As introduced in chapter 1.9, governments should adopt a structured and programmatic approach if they want to rely significantly on the PPP model for new infrastructure development. This is a way to attract stronger and more consistent interest from the private sector. In this sense, a PPP program may be defined as the ways in which the government plans to use PPPs to achieve improved infrastructure service provision. This goes beyond the PPP pipeline to include plans to develop additional and, as yet, not identified projects. It may include indications of priority sectors in which PPPs are expected to be used, and the relevant extent to which the government plans to use PPPs (as opposed to other service delivery mechanisms) in general or in any particular sector.
The PPP framework should aim to promote the effective, efficient and sustainable delivery of the PPP program in the jurisdiction. A PPP framework is not an end in itself but a means to an end. It would not make sense for a jurisdiction to develop an elaborate PPP framework if it only planned to do one PPP project[2]. Equally, a government that is doing PPPs to finance a rapid build out of urgently needed infrastructure may design a framework focused on speed and attracting capital. A government using PPPs to improve efficiency and accountability in an already well financed sector would probably develop a different framework.
As such, it is important that governments define PPP program objectives as a first step in developing the PPP framework. These objectives will give designers of the framework the direction needed to formulate appropriate processes, decision criteria, and institutional responsibilities.
The choice of objectives depends on the government’s policies and priorities. They can include the following:-
- Enabling more investment in infrastructure by increasing project financing options;
- Achieving Value for Money in the provision of infrastructure and public services;
- Improving accountability in the provision of infrastructure and public services;
- Harnessing private sector innovation and efficiency;
- Ensuring that the long-term delivery and management of PPPs is sustainable, especially when stakeholders change over time (political actors, champions, representatives in ministries or PPP units); and
- Stimulating growth and development in the country.
Table 2.2 provides examples of clear statements of PPP program objectives drawn from the relevant country’s PPP policy statement or law.
TABLE 2.2: Examples PPP Policy Objectives
|
Country |
PPP Objectives |
|
Australia |
Describes the aim of PPPs as being “to deliver improved services and better Value for Money, primarily through appropriate risk transfer, encouraging innovation, greater asset utilization and an integrated whole-of-life management, underpinned by private financing”.[3] |
|
Bulgaria |
The Public-Private Partnership Act (SG, No. 45 of 2012) has the following objectives. · Ensure the development of high quality and accessible services of general interest by means of obtaining better Value for Money from invested public funds. · Create prerequisites for the promotion of private investments in the construction, maintenance, and management of physical and social infrastructure facilities, and the carrying out of activities of general interest. · Create guarantees for protection of public assets and for effective management of public funds upon the implementation of PPP. § Ensure the principles of transparency, free and fair competition, non-discrimination, equality and proportionality.[4] |
|
India |
The draft National PPP Policy sets several objectives for PPPs. · Harnessing private sector efficiencies in asset creation, maintenance, and service delivery. · Providing focus on a lifecycle approach for development of a project, involving asset creation and maintenance over its lifecycle. · Creating opportunities to attract innovation and technological improvements. · Facilitating affordable and improved services to the users in a responsible and sustainable manner.[5] |
|
Indonesia |
The purpose of “co-operation of government and the private sector” (through PPPs) is set out as follows. · To fulfill sustainable funding requirements in the supply of infrastructure through mobilization of private sector funds . · To improve the quantity, quality, and efficiency of services through healthy competition. · To improve the quality of management and maintenance in the supply of infrastructure. · To encourage the use of the principle whereby users pay for services received, or in certain cases the paying ability of the users shall be taken into consideration.[6] |
|
São Paulo (Brazil) |
It states that the objective of the PPP program is to “promote, co-ordinate, regulate, and audit the activities of the private sector agents who, as collaborators, participate in the implementation of public policies aimed at the development of the state and the collective wellbeing”.[7] |
|
México |
It states that the objective of the PPP program is to increase social wellbeing, and investment levels in the country.[8] |
|
United Kingdom |
The Private Finance Initiative (PFI) was introduced in 1992 as a means of harnessing the private sector’s management skills and commercial expertise, and to bring discipline to the delivery of public infrastructure. The overall aim of the policy was to achieve better Value for Money for the taxpayer by ensuring that infrastructure projects were delivered on time and to cost, and that assets were well maintained.[9] |
The PPP framework should reduce the risk that PPPs are used for the wrong reasons. Some governments have used PPPs to reduce reported levels of government expenditure and borrowing, even when the long-term fiscal implications of the PPP projects were similar to those of a publically financed project. A good PPP framework should ensure that PPPs are used to achieve substantial benefits, and not to manipulate accounting results.
[2] The government would still want to follow good practice in doing the one PPP, but it would not need to codify general approaches and capacitate multiple agencies. Developing good practice for a single project is a lot easier than developing processes and rules that will work well for all projects, so investing in a framework is worthwhile only when it is expected that it will be applied to multiple projects.
[3] Government of Australia (2008) National PPP Guidelines-PPP Policy Framework, p3.
[4] Ministry of Finance of the Republic of Bulgaria (n.d.) Public Private Partnership. [Online] Available at http://www.minfin.bg/en/page/750
[5] Government of India (2011) National Public Private Partnership Policy-Draft, p8.
[6] Government of Indonesia (2005) Presidential Regulation No. 67 concerning Government Cooperation with Business Entities in the Supply of Infrastructure, as amended by Government of Indonesia (2011) Presidential Regulation No. 56, chapter 2, article 3.
[7] Legislative Assembly of the State of São Paulo, Brazil (2004) Law 11688 ("PPP Law"). São Paulo, Article 1.
[8] General Congress of the United States of Mexico, 2012. Ley de Asociaciones Publico Privadas (PPP Law), Article 1.
[9] HM Treasury (2012) A new approach to public private partnerships. Crown, London, p 15
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