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05 Background for successful public private partnership
Practically it has been proved that the provision of socio economic services efficiently for the citizens of a country could be done through the Public Private Partnership. This would facilitate enormously achieving macro level objectives in any country, namely increase in economic growth, acceleration of development and reduction of poverty etc. Developed countries are mostly adopting this approach in improving their socio economic infrastructure and presently the developing countries have also paid much attention in this regard. However, when doing so, it is important to have common dialog and positive views and attitudes in order to achieve the objectives through this approach. In other words, government should reserve the rights of encouraging the requirement of improving the service provided the public and widening the same and also requirement of securing ‘value for money”. At the same time private sector should receive a reasonable profit margin for their investment while preparing to render a great contribution to the public, based on their social responsibility. Some of the basic conditions that are required to ensure the provision of efficient service network for accelerated economic development through the PPP are given below.
The PPP approach should be clearly indicated in the government policy framework and there should be a commitment to do so. Specially, the private sector is coming forward to bear risk for their investment, only if such provisions one available in the government policy. The following principles should be clearly spelt out in the policy framework.
Justification in principle, for applying PPP.
The procurement procedures adopted in obtaining services from the private sector. (Transparency)
The criteria adopted in selecting relevant projects and assets.
Conflict resolution procedures.
Monitoring procedure in obtaining services.
The legal and regulatory framework should be openly exhibited and the legal background at every stage should be adequately described from the beginning of the project and up to the point of providing services. Especially the provisions available in the government institutions to enter into agreements with the private sector, possibility to charge price or tariff, actions to be taken when defaulting payments, and actions to be taken when defaulting the agreements etc should be clearly indicated. The private sector and the lending institutions normally expect the explanations which are described below.
Whether the unsolicited projects are approved and if so, the procedures adopted?
The biding process is how far transparent?
Whether the budgetary provisions are adequately available for the payments for government involved projects?
Whether the government institutions have the legal authority or entrusted such provisions for entering into with agreements.
Whether the legal provisions and institutions are available for the relevant project or the asset owning sector for regulating its activities.
Whether adequate staff with knowledgeable professionals is available in the regulatory institutions.
Whether it is clearly stated the price or tax enforced on the end user
Whether there are legal or special regulations available connected to investor’s decision and accounts
Any specific details with regard to undertaking of responsibility in the event any rules and regulations are changed or amended
Actions to be taken in connection with institutional conflicts, strikes and remedial measures on loses, if incurred
Under these circumstances, amendment of the existing rules and regulations or enactments is required to encourage to motivate private sector to take investment decisions. (iii) In order to win the investor confidence, it is important to indicate the proposals expected to be implemented on a priority basis through public-private partnership in the government’s short-term and long-term development/ investment framework. By doing so, the commitment made by the political authorities and the government’s investment policy could be clearly made available to convince the investors and donor agencies. In the investment framework it should not be only listing of such investment proposals and there should be a profile of detailing out the task to be performed by the both parties and the required sectors of investments and its quantum and location etc. When requesting offers from the reputed investor companies such investment plans would be much useful. It should also be a clear certification for the private sector to show the transparency and good governance.
In addition to providing legal and regulatory guidelines connected to PPP, it is important to have a implementation framework. A separate special unit in this connection should be setup in the central government (PPP, Unit) and if necessary, such units may also be setup at provincial level. These units should prepare implementation plans and undertake the implementation based on a time frame. In this regard, these units must have professionals with expertise knowledge who have to be ready with the required procurement and monitoring procedures. This is very important in attracting reputed foreign companies. In this PPP investment process, there are many steps to be followed in preparation of policies and strategies, identification of projects, evaluation of projects, selection of suitable investors, management and monitoring etc and these steps could be successfully completed through proper coordination from central level up to provincial level.
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