Public Private Partnership
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Public Private Partnership

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Presentation held by Ms. Rozalija Vasilevska as a part of the Public Private Partnership Session at the 8th SEEITA and 7th MASIT Open Days Conference, 14th-15th October, 2010

Presentation held by Ms. Rozalija Vasilevska as a part of the Public Private Partnership Session at the 8th SEEITA and 7th MASIT Open Days Conference, 14th-15th October, 2010

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  • 1. Public Private Partnership Alternative Municipal Funding for Capital Projects Rozalija Karchicka – Vasilevska, M.Sc. Local Economic Development Team Leader USAID Macedonia Local Government Activity (MLGA)
  • 2. Issues addressed in the presentation Real need of PPP projects in Macedonia; USAID Donor assistance in this area; Thoughts for foods
  • 3. Real need of PPP projects in Macedonia* - migration rural -> urban area -  1900  10% from the total population lived in urban area  2007  50% from the total population lived in urban area  2050  75% from the total population lived in urban area *Excerpt from CEA document on PPP – Discussion for Intensifying PPP on local level
  • 4. Real need of PPP projects - thesis - • Municipal budgets are limited and usually with low or no development component ( capital improvements); • Municipalities have needs and pressure for quality public services; • Public investments in infrastructure are under leveled in accordance of EU requirements for pre-accession standards • In general, local infrastructure is old and it is necessary huge effort for modernization and its replacement • Public services on municipal level, need as well, huge investments for better quality • Evidently, the financing of the huge part of development, replacement and renewal of the municipal capital objects NEED TO BE COVERED WITH FINANCES OUT OF MUNICIPAL BUDGETS, including alternative financing of capital projects.
  • 5. Real need of PPP projects - Macedonia-EBRD Transition Indicators (TI) - EBRD Transitional scores [1] 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 [1] TI are from 1- 4 where 4 means free market economy 0,0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Macedonia Bulgaria Czeck R. Estonia Hungary Latvia Lithuania Poland Romania Slovak R. Slovenia Albania Serbia Croatia
  • 6. 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 ALBANIA BULGARIA CROATIA CZECH REPUBLIC ESTONIA MACEDONIA HUNGARY LATVIA Railways LITHUANIA POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA ALBANIA BULGARIA TI by sectors for 2008 CROATIA CZECH REPUBLIC ESTONIA MACEDONIA HUNGARY LATVIA Electric power LITHUANIA POLAND ROMANIA SERBIA Real need of PPP projects SLOVAK REPUBLIC SLOVENIA - Macedonia - EBRD TI railway, el.power-
  • 7. 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 ALBANIA BULGARIA CROATIA CZECH REPUBLIC ESTONIA MACEDONIA HUNGARY Roads LATVIA LITHUANIA POLAND ROMANIA SERBIA SLOVAK REPUBLIC SLOVENIA ALBANIA BULGARIA TI by sectors for 2008 CROATIA CZECH REPUBLIC ESTONIA MACEDONIA HUNGARY LATVIA LITHUANIA Water and waste water POLAND ROMANIA Real need of PPP projects SERBIA SLOVAK REPUBLIC SLOVENIA - Macedonia - EBRD TI roads, water/waste-
  • 8. PPP Context  One solution for delivery of public services;  Transferring the risk on the private partner;  Increased efficiency, quality and management of service delivery;  Increased value for invested money (Value for money – comparator for public sector
  • 9. PPP - Yes or No? -According to the World Bank in period 1990-2001 on annual basis, PPP projects are 754 billion dollars- 1. Municipality adopts economic and development policies; 1. List of municipal project proposals is developed; 2. Evaluation of municipal projects; 3. Decision for entering PPP with specific project (recommended are projects related with municipal own and decentralized authorities)
  • 10. USAID Donor assistance on PPP Two projects worked on PPP issue;  USAID BEA (2006- 2010);  USAID MLGA (2007- 2011);  Development of Feasibility studies for PPP in 3 municipalities;  Analysis/identification of municipal PPP projects in 5 municipalities;  Institutional and new legislation development support to MoE;  Support of local consultants in their certification for PPP experts;
  • 11. USAID Donor assistance on PPP 1. Feasibility study for PPP in Probistip- green market and administrative /business center 2. Analysis/identification of municipal PPP projects in 5 municipalities;  Gazi Baba – Administrative building and hotel complex;  Chair – underground parking garage and mun square;  Novo Selo – Green Market;  Veles – Reconstruction of Sport hall;  Vasilevo – Tourism development on lake Turija; Great interest from municipalities for this project
  • 12. PPP Challenges  Level of capital improvement costs and their availability;  Risk allocation and its management between public and private partner;  Value for money in PPP project need to be logical for transfer from private to public partner
  • 13. USAID Experience  PPP projects related with mun. own or decentralized authorities;  Complex procurement process for all categories of PPP;  Municipal resources for entering PPP are still very weak ( land, attractive competencies, buildings etc)  PPP culture on local level is still too weak (mun. officials are discouraged to make PPP decisions, no single municipal PPP project implemented, no institutional framework for PPP exists etc)  PPP is considered for infrastructure projects only;  Municipalities need to establish PPP Municipal Teams (Lawyer, Civil Engineer, Economist, Architect..) and to build their capacities;
  • 14. Recommendations  Legislation need to be streamlined not only for concessions but for PPP as well;  Special municipal projects for education and awareness rising need to be developed for Private Funding Initiatives,  Management of PPP project may be another challenge on this road after critical number of PPP projects are implemented;  Municipal financial possibilities are definitely very modest and there is necessity for additional municipal investment funds for PPP tender and contract preparation and funding  Macroeconomic stability is one good incentive for Macedonia in order to attract PPP partners;
  • 15. Thoughts for foods  PPP in ICT and other related services  Entrepreneurship;  R&D;  Business Incubators;  Technological Parks;  “Low hand fruits”;  Model for learning and practice;  Development and upgrading the municipal staff capacities;  Institutionalization of PPP function as one of municipal functions;  Legislation streamline;  Creating PPP culture on municipal Level
  • 16. Thank you for your attention! Q&A?
  • 17. Rozalija Karchicka – Vasilevska, M.Sc. LED Team Leader & Best Practice Coordinator USAID Macedonia Local Government Activity (MLGA) email: rvasilevska@mlga.com.mk ; web. www.mlga.com.mk