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  1. 1. The PPP Good GovernanceChallengeTony BonniciTony BonniciEconomic Affairs OfficerEconomic Affairs OfficerChisinau, MoldovaChisinau, Moldova10 October 201210 October 2012
  2. 2. Overview Success story: Manila Water Concession 7 Principles of Good Governance on PPPs National Kidney and Transplant Institute: HaemodialysisCenter Project (Philippines)
  3. 3. Examples of success:Manila Water ConcessionBackground:−One of the oldest and the least efficient water systems amongmajor Asian cities−MWSS was heavily indebted, overstaffed and inefficient−Three-quarters of the homes in the eastern half of Manilalacked 24-hour service and only 8% had sewerage connection−Two-thirds of the water produced was being lost to leaks, poormetering, and illegal connections
  4. 4. Outcome…In August 1997, the Manila Water Company took over the operation ofthe government-owned Metropolitan Waterworks and SewerageSystem under a 25-year concession agreement.−In 1997, water was available to 3.1 million people or only 26% of thepopulation in the East Zone. Today, water is provided 24/7 to 99% ofthe population in its service area, mostly in low income communities−36 sewage treatment plants with a combined capacity of 135 millionliters of wastewater per day−200 kilometers of sewer pipelines have been laid
  5. 5. Video case study: Manila WaterCompany PPP
  6. 6. PPP success factors:Principles of Good Governancein PPPs A coherent PPP policy Strong enabling institutions Legal framework “fewer, better, simpler” Cooperative risk sharing and mutual support Transparency in partner section Putting people first Achieving sustainable development
  7. 7. Misconceptions…PPP pilotswill starttheprocess…No!You need a policyframework with direction,responsibilities and goals.PRINCIPLE 1. POLICY
  8. 8. • A PPP Policy is needed to fix a “roadmap”• Strong social objectives, e.g. increasing accessibility fordisadvantaged• Core values and principles (fairness, continuation of services,improved quality)• Consultation within Government• Consult investor community• Identify the right projects to get startedPrinciple 1. PPP Policy
  9. 9. Misconceptions…PPPs focuson ringfencing theproject…No!You need to build the skillswithin the government and setup the right institutions.PRINCIPLE 2. CAPACITYBUILDING
  10. 10. Principle 2. Capacity-BuidlingINTERNALLYTrain personnel for the required skills for PPPsEstablish PPP UnitOffer National PPP training programmes, guidelinesEXTERNALLYAt same time use qualified independent advisors tohelp on projects
  11. 11. Misconceptions…PPPs …prescriptiverules and tightcontrol…No!Overall frameworkshould be simpler,fewer and better.PRINCIPLE 3. LEGAL
  12. 12. Principle 3. Legal:Fewer, better and simpler• Fewer laws - removal of constraints• Better laws - knowable, secure andpredictable• Simpler laws - bundling projects,‘competitive dialogue’
  13. 13. Misconceptions…PPPs provideassets togovernmentsat no risk andno costNo!Governments mustassume some risk andoffer some subsidy.PRINCIPLE 4. RISKSHARING
  14. 14. Principle 4. Risk• Cooperative sharing and mutual support• Risk sharing key to PPP success• No science to allocating risks• Yes to some government subsidy but with care
  15. 15. Misconceptions…PPPs …notenderrequired…No!Competition allows for thebest partner and the bestproject.PRINCIPLE 5.PROCUREMENT
  16. 16. Principle 5. Procurement• Open and transparent• Opportunities should be made public• Non-discrimination• Zero tolerance to corruption• Choosing the right partners
  17. 17. Misconceptions…Keep peopleout: they donot understandthe technicalmatters…No!People have to be put first.PRINCIPLE 6. PUTTINGPEOPLE FIRST
  18. 18. Principle 6. Putting PeopleFirst• Define the public interest• Consult with people• Inform: disclose information in contracts• Oversee by objective third party• Involve independent auditors
  19. 19. Misconceptions……you have tochoose betweenprofit and socialand environmentdevelopment…No!Project can make profit andachieve social andenvironmental goals.PRINCIPLE 7. ENVIRONMENT
  20. 20. Principle 7. Environment• The ‘Green case’ works for PPPs• Provide incentives to the private sector toadopt green criteria• Avoid politically correct ‘add ons’ that meannothing
  21. 21. Video case study: National Kidney and TransplantInstitute: Haemodialysis Center Project (Philippines)
  22. 22. Thank you for your attention!Tony BonnicTony