Public Private Partnerships in the caribbean webinar presentation part 2


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Part two of investigation into Public Private Partnerships and the potential scope and role for their application to development interventions in the Caribbean- presented as a webinar for the PMI (c) International Development Community of Practise (IDCoP)

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  • Thank you Amjad, and welcome once again to each of you. It is an honour to have the opportunity share some more with you on the topic of today’s webinar.
  • In the first webinar we commenced our exploration of Public-Private Partnerships for the pursuit of development and regional integration objectives, in the Caribbean region. We opened with some generic definitions of PPPs and identified some of the variations that have emerged especially in more recent times. After racing through the history of the modality, we gave attention to several global and regional factors which are creating a favorable context for the strategic application of P3s as a modality for implementing development projects in the Caribbean. We also touched briefly on some advantages of the P3 modality and possible constraints to their effective application in the Caribbean, and identified a few examples of existing or previous P3s in key development sectors in the region such as health, economic infrastructure, trade facilitation. Having thus whetted your appetite, today’s webinar resumes our discussion and takes a deeper look at some of the issues related to the development and implementation of Public-Private Partnerships.
  • So… some of the questions that were posed at the end of our first webinar included, “What types of projects in the Caribbean would benefit from a P3 approach? What do we need to consider in setting up PPP Units in the Caribbean- either at national or regional levels? What are some of the important requirements for effective management of P3s for development? What do the Parties to a P3 need to do at different stages of the project life cycle? What is a project manager’s role in such a complex process?”So, to maximise the time allocated today, I propose to answer these questions by looking at the specific situations as they relate to the implementation of P3s in Trinidad and Tobago, and in Haiti. Now, these two Caribbean countries appear to be at opposite ends of the development spectrum, both are members of the Caribbean Community integration process, however one is currently classified as a High Income Country ( HIC) the other classified as “Least Developed.” Both have embarked on P3 programs and so, we will examine some of the stated objectives of their P3 programs, the priority sectors identified for these programs; the national legal, regulatory and institutional frameworks that exist or are being put in place to facilitate these programs; progress to date in implementing their programs.I’ll also look at the role of regional institutions and their part in fostering the P3 approach to project implementation at regional levels.
  • Before we proceed, a quick reminder of the generic definitions for P3s adopted in the first presentation. A public private partnership is “a voluntary alliance between various equal actors from different sectors whereby they agree to work together to reach a common goal or fulfill a specific need, that involves shared risks, responsibilities, means and competencies.” It can also take the form of “a contractual agreement between public sector and private sector (for-profit) where resources and risks are shared to meet a specific public need.” Do take note of the highlighted adjectives as they are often reflected in other definitions.These definitions are important as much of the information available about P3s is still heavily skewed towards a definition of P3s based on the “concession model” I would have spoken of before. For you who missed that first presentation, “the concession model”, made popular by the Uks Private Finance Initiative in the 1990s, is a form of P3 where the private sector provides initial payment (to the public sector entity) for the right to lease an infrastructure asset, operate and maintain the asset and retain all or most of the revenues generated by same. This model includes a range of formal contractual arrangements from “operation and maintenance only” to more complex “Design, build, finance, operate and maintain– or DBFOM contracts.” However, since our investigation is concerned with the wholistic development of the Caribbean, please keep in mind that in additional to infrastructure P3s , there are other P3s for development which can be product-based and issues or systems-based P3s and may have a more flexible structure which allows for: - Consultation between public and private actors - Concertation (or agreement) of policy between actors; collaboration on standard setting - Operational functions such as joint research and product development or programme implementation…
  • Without further ado, we’ll take a look at our first Caribbean Case Study- Trinidad and Tobago…T&T has one of the highest growth rates and per capita incomes in the Region and is the leading Caribbean producer of oil and gas. It supplies manufactured goods, notably food products and beverages, as well as cement to the rest of the Caribbean region. The country is also a regional financial center, and tourism is a growing sector.
  • In July 2010, the Multilateral Investment Fund ( member of the IDB Group of Financial institutions) approved a programme to (quote) “strengthen the capacity of the Government of Trinidad and Tobago to structure and oversee the implementation of 2 pilot PPP projects, in order to create a demonstration effect.” (end quote). Total funding provided for the project was approximately US$2.1 Million, with 40 % financing from the MIF and 60% counterpart. The Ministry of Finance and the Economy was designated the executing agency for the programme.For its part, the Government of Trinidad and Tobago, claiming recognition of the fact that “both public and private sectors have roles to play in the delivery of high quality, responsive infrastructure and infrastructure related services” has presented several objectives and justifications for the use of P3s to support its key Policy objectives and to remove perceived “infrastructure bottlenecks” in the Country. Among these was their primary commitment to citizens to improve the quality of the economic and social infrastructure country-wide. The infrastructure P3 programme would span interventions in sectors such as health, education, public transport, water and sanitation, tourism, and would also allow the Government to achieve best value for money from its budgetary provisions to those sectors.
  • To assist in attaining the objectives of the P3 Programme, and as part of the FOMIN/ IDB project, a dedicated PPP Unit was set up within Trinidad’s Ministry of Finance. This Unit would perform a range of key functions, and had the main responsibility to “lead, drive and coordinate” the P3 Programme.During 2012 there has been definitive action by the Government of Trinidad and Tobago to develop an “organisational and institutional model or operational guidelines to support PPP Investments in Trinidad and Tobago.” In June 2012 the Cabinet approved a national P3 Policy which became the country’s, “Public Economic Policy for Development and Implementation of ALL P3 Projects which are Capital Intensive in nature. The policy therefore provides a “high level framework” for the development of further detailed guidelines.
