Good
Practices in PPPs: Financing and operating infrastructure projects and how this
success can be replicated
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.
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There are increasing instances of government grants for
socially desirable projects.
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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.