamber of Commerce of Indonesia, who moderated the session, said he was inspired by the trend in developing countries to look to Private-Public Partnerships to bridge the gap between available public resources and infrastructure needs, and to ensure that infrastructure services are delivered as efficiently and cost effectively as possible.

Despite their potential, however, PPPs are highly complex policy instruments and must be fully understood and professionally implemented and managed if they are to deliver on their promise. There have been as many failures as successes in implementing PPPs across the world, he said.

The main conclusions of the session were the following:

• Governments are attracting private financing for projects by establishing a predictable legal and regulatory framework including for dispute settlement, and by proper identification of projects which are needs based, financially and economically sound, while also viable technically and environmentally.
• Projects should be awarded transparently through a competitive process.
• Financial guarantees reduce risk exposure of both the contracting agency and the private sector counterpart.
• There are increasing instances of government grants for socially desirable projects.
• There is a limited role for unsolicited proposals. These are considered only if they involve a new concept and technology that only one company may be able to provide. However, rigorous standards should be put in place to deal with such proposals, which should be the exception rather than the rule.

H. E. Mr Dagobert Banzio, Minister of Commerce of Côte d’Ivoire, told participants that his government has taken steps to develop and promote PPPs, including the establishment of a legal and regulatory framework to provide security to private investors; introduction of dispute settlement mechanisms which encourage the use of arbitration on PPP conflict resolution; establishment of an institutional framework – a National Steering Committee in charge of implementation and promotion of PPPs; improvement of fiscal policy; and simplification of the business registration process for SMEs.

Currently, PPP projects in Côte d’Ivoire cover the water and sanitation, energy/electricity, road infrastructure and industry sectors.

Mr Banzio identified the key success factors of PPP projects as the ability to find the right partners; clear definition of the project scope; correct upfront costing; and political stability. He also emphasized that it is important to ensure that the PPP project is endorsed by its beneficiaries.

Mr Ferdinand D. Tolentino, Deputy Executive Director, Public-Private Partnership Centre of the Philippines, said that important issues were the criteria used to select projects for PPP and their prioritization, inclusion of the projects in national development plans and their commercial and environmental viability. He said that unsolicited proposals may be accepted for evaluation if they involve a new concept or technology and do not involve a direct government guarantee or equity. He added that recommendations are being considered by the government of the Philippines to improve the processes involved in dealing with unsolicited proposals.

Dr Freddy Rikson Saraigh, of the Fiscal Policy Office of Indonesia’s Ministry of Finance, described his country’s MP3EI Master Plan as a PPP business model. The aim is to develop infrastructure in nine sectors, with between 20% and 25% of funding coming from the private sector. He explained that two types of agreement were usually negotiated: a guarantee agreement between the government and the contracting agency; and a co-guarantee agreement between the contracting agency and private investors. The government’s aim was to achieve transparency and clarity on PPP procedures, he said adding that bilateral negotiations were rarely undertaken, except when linked with bilateral aid.