  • To summarize some of the key points of the Policy:Based on the accepted definition of P3s, partners can be any majority, privately owned company or consortium; a Ministry, State Enterprise, Statutory Body or other Gov’t contracting authority. Resulting contracts will involve the private sector bearing significant risk and management responsibility, but will provide for remuneration of the Private Party depending on specific outputs. This remuneration for assets/ services provided by the private party may be made by users, government or a combination of both. Penalties may be imposed for failure to meet contractually agreed standards etc.To meet the expressed objectives and especially get best value for money, the P3 programme will give particular attention to risk evaluation and transfer; total cost including design, construction, operations, maintenance; competitiveness to encourage innovation; and using a single facility to provide multiple revenue streams. Service delivery and accountability are also key points of focus.Since the policy is meant to ensure that P3 projects achieve value for money, are fiscally responsible, transparent and honest, and are environmentally and socially sustainable, each project must meet the universal criteria. They must be central to policy priorities and sectoral/ infrastructural needs, technically, legally and otherwise feasible and economically cost-benefit justified. The commercial rate of return should also be sufficient to attract qualified private parties.Detailed guidelines and manuals being developed will set out specifics for each of the four stages identified for P3 development- namely, Project Identification- where assets or services whose quality and value can best be increase via a PPP will be selected; Business case –or appraisal of the project to be submitted for Cabinet approval; transaction- a transparent and competitive process for selection of the specific PPP contractor; and contract management- where the P3 will be monitored and managed to ensure all Parties meet their obligations and services/ products delivered as planned.
  • With regard to Institutional responsibilities, a Ministerial Committee composed of nine Ministers, and headed by the Minister of Finance and Economy oversees the development and implementation of P3 projects, provides strategic direction to the Programme and exercises oversight of project implementation, contract management and change management. In this regard the Ministerial Committee also reviews and selects indiv. Projects for implementation.The P3 Unit provides acts as the secretariat to the P3 Ministerial Committee and along with its other functions, will screen P3 projects submitted by Ministries and other agencies for consideration by the Ministerial Committee. The P3 Unit also participates in the Execution Teams that are constituted for each specific project;The P3 Execution Teams will consist of experienced advisors, representatives of relevant Ministries or Government Agencies, the P3 Unit or other relevant Government entities. The PETs have ultimate responsibility for developing the business cases for their specific projects, and for subsequent implementation.These Teams report to the Ministerial Committee. The Policy also provides for the contracting of specific technical, legal, economic/ financial and other advisors as required.The institutional architecture also makes specific provisions for the establishment of separate “Contract management teams” for each P3 project, reporting to the Ministerial Council.The current Administration has also announced plans to create an Infrastructure Development Bank described as “going beyond the provision of loans and equity, to providing guarantees, capital mobilisation and creating new buffers via interest rate subsidies and insurance products.” This is to be done with the assistance of the International Finance Corporation (IFC), and it remains to be seen if and how it will be integrated into the country’s institutional framework for P3s.To date, approximately90 potential P3 projects have been developed based on proposalsfrom various Ministries and state agencies. These include eMarine Ports, Airport Concessions, Utilities, Highways, Foreshore Development, Hotel Accommodation, Administrative Buildings and Schools/University Campus.  Several have even been included in the Administrations’s 2013 Budget.   
  • Our second P3 Case Study is Haiti.Haiti is considered one of the poorest countries in the Western Hemisphere; statistics say that 80% of the population of 8.2 million currently lives below the poverty line, and approximately 54% in abject poverty. Following the devastating earthquake in 2010, Haiti also endured two major hurricanes, with cumulative negative effects on it’s pursuit of economic recovery, and national re-development. The historical deficiencies and fragilities of the political, economic and social systems in Haiti has made that country the object of many development aid interventions. It is in that context that, in November 2012, the Haitian Ministry of Economy and Finance (MEF) led by Minister Marie Carmelle Jean-Marie, launched a formal national Programme for Public Private Partnerships as a key tool for national development, having subscribed to the leading international development philosophy (espoused in the Busan Partnership for Effective Development Cooperation) that there is a (quote) “central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn contributing to poverty reduction.”
  • Based on information provided by the Ministry, Haiti’s PPP Programme is being developed along 4 major strategic lines over the next 3 years- the first is the Development of a national/ overarching framework for PPPs. That framework will define what constitutes a PPP in the national context; it will identify and explain the various models of P3s that can be structured within that definition… and in that regard, the Government ,in addition to ‘traditional concessional models’ has already identified 2 other forms of P3s to be pursued. One alternative allows the State to temporarily acquire parts of a business (company) which provides goods or services of strategic interest to the country, and the other permits a private investor to acquire unproductive or failing public assets for commercial pursuits for a defined period under negotiated terms. Such a framework will further define the strategic direction and operations of the P3 Programme as they relate to the development priorities of the Government, but will allow scope for further definition of specific priorities, policies and partnership models to be pursued within each Sector. It will also provide the context for the elaboration of critical legal and regulatory frameworks for P3s in Haiti since previous P3s were concluded under various existing national laws which were not really specific in their treatment of P3s- like the national law on Public Procurement and Markets and the Public Enterprise Modernisation Law. It will also provide guidance for the elaboration of detailed manuals that will address various important processes for the creation and successful roll-out of a P3 including management of the tender process, evaluation of proposals, actual implementation, management of contracts, monitoring and evaluation.
  • The Second strategic line of action will entail the Mobilisation of Resources, (this is my translation/ interpretation of the original French wording of the documentation available.) In the first instance, the Government of Haiti intends to mobilize the necessary financial resources to enable the State to meet its financial obligations under P3 arrangements or to leverage the financial participation of other partners in key projects. Not only have they made provisions under the national budget, but will also be looking at using grants and co-financing arrangements to meet financial requirements. The Administration also intends to contribute, where necessary, public assets for projects in areas of strategic importance. In both instances, decisions will be based on evaluations of the ‘value for money’ and of the strategic contribution of the P3 as they aim to optimize public expenditure.
  • The Third strategic line of action is the establishment of an institutional structure to provide adequate for the development and management of P3s. At the apex of the structure is the Strategic Steering Committee- over which the Minister of Economy and Finance presides. The Minister of Industry and Commerce acts as Vice-President and other members include the Minister for the Interior, the Governor of the Bank of the Republic of Haiti (Central Bank) and a representative of the Private Sector Economic Forum. The “Comite de Pilotage Strategique” as it’s called in French is tasked with providing strategic direction to the overall P3 Programme, identifying priorities and defining policies. Another key part of the institutional architecture is the dedicated Central Management Unit for the P3 Programme. Its purpose is the “promotion and management of P3s.” To this end, the Unit will undertake research on the basis of which it will advise and support the Public Authorities for decision-making; it will contribute to the evaluation and recommendation of approval for proposals; and through a core staff of national experts and ad hoc recruitment of external specialists, it will offer technical assistance to project promoters and otherwise work to develop the institutional capacity of the Administration/ partners for management of P3s. The fourth element of the institutional structure is a network of accredited/ chartered management centers, which will be accessible to those responsible for implementing P3 projects. This network will consist of offices of accounting and management experts who will undertake the necessary follow- up or monitoring of projects to ensure transparency, and compliance with accounting and managerial and other requirements.
  • The Fourth and final strategic line of Action deals with the actual roll out of the Programme, the promotion and management of actual Partnership projects. In this first phase, the Government of Haiti is already investigating the identification, feasibility and development of proposals for interventions in strategic sectors such as Tourism, Agri-business, maritime ( port) infrastructure and airports and Housing.Now, it might be useful for me to point out that quite a few P3s have been implemented in Haiti even before the launch of this formal national program. The photo collage you see has images that represent several of the products/ services/ infrastructure outputs of previous or ongoing Public-Private interventions. The distinction now is that a formal program for P3, with its legal, regulatory and institutional frameworks institutionalizes P3s as important vehicles for realizing the development objectives of the Administration.(Optional: i. 2011- Establishment of the North Industrial Park- P3 among GoH, USA, IDB and Korean company Sae-A Co.Ltd. ii. 2008- The Haiti Hope Project- focus on sustainable economic opportunities for Mango Farmers and their families- Coca cola, MIF (FOMIN), USAID, Technoserv, Sogesol etc. iii. SESAM/LYSA Partnership for (delegated) Management of the Drinking Water service in Saint-Marc. iv. 2013- Investigation of P3 opportunities in port sector- engagement between National Port Authority, Guivar Nelson, Mins. Of Economy & Finance and Castalia ( linked to World Bank), UCG- PPP Unit.
  • And at this juncture I would wish to point out, that in both Haiti and Trinidad and Tobago, the Multilateral Investment Fund (MIF/FOMIN) and the parent Inter-American Development Bank (IDB), are among integral sponsors and supporters for the development of the National P3 Programs in developing countries… therefore, any similarities you may have noted are NOT coincidental!So, I hope that up to this point you would have been taking some notes and have begun to distill some of the answers to the questions that we posed at the outset… As a clue, I’m sharing this image borrowed from the 250 page “Public Private Partnerships Reference Guide V.1.0” published in 2012 by the World Bank and the Public-Private Infrastructure Advisory Facility (PPIAF). (Just for the sake of establishing legitimacy and authority) the PPIAF is a multi-donor trust fund that (according to its Website) “provides technical assistance to governments in developing countries in support of the enabling environment conducive to private investment, including the necessary policies, laws, regulations, institutions, and government capacity. It also supports governments to develop specific infrastructure projects with private sector participation.” Among the 17 multilateral and bilateral donors of the PPIAF are multilateral financial institutions like the Asian Development Bank, the International Finance Corporation, and the World Bank.But before I give you the complete answer sheet, I propose we give some consideration to what obtains at the Regional level…Why? Because in a space like the Caribbean comprised mainly of Small Island Developing States (SIDS), the prevailing wisdom is that “the right combination of country-based and trans-national measures will lead to outcomes that are superior to those achievable on the basis of national measures alone.” Or in the words of a Caribbean Proverb, “one hand cannot clap!”
  • And in this regard, I want to make special mention of the Caribbean Development Bank (CDB) as a regional promoter and critical financial institution for the application of P3s for regional development objectives and production of regional public goods (RPGs). According to (Article 1) of the 1969 Agreement establishing the CDB thepurpose of the bank is “to contribute to the harmonious economic growth and development of the member countries in the Caribbean and to promote economic cooperation and integration among them, having special and urgent regard to the needs of the less developed members of the region.” It’s published mission is to “be the leading catalyst for development resources into the Region, working in an efficient, responsive and collaborative manner with (BMCs) and other development partners, towards the systematic reduction of poverty in their countries through social and economic development .”To achieve this purpose, CDB performs various functions including assisting borrowing member countries to optimise the use of their resources, develop their economies, and expand production and trade; promotion of private and public investment, mobilisation of financial resources for development from intra and extra regional; supporting regional and local financial institutions and serving as stimulant for the development of capital markets in the Region. The “comparative advantage” of the CDB is based on in-depth knowledge and understanding of its BMCs and of the challenges these SIDS face. It has developed an invaluable professional network and nurtured relations that allow access by Bank personnel to policy- makers, administrators and institutions of civil society region-wide. Additionally, the CDB is Headquartered in Barbados, in close proximity to BMCs which contributes to lower costs for the appraisal and supervision of projects in the region. Another advantage is that the CDB has close functional links with regional and sub-regional integration organisations and institutions such as the CARICOM Secretariat, the Organisation of Eastern Caribbean States (OECS) Secretariat and the Eastern Caribbean Central Bank, and even participates in some of their meetings.
  • Now, let me clarify that, in the complex regional integration and development architecture, the CDB will not be the only institution at the Regional level with a vital role to play in the development of Public Private Partnerships for development. However, given the critical need for innovative financing mechanisms for development, it is the premier regional financial institution, and further, in my opinion ( which others are welcome to challenge) the CDB possesses the institutional capacity required to address not only financial but other technical requirements that emerge in the formulation and implementation of P3s (at the national and regional levels.)The CDB’s Private Sector Development Division (PSDD) is tasked with giving life to several of the Bank’s strategic priorities for supporting the private sector. It pursues the development of micro, small and medium enterprise (MSME) development, by supporting other financial institutions that provide assistance to MSMEs, and by assisting in the development of appropriate regulatory frameworks. The Division works to improve the enabling environment and investment climate, and gives tangible (financial and technical) support for private participation in infrastructure development. (That should ring a bell…Ding!!). The PSDD also works to improve the global competitiveness of the region’s productive sectors on a sustainable basis, with emphasis on building enterprise and institutional capacity and increasing the flow of investment capital to business enterprises.Why?- and it redounds once again to the underlying belief/ recognition that the private sector has an important role in stimulating economic growth and development, which in turn is deemed necessary for sustainable employment generation which will contribute to the eradication of poverty in the Region.
  • Now, understandably, that approach, if taken in isolation, will not resolve all the development issues facing our “beautiful islands in the sun” (ahem and those on the South American mainland too)… and that is why I think it is necessary to make the case for using PPPs to generate Regional Public Goods. The online Investopedia definition of a Public Good is “a product or service that an individual can consume without reducing its availability to another individual and from which no one is excluded.” According to the OECD, an International or Regional Public Good must meet the criteria of (a) Non-rivalry between users- so it can be used by more than one “user” simultaneously; and (b) Non-exclusion from use- so it must be available to more than one user at no or negligible additional cost.At the national level, public goods (and services) include for example National Defense, public parks, street lighting, sewerage systems. At the regional level, Regional Public Goods encompass things like shared policy frameworks, information databases and institutions. In the Caribbean, the coordination of transportation infrastructure among countries in the region; the Regional health framework “Caribbean Cooperation in Health Phase 3”, the Caribbean Disaster Emergency Response Agency CDERA, the Pan-Caribbean Partnership against HIV/AIDS are examples of RPGs in Health, Transport/ Infrastructure, Citizen and Social Security, and Environmental management. …And there are other Sectors like Energy, Trade and Investment in which concerted collaboration among public and private actors in the region on specific issues could be effective and efficient in creating “products and services” which complement national efforts and which will benefit all actors.On the list of specific interventions identified by the CDB in it’s Regional Cooperation and Integration Strategy, are things like ‘enhancing statistical data collection for improved policy making and MFDR reporting; strengthening regulation of the financial sector and providing supervision for economic stability/ growth; improved intra-regional transport for better movement of goods and persons. Other areas identified for a regional approach include climate change, energy efficiency and renewable energy. Now, unlike the infrastructure P3s we’ve seen, the P3s required at the regional level will involve more of the “- Consultation between public and private actors ; Concertation (or agreement) of policy between actors; collaboration on standard setting, and Operational functions such as joint research and product development or programme implementation- mentioned at the start. These forms of regional PPPs require transparent, participatory methods when setting priorities; and akin to the all important contracts for infrastructure P3s, it is also advisable to have self-enforcing agreements and treaties – as a measure for ensuring compliance in the absence of supranational authorities.
  • And the logical question you are probably asking is, “and funding or other resources for these regional P3s will come from…hmmm?” From some of the traditional sources- the region’s International Development Partners, bilateral country partners that are ODA providers, multilateral financing agencies, Government contributions…and from Private Sector Partners (for profit and not-for-profit corporations), civil society etc.What will be interesting to observe will be the innovative financing mechanisms which will mix grants, loans and other forms of financing…if you recall the situation created by most CARICOM Countries being classified as “upper middle income countries” and where several High Income Caribbean States have been “graduated” off the DAC List of countries eligible to receive ODA... The EU’s policy on “differentiation” among the States and it’s expressed intention to use mechanisms which will tap into “Private sector” resources will further influence how financing is delivered in the future…and also sets the stage for increased use of regional P3s to leverage the various Partners contributions for maximum impact. As I wrap up on this point, permit me to reiterate the widely accepted insight that the State acting alone will not achieve the MDGs and the individual national development goals that have been subject of attention to date, and that the inputs of non-state actors, including the Private Sector and Civil Society are required. Furthermore, the development objectives being pursued are often to mutual benefit of public and private sector alike (in today’s context of Corporate Social Responsibility and Common Shared Value as key components for productive and sustainable business.) “The proposed PPP Policy defines the extent, objectives, and guiding principles of the Government’s PPP Program.”So a policy should give a definition and clearly set scope of the P3 Programme. It can describe contractual attributes, define priority sectors; establish principles by which contracts will be structuredObjectives of a P3 Program- Increase access to funding (use of private sector investment resources); improve value for money in infrastructure projects; encourage innovation in provision of infrastructure; improve sustainability of infrastructure and services; improve accountability in public expenditureWhy a dedicated P3 Unit? When gov’t lacks experience and capacity to develop P3s, a dedicated P3 Unit is recommended.IT will carry out a range of functions icluding promoting the P3 program, supporting gov’t departments in developing and implementing P3s or regulating the P3 development process by assessing and approving proposals.P3 unit will serve 3 main functions: develop the PPP policy and program; support line agencies in identifying, developing and implementing P3 projects, disseminating information on the P3 program. It will lead in developing the guidelines and requirements for each stage of project development and standard documentation for P3s, procurement and dispute resolution procedures. It will also need to monitor and review P3 performance ( to be able to update guidelines/ extract lesson learnt** The PPP Policy, institutional responsibilities, and procedures constitutes the substance of the PPP framework. A PPP law is the best way to provide clear and specific support for the framework. ( optional) ( see PPIAF note 4)What considerations to be addressed in setting up a P3 Unit?The OECD’s Principles for Governance of PPPs recommend that there be a clear, predictable and legitimate institutional framework established. That framework is to be supported by competent, well-resourced authorities.The Public sector party is to provide political leadership and is responsible for developing public awareness of P3- costs, benefits, risks ( contrasted with more conventional procurement practise.Location of the P3 Unit in the Government is crucial to determining its effectiveness in carrying out the proposed functions- affects its authority and ability to coordinate with various government entities involved in developing/ implementing P3s.To fulfil its role, the P3 unit needs the right balance of skills and experience. Core staff provide in-house technical capacity for developing the P3 framework, promoting etc… and should include project finance- analysis/ due diligence; economic analysis; legal- contracting, legislation, regulation; public relations/ communications, contract monitoring& evaluation. Experience in project management a need. Sector specific advisors can be contracted as needed
  • Reviewing the information presented so far on PPPs at both the national and regional levels, one might be very impressed with how well structured and ambitious they sound… however, despite our belief in the potential of P3s, the reality is that there are many factors in the domestic and regional environments which obstruct their efficiency and effectiveness and in some cases implementation… We looked at P3 programmes in Trinidad and Haiti, and despite the similarity in objectives and in the legal, regulatory and institutional structures established for the implementation of the P3 Programmes, the outcomes will be vastly different. How so? One business intelligence unit points out that despite the current Haitian administration’s commitment to improve investment and recent actions in that regard, Haiti was still ranked 174 out of 183 on the Worlds Banks 2013 Business report. The Statement explains that Haitian laws in several relevant areas are deficient, where the laws exist, enforcement mechanisms are weak, the judicial system is also weak or inefficient given excessive ‘red tape’. The standards governing Haiti’s legal, regulatory and accounting systems are often below international standards. These also make it difficult to obtain financing (domestically). Political infighting, systemic corruption and instability otherwise are also hindrances to investment, economic growth and development- and by extension to the effective implementation of PPPs in that country. On the other hand, Trinidad and Tobago is ranked 69 world wide for ease of doing business, with major improvements noted in administrative efficiency in its public utilities, customs management, property transactions and other areas. The country’s macroeconomic situation is relatively stable, investors enjoy a high level of protection and there is access to credit. The same report however points to deficiencies in other areas, like the time required to conclude contracts and inadequate enforcement of contracts. According to the latest Global competitiveness index, T&T is classified as an “economy in transition”…progressing towards “an innovation driven economy.”One lesson distilled from the PPIAF’s review of the success or failure of National P3 Units, is that “less effective governments tend to have less effective PPP Units… lack of political commitment, transparency and coordination in Government agencies reduces the Units chances for success.” So factors such as prior experience; political will; relevant existing laws must be addressed for P3s to succeed.The application of P3s for development in the Caribbean at both national and regional levels is also constrained by the general challenges still facing the regional Private sector. These include small market size and difficulties in achieving economies of scale, weak enabling environment for business, limited access to financial services and capital markets, inadequate infrastructure for competitiveness, a derth of management skills and insufficient support for Innovation and Technological development among others.Unless measures are put in place to mitigate some of the private sector’s current challenges, their equitable participation as partners in regional and national P3s will not be realized.
  • Under the microscope, there is more to Public-Private Partnerships (be they focused on infrastructure, social issues, products or systems based), than meets the eye… and as project managers it behooves us to at least be aware of some of the key matters for attention that emerge during the P3 project lifecycle. To illustrate, I’ve selected this diagram of the Partnership Life Cycle, developed by The Partnering Initiative (TPI), and published in its manual “Partnering Step by Step”. TPI is a specialist programme of the International Business Leaders Forum (IBLF), an international non-profit organisation. Over the past 20 years, the TPI has lead in research and development of the theory and practice of cross-sector (or in my jargon-) Public Private partnerships. To me this diagram and the aforementioned manual capture the general phases for development and implementation of any kind of P3.It commences with processes for initiating and planning the Partnership in a phase they call “Scoping and Building.” Then it advances to processes for execution, monitoring and controlling, in their “Managing and Maintaining” phase. The iterative nature of the Partnership is reflected by the circular arrow used to demarcate implementation. In that process is included an overlapping phase for Reviewing and Revising of the Partnership- with several options- closing out ( or moving out), scaling, or re-scoping and building… In the first phase, the initiating organisation needs to consider among other things, alternatives to partnering. If a P3 is the best way forward then a clear business case will be prepared to convince others. The identification of partners is also paramount and should include consideration of criteria such as partnering capacity, reputation/ track record, management and governance capacity, financial track record, interest/ willingness to partner, access to resources etc…. When moving on to ‘building’, investment in deepening the understanding between partners is necessary. The TPI advises that relationship development should have “rules for interacting with other partners, rules how you communicate internally and externally, rules for managing logistics and rules for making decisions.”…. Planning is critical and should precede agreement signing- this will ensure that the right partners are involved and that all expectations are clear and acceptable. Resource mapping will facilitate planning…. The conclusion of some form of partnering agreement ( contract, mou, treaty etc.) records the objectives, definition, rules etc. underpinning the collaboration….That is quickly followed by the establishment of a structure to accomplish the agreed work. In this regard, these structures must ensure that partners are accountable to each other and should have dispute resolution mechanisms. Mobilising and Delivery in TPI jargon are akin to executing- and in a partnership, this is where partners deliver on their commitments. Appropriate records must be kept and activities monitored, stakeholders informed and changes managed….Measuring allows partners to justify their involvement, identify what is working or not and to keep track of deliverables, output and impact… Reviewing is useful for determining the added value and effectiveness of the partnership…Revising is where changes arising as a result of review are decided on/ implemented…Scaling may entail expansion of the project, publicising via media etc., or even replication.. When opting to move on, the partnership will be closed out or disbanded or the project handed over to an existing or new institution for long term delivery.
  • So to conclude my presentation today, I want to share with you, a few questions drawn from the TPI questionnaire for individual practitioners, and invite you to post answers and additional questions in the discussion on the webinar on the website of the International Development Community of Practice.Thanks again!
  • Public Private Partnerships in the caribbean webinar presentation part 2

    1. 1. “Public-Private Partnerships and the Future of Development Projects in the Caribbean” Presenter: Resel Melville (PMP, D.E.A, B.A (Hons) Date: June 13 2013
    2. 2. 2 RECAP OF THE FIRST WEBINAR i. Key Definitions: * What is a PPP/ P3? * Who are the players/ parties involved? * Types of PPPs ii. Recent history of PPPs- 1990’s to 2000’s iii. Present day: global context *Busan Global Alliance *EU Agenda for Change *WTO Aid for Trade Initiative iv. Present day- regional context * CARICOM Single Market and Economy * CARIFORUM-EU Economic Partnership Agreement v. P3s for Development- pros and cons vi. Examples of recent/major Public Private Partnerships in Key Development Sectors in the Caribbean vii. Part 2: a preview…. “Public-Private Partnerships and the Future of Development Projects in the Caribbean”
    3. 3. • What types of projects in the Caribbean would benefit from a P3 approach? • What do we need to consider when thinking about setting up dedicated PPP Units in the Caribbean? – National – Regional • What are requirements for effective management of P3s for development…and at different stages of the project life cycle? • What is the project manager’s role in such a complex process?
    4. 4. 4 Reminder- what is a PPP? • “a voluntary alliance between various equal actors from different sectors whereby they agree to work together to reach a common goal or fulfill a specific need, that involves shared risks, responsibilities, means and competencies.” (USAID/CED, Public Private Partnerships for Development- A Handbook for Business, July 2006) Presentation Title “a contractual agreement between public sector and private sector (for-profit) where resources and risks are shared to meet a specific public need.” (UNDP SSC
    5. 5. 5 Case Study- Trinidad and Tobago Presentation Title Fast Facts • Population: 1,305,000 • Capital: Port-of-Spain; 55,000 • Area: 5,128 square kilometers (1,980 square miles) • Language: English, French, Spanish, Hindi • Religion: Roman Catholic, Anglican, Hindu, Muslim, Presbyterian • Currency: Trinidad and Tobago dollar • Life Expectancy: 71 • GDP per Capita: U.S. $20,400 (Est 2012) • Literacy Percent: 99 • Industry: Petroleum, chemicals, tourism, food processing • Agriculture: Cacao, sugarcane, rice, citrus; poultry • Exports: Petroleum and petroleum products, chemicals, steel products, fertilizer
    6. 6. 6 PPP Programme for Trinidad and Tobago FOMIN: Multilateral Investment Fund (member of the IDB Group) Purpose: To strengthen capacity of the Government of Trinidad and Tobago to structure and oversee the implementation of 2 Pilot PPP projects in order to create a demonstration effect Executing Agency: Ministry of Finance and the Economy Related Areas: Infrastructure, Public Services, Public-Private Partnerships Approval Date: July 16 2010 Funding: FOMIN- US$864,285 Counterpart- US$1,277,955 Presentation Title NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T) P3 PROGRAMME RATIONALE/ OBJECTIVES - Government’s commitment to “improve the quality of the economic and social infrastructure across the country” - to expand access to effective and efficient infrastructure and infrastructure services - To meet social needs through better health and education facilities; improved road networks, transport systems, water and waste management, energy, communications infrastructure - To provide infrastructure for sustainable development of the tourism sector - To improve the value achieved from the allocation of government resources to identified sectors/ get best value for money
    7. 7. 7 Government of the Republic of Trinidad and Tobago PPP Policy Approved by Cabinet June 2012 • PPP Definition • PPP Value Drivers • Aim and Scope • Universal Criteria for Projects • Project Development/ Implementation Processes • Institutional Responsibilities for the Programme Presentation Title T&T PPP UNIT - Lead, drive, coordinate the National Infrastructure P3 Programme - Develop and disseminate guidelines on processes and criteria for Identifying, Preparing, Procuring, and Implementing P3 Projects - Review, select, evaluate, recommend projects to be done as P3s - Work with implementing agencies , facilitate agreements - Provide oversight of P3 projects; ensure consistency, good coordination - Repository of skills and knowledge on P3s NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)
    8. 8. 8 • PPP Definition- a long term contract between a private party and a Government Agency for providing a public asset or service in which the Private Party bears significant risk and management responsibility.” • PPP Value Drivers- risk transfer; whole of life costing; innovation; asset utilization; focus on service delivery, accountability • Aim and Scope- achieves value for money, is fiscally responsible, ensures transparency and honesty, is environmentally and socially sustainable • Universal Criteria for Projects- feasibility & economic viability; commercial viability; value for money; Fiscal responsibility • Project Development/ Implementation Processes- Project Identification; Business Case; Transaction; Contract Management • Institutional Responsibilities for the Programme- Ministerial Committee, PPP Unit, PPP Project Execution Teams incl. contract management team Review and approval: A PPP must be approved by Cabinet at 2 stages- (a) Business Case - to approve the P3 Transaction; (b)Transaction- to sign the P3 Contract Presentation Title NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)- LEGAL FRAMEWORK
    9. 9. 9 Presentation Title NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)- INSTITUTIONAL FRAMEWORK MINISTERIAL COMMITTEE - Ministers of: Finance (Chair), Planning, Education, Health, Housing &Environment, Public Utilities, Transport, Works &Infrastructure, Attorney-General. (can be expanded to incl. specific Ministry leading a P3) - Strategic direction, oversight, change management PROJECT EXECUTION TEAMS - Constituted for each P3 project - Experienced advisors, Ministry reps, P3 Unit, other Gov’t entities, other special advisors - Develops business case, leads proj. implementation/P3 transactions - Reports to Ministerial Committee PPP UNIT (MOFE) (Secretariat to MC) CONTRACT MANAGEMENT TEAMS - Legal and other expertise - Manages contracts for P3s - Reports to Ministerial Committee/ consults same to manage change INFRASTRUCTURE DEVELOPMENT BANK??? - loans/ equity - Guarantees, capital mobilisation, interest rate subsidies, insurance products…
    10. 10. 10 CASE STUDY: HAITI Fast Facts • Population:8,288,000 • Capital: Port-au-Prince; 1,961,000 • Area:27,750 square kilometers (10,714 square miles) • Language: French, Creole • Religion: Roman Catholic, Protestant, Voodoo • Currency: Gourde • Life Expectancy:51 • GDP per Capita: U.S. $1,400 • Literacy Percent:53 • Industry: Sugar refining, flour milling, textiles, cement • Agriculture: Coffee, mangoes, sugarcane, rice; wood • Exports: Manufactures, coffee, oils, cocoa
    11. 11. 11 Presentation Title NATIONAL PPP PROGRAMME OF HAITI 4 Strategic Lines of Action: 1. Development of Overarching National Framework a. Definition of a P3 in Haitian context i. Identify various forms/ structures for P3s b. Definition of Strategic Priorities/direction/ operations of the Programme c. Elaboration of specific legal and regulatory frameworks for the operations of P3s d. Development of detailed guides and manuals (based on int’l standards: - Management of tendering process - Evaluation of projects - Project implementation - Contract management - Monitoring and evaluation of P3s
    12. 12. 12 Presentation Title NATIONAL PPP PROGRAMME OF HAITI 4 Strategic Lines of Action: 2. Mobilisation of Resources for the development of P3s. a. Mobilisation of financial resources ($$) by the State - US$25 Million- 2012-13 budget for launch/ start-up - Grants - Co-financing - Leveraging of private capital/ investments - Other State Contributions to P3s- public/government assets (quantity, description, strategic contribution/ value for money TBD)
    13. 13. 13 Presentation Title NATIONAL PPP PROGRAMME OF HAITI 4 Strategic Lines of Action: 3. Establishment of Institutional Framework for development and management of P3s. Strategic Steering Committee - Strategic priorities/ policies - Key Ministries, Central Bank, Recognized Private Sector Rep. Industrial Development Fund (FDI) -Trust (financial pole); management of financial resources for MEF; financial partner to participating financial institutions -Banking and financial institutions Central Management Unit - “promotion and management of P3s” - research; advisory; evaluation; - technical assistance; capacity building - Core staff of National experts/ ad hoc short term specialists Network of Chartered/ Accredited Management Centers - guarantee permanent follow- up of P3 operations, guarantee creditable financial and managerial performance; ensure company compliance with tax requirements -key accounting and management professionals
    14. 14. 14 Presentation Title NATIONAL PPP PROGRAMME OF HAITI 4 Strategic Lines of Action: 4. Implementation of the Haiti National P3 Programme- promotion and management of P3 projects in key Sectors Strategic Sectors for implementation of P3s in Haiti… - Tourism - Agri-business - Maritime Infrastructure - Airports - Housing Sectors where existing/ previous P3 implemented… -Electricity -Potable Water -Agriculture/ agri-business -Transport -Communication -Manufacturing -Tourism -Mobile Banking….
    15. 15. 15 Presentation Title Fig.1: PPP Reference Guide Overview Source: Public Private Partnerships Reference Guide V.1.0, World Bank/ PPIAF 2012
    16. 16. 16 Presentation Title www.caribank.orgTHE CARIBBEAN DEVELOPMENT BANK Established: 1969 Entry into Force: 1970 Members – Antigua and Barbuda; The Bahamas; Barbados; Belize; British Virgin Islands; Cayman Islands; Dominica; Grenada; Guyana; Jamaica; Montserrat; St. Kitts/Nevis/Anguilla, St. Lucia, St. Vincent and the Grenadines; Trinidad and Tobago; Turks and Caicos Islands; Canada and the United Kingdom; Venezuela; Colombia; Anguilla ( formerly part of the State of St.Kitts/ Nevis/Anguilla); Mexico, Italy, Germany; China, Haiti, Suriname and Brazil For additional details on the CDB see: dbpurpose-2013.pdf PURPOSE: to contribute to the harmonious economic growth and development of the member countries in the Caribbean and to promote economic cooperation and integration among them, having special and urgent regard to the needs of the less developed members of the region MISSION: to be the leading catalyst for development resources into the Region, working in an efficient, responsive and collaborative manner with (BMCs) and other development partners, towards the systematic reduction of poverty in their countries through social and economic development .” FUNCTIONS: - To assist Borrowing Member Countries (BMC) to optimize use of resources, develop their economies & expand production & trade - To promote private & public investment, encourage development of the financial upturn in the region & facilitate business activity/ expansion - To mobilise financial resources from within & outside the region for development - To provide technical assistance to regional BMCs - To support regional & local financial institutions & a regional market for credit/ savings - To support & stimulate development of capital markets in the region
    17. 17. 17 The CDB and Private Sector Development in the Caribbean CDB Strategic Priorities for the Private Sector • Business and Product Development • Financial Intermediation • Direct Support • Facilitate Participation in Private Infrastructure • Privatisation • Technical Assistance • Environmental management • Guarantees • Research & Development • Catalysing Investment Flows • Capital Market Development • Equity ( Funds, Investments) • Creating an enabling environment (legal and regulatory framework) • Policy Dialogue • Public and Corporate Governance • Risk Management Presentation Title Extract: “Assistance may be considered for projects to establish, expand, diversify and modernize productive facilities in various sectors including energy, manufacturing, agribusiness, tourism, transportation, infrastructure, telecommunications and financial services.” CDB will give due consideration for investment to projects which are deemed to be beneficial to the economy of the BMCs. Priority is given to those activities which will enhance the region’s foreign exchange earning capabilities, generate employment, and those which promote poverty reduction, social equity and environmental protection. cdb/organisation/projects-department/psdd
    18. 18. 18 Key characteristics of a Public Good (national, regional or international) - Non-rivalry between users- can be used by more than one “user” simultaneously; - Non-exclusion from use- must be available to more than one user at no or negligible additional cost. e.g: policy and other frameworks, institutions, databases… Sectors where RPGs can be created, using PPPs :Health, Transport/ Infrastructure, Citizen Security, Environmental management, Energy, Investment, Communication, ICTs etc. Presentation Title PUBLIC PRIVATE PARTNERSHIPS FOR REGIONAL PUBLIC GOODS (RPG) Types of P3s for RPG - Consultation between public and private actors - Concertation (or agreement) of policy between actors; collaboration on standard setting, and - Operational functions such as joint research and product development or programme implementation Examples of Caribbean Regional P3s for RPGs: - PanCaribbean Partnership against HIV & AIDS; - Caribbean Cooperation in Health (CCH III); - Caribbean Disaster and Emergency Risk Agency (CDERA)-Regional disaster risk management for sustainable tourism in the Caribbean.
    19. 19. 19 • Public Partners- traditional and emerging International Development Partners (IDPs) bilat. countries; multilateral organisations, international and regional financial institutions; Caribbean Governments • Private Partners- for profit corporations, not-for-profit corporations, Non-governmental organisations, civil society (at various levels) Presentation Title PUBLIC PRIVATE PARTNERSHIPS FOR REGIONAL PUBLIC GOODS (RPG)- RESOURCES AND FUNDING
    20. 20. 20 REALITY CHECK- the Challenging reality for P3s in the Caribbean • “less effective Governments tend to have less effective PPP Units… lack of political commitment, transparency and coordination in Government agencies reduces the Units chances for success.” (PPIAF Info.Note 4, 2012) • Political will or lack thereof • Prior experience of the Government in P3s • (Deficiencies in ) Relevant existing laws and regulatory authorities/ enforcement capacity  small market size and difficulties in achieving economies of scale  weak enabling environment for business  limited access to financial services and capital markets,  inadequate infrastructure for competitiveness  a dearth of management skills  insufficient support for Innovation and Technological development  Limited capacity to manage environmental risks Presentation Title
    21. 21. 21 Presentation Title The Public Private Partnership Lifecycle… for more details and tools see-
    22. 22. 22 The Partnering Initiative- Questions for Partnership Practitioners… • A. ORGANISATIONAL ISSUES 1. What are the underlying motivations / drivers for my organisation’s interest and involvement in the partnership? How can I help the other partners understand these? 2. How do the other partners regard my organisation? How can I help partners to understand my organisation better? • B. PROFESSIONAL COMPETENCY ISSUES 3. What professional skills & competencies do I have and how are they useful to the partnership? 4. What new skills/ competencies do I need to have to partner effectively? How can I acquire them? 5. How do other partners perceive my skills/ competencies? • C. PARTNERSHIP ISSUES 6. What do I see for the Partnership in the future? Do others share my vision? ANY OTHER ISSUES TO EXPLORE** Presentation Title
    23. 23. 23 Presentation Title