This document discusses public-private partnerships (PPP) from the perspective of Bangladesh. It defines PPP as a contractual agreement between a public agency and private sector entity to deliver public services. The document outlines reasons for PPP including accelerating projects and tapping private sector resources. It describes key benefits as expedited completion, cost savings, and access to private capital. The document then discusses how risks and rewards are allocated in PPPs and sectors for potential partnerships in Bangladesh such as health, education, and infrastructure.

1. Public-PrivatePublic-Private
PartnershipPartnership
Bangladesh PerspectiveBangladesh Perspective
Presented By:Presented By:
Mohammad Zakir HossainMohammad Zakir Hossain
Deputy Comptroller and Auditor GeneralDeputy Comptroller and Auditor General
Office of the Comptroller and Auditor GeneralOffice of the Comptroller and Auditor General
of Bangladeshof Bangladesh

2. Public-Private Partnership (PPP)Public-Private Partnership (PPP)
 PPP is a contractual agreement formed between aPPP is a contractual agreement formed between a
public agency and private sector entitypublic agency and private sector entity
 PPP allows greater private sector participation inPPP allows greater private sector participation in
the delivery of servicesthe delivery of services
 PPP allows the public agencies to tap privatePPP allows the public agencies to tap private
sector technical, management and financialsector technical, management and financial
resources to achieve certain public agencyresources to achieve certain public agency
objectives such asobjectives such as
• greater cost and schedule certainty,greater cost and schedule certainty,
• supplementing in-house staff,supplementing in-house staff,
• innovative technology applications,innovative technology applications,
• specialized expertise or access to private capital.specialized expertise or access to private capital.

3. Reasons for Public-PrivateReasons for Public-Private
PartnershipPartnership
 Accelerating the implementation of high priority projects byAccelerating the implementation of high priority projects by
packaging and procuring services in new wayspackaging and procuring services in new ways
 Turning to the private sector to provide specializedTurning to the private sector to provide specialized
management capacity for large and complex programs;management capacity for large and complex programs;
 Enabling the delivery of new technology developed byEnabling the delivery of new technology developed by
private entities;private entities;
 Drawing on private sector expertise in accessing andDrawing on private sector expertise in accessing and
organizing the widest range of private sector financialorganizing the widest range of private sector financial
resources;resources;
 Encouraging private entrepreneurial development,Encouraging private entrepreneurial development,
ownership, and operation of related assets;ownership, and operation of related assets;
 Allowing for the reduction in the size of the public agencyAllowing for the reduction in the size of the public agency
and the substitution of private sector resources andand the substitution of private sector resources and
personnel.personnel.

4. Key Benefits of Public-Private PartnershipKey Benefits of Public-Private Partnership
PPP provides benefits by allocating the responsibilitiesPPP provides benefits by allocating the responsibilities
to the party – either public or private – that is bestto the party – either public or private – that is best
positioned to control the activity that will produce thepositioned to control the activity that will produce the
desired resultdesired result
 The primary benefits of using PPP to deliver servicesThe primary benefits of using PPP to deliver services
include:include:
• Expedited completion compared to conventional deliveryExpedited completion compared to conventional delivery
methodsmethods
• Cost savingsCost savings
• Improved quality and system performance from the use ofImproved quality and system performance from the use of
innovative materials and management techniquesinnovative materials and management techniques
• Substitution of private resources and personnel forSubstitution of private resources and personnel for
constrained public resources andconstrained public resources and
• Access to new sources of private capital.Access to new sources of private capital.

5. How are risks and rewards allocatedHow are risks and rewards allocated
in public-private partnershipin public-private partnership
 Risks are allocated to the party that isRisks are allocated to the party that is
the best equipped to manage themthe best equipped to manage them
 PPP contracts often include incentivesPPP contracts often include incentives
that reward private partners forthat reward private partners for
mitigating risk factorsmitigating risk factors

6. Promoting Public-Private Partnership inPromoting Public-Private Partnership in
BangladeshBangladesh
 Fast changing policy situation withFast changing policy situation with
globalization and deregulation recognizesglobalization and deregulation recognizes
increasingly important role of privateincreasingly important role of private
sector in Bangladeshsector in Bangladesh
 Bangladesh has a very rich experience onBangladesh has a very rich experience on
PPP, especially in respect of the scope andPPP, especially in respect of the scope and
diversity of Non-Government Organizationdiversity of Non-Government Organization
(NGO) activities in social services(NGO) activities in social services

7. Sectors of PPP in BangladeshSectors of PPP in Bangladesh
 Health SectorHealth Sector
 Education SectorEducation Sector
 Infrastructure DevelopmentInfrastructure Development
 Tourism SectorTourism Sector
 ICT SectorICT Sector
 IndustriesIndustries

8. Premises of PPP in Health and EducationPremises of PPP in Health and Education
SectorSector
 PPP in health and education sectors arePPP in health and education sectors are
based upon three premises:based upon three premises:
• Health and education are critical areas ofHealth and education are critical areas of
activity for national developmentactivity for national development
• The “public good” character of health andThe “public good” character of health and
education and the scale of effort required toeducation and the scale of effort required to
meet society’s needs in these two areas callmeet society’s needs in these two areas call
for close cooperation of all stakeholders infor close cooperation of all stakeholders in
both public and private sectorsboth public and private sectors
• The current status and future prospects ofThe current status and future prospects of
PPP are contingent upon country specificPPP are contingent upon country specific
circumstances.circumstances.

9. The Spectrum of Relationship in PPPThe Spectrum of Relationship in PPP
 Parallel activities:Parallel activities: Public and privatePublic and private
activities are carried out without anyactivities are carried out without any
contact with each other orcontact with each other or
acknowledgement of the existence of eachacknowledgement of the existence of each
otherother
 Competitive activities:Competitive activities: The activities inThe activities in
the public and private sectors are carriedthe public and private sectors are carried
out with same or similar objectives,out with same or similar objectives,
targeting common clientele and competingtargeting common clientele and competing
with each other, which may mean eitherwith each other, which may mean either
wasteful duplication of activities orwasteful duplication of activities or
enlargement of choices for theenlargement of choices for the
beneficiaries.beneficiaries.

10. The Spectrum of Relationship in PPPThe Spectrum of Relationship in PPP
(Contd.)(Contd.)
 Complementary activities:Complementary activities: Activities orActivities or
services from the public and the privateservices from the public and the private
sectors complement each other in termssectors complement each other in terms
of nature and content of services orof nature and content of services or
geographical and population coverage,geographical and population coverage,
either by design or incidentallyeither by design or incidentally
 Contractual services:Contractual services: The governmentThe government
contracts private sector for providingcontracts private sector for providing
specified services for agreed fees, withspecified services for agreed fees, with
the contractor being accountable to thethe contractor being accountable to the
government authority.government authority.

11.  Cooperation and collaboration:Cooperation and collaboration: PublicPublic
and private actors work together on theand private actors work together on the
basis of shared objectives, strategies andbasis of shared objectives, strategies and
agreed criteria regarding assessingagreed criteria regarding assessing
process and outcome; the partners alsoprocess and outcome; the partners also
cooperate in developing commoncooperate in developing common
objectives and strategies and criteria forobjectives and strategies and criteria for
assessment of activities.assessment of activities.
The Spectrum of Relationship in PPPThe Spectrum of Relationship in PPP
(Contd.)(Contd.)

12. Who are the PartnersWho are the Partners
Public Sector PartnersPublic Sector Partners
 National governmentNational government
 District administrationDistrict administration
 Municipal authoritiesMunicipal authorities
 Local government bodiesLocal government bodies
 Para-statal corporationsPara-statal corporations
 State universities and researchState universities and research
organizationsorganizations

13. Who are the Partners (Contd.)Who are the Partners (Contd.)
Private Sector PartnersPrivate Sector Partners
 Commercial for-profit enterprisesCommercial for-profit enterprises
 Development-focused voluntary non-Development-focused voluntary non-
governmental organizations (NGOs)governmental organizations (NGOs)
 Cooperative societiesCooperative societies
 Community-based organizationsCommunity-based organizations
 Religious organizationsReligious organizations
 Professional organizationsProfessional organizations
 Trade unionsTrade unions
 Research and academic institutionsResearch and academic institutions
 HouseholdsHouseholds

14. Judging Effective PartnershipJudging Effective Partnership
 The principles of “non-rivalry” and “non-exclusion” ofThe principles of “non-rivalry” and “non-exclusion” of
public goods logically point to the criteria of universalitypublic goods logically point to the criteria of universality
and equity in judging the value of partnershipand equity in judging the value of partnership
 Given the competing demands on scarce resources inGiven the competing demands on scarce resources in
developing countries, efficiency in terms of optimaldeveloping countries, efficiency in terms of optimal
benefits from a given cost must be an important criterionbenefits from a given cost must be an important criterion
 Accountability to various stakeholders regardingAccountability to various stakeholders regarding
objectives, process and outcome in basic social servicesobjectives, process and outcome in basic social services
also is a key considerationalso is a key consideration
 In other words,In other words,
• universalityuniversality
• equityequity
• efficiency andefficiency and
• accountabilityaccountability
of basic services are the four sets of criteria for judgingof basic services are the four sets of criteria for judging
the design and the results of partnershipthe design and the results of partnership

15. Criteria for Judging Effective PPP (Contd.)Criteria for Judging Effective PPP (Contd.)
 UniversalityUniversality
• refers to access for all who are eligible to a type of service; for example,refers to access for all who are eligible to a type of service; for example,
universal primary education for all children in the primary-school age groupuniversal primary education for all children in the primary-school age group
 EquityEquity
• is an elaboration of the universality criterion in terms of ensuring acceptableis an elaboration of the universality criterion in terms of ensuring acceptable
quality of service for all; sharing of costs equitably when a cost is necessaryquality of service for all; sharing of costs equitably when a cost is necessary
to be imposed; and special attention to groups disadvantaged due toto be imposed; and special attention to groups disadvantaged due to
historical, economic or cultural reasonshistorical, economic or cultural reasons
 EfficiencyEfficiency
• has two aspects. Internal efficiency in terms of operations and managementhas two aspects. Internal efficiency in terms of operations and management
of an activity to achieve maximum output for the least cost; and externalof an activity to achieve maximum output for the least cost; and external
efficiency in terms of achieving best results in terms of objectives of theefficiency in terms of achieving best results in terms of objectives of the
activity for the least costactivity for the least cost
 AccountabilityAccountability
• refers to holding the providers of services answerable to the beneficiariesrefers to holding the providers of services answerable to the beneficiaries
and other stakeholders regarding both process and outcome of a program.and other stakeholders regarding both process and outcome of a program.
Openness and transparency in management and a participatory approach inOpenness and transparency in management and a participatory approach in
planning, making key decisions, and evaluation are necessary conditions forplanning, making key decisions, and evaluation are necessary conditions for
accountabilityaccountability

16. Key Features or FindingsKey Features or Findings
ofof
Case Studies ofCase Studies of
Non-Government InvolvementNon-Government Involvement
in Bangladeshin Bangladesh

17. In the Health Sector of Bangladesh the following key features ofIn the Health Sector of Bangladesh the following key features of
the partnership identified:the partnership identified:
 In the total national effort to provide forIn the total national effort to provide for
health services, the government is a minorhealth services, the government is a minor
actor in terms of the total health expendituresactor in terms of the total health expenditures
and peoples’ utilization of services, contraryand peoples’ utilization of services, contrary
to general impressionsto general impressions
 It is evident that non-governmentalIt is evident that non-governmental
organizations active in health and familyorganizations active in health and family
planning have been engaged in:planning have been engaged in:
• a major collaborative relationship with the publica major collaborative relationship with the public
sector services; orsector services; or
• have run their own complementary programs.have run their own complementary programs.

18. Key features of partnership (Contd.)Key features of partnership (Contd.)
 In case of public sector health careIn case of public sector health care
and family planning services:and family planning services:
• their quality does not generally meet atheir quality does not generally meet a
minimum acceptable standard;minimum acceptable standard;
• they have widespread reputation ofthey have widespread reputation of
mismanagement, corruption,mismanagement, corruption,
inefficiency, and of being devoid of ainefficiency, and of being devoid of a
friendly service-provider attitudefriendly service-provider attitude
• the public facilities are utilizedthe public facilities are utilized
considerably below their expectedconsiderably below their expected
capacity.capacity.

19.  Preventive and basic curative carePreventive and basic curative care
provided by NGOs are generallyprovided by NGOs are generally
regarded as:regarded as:
• more effectivemore effective
• more client-friendly andmore client-friendly and
• utilized more frequently than publicutilized more frequently than public
facilitiesfacilities
 The private sector service providers inThe private sector service providers in
health account for three-quarters ofhealth account for three-quarters of
all health sector expendituresall health sector expenditures
Key features of partnership (Contd.)Key features of partnership (Contd.)

20.  There is no substitute for a strong public sectorThere is no substitute for a strong public sector
role in setting policies and priorities for therole in setting policies and priorities for the
nationnation
 Effective protection of public interest demandsEffective protection of public interest demands
that the large and important role of NGOs,that the large and important role of NGOs,
households and the other actors are recognizedhouseholds and the other actors are recognized
• that they are taken into account in maintaining anthat they are taken into account in maintaining an
overview of the sector by the government and inoverview of the sector by the government and in
guiding policies and priorities; andguiding policies and priorities; and
• that the policy and regulatory environment is createdthat the policy and regulatory environment is created
for all actors to play their collaborative,for all actors to play their collaborative,
complementary, parallel or competitive rolecomplementary, parallel or competitive role
Key features of partnership (Contd.)Key features of partnership (Contd.)

21. Public-Private Partnership and SAI BangladeshPublic-Private Partnership and SAI Bangladesh
 The audit mandate of the SAI Bangladesh with regardThe audit mandate of the SAI Bangladesh with regard
to audit of PPP is clear. All PPP, where theto audit of PPP is clear. All PPP, where the
government has a majority interest are within thegovernment has a majority interest are within the
purview of audit of SAI Bangladeshpurview of audit of SAI Bangladesh
 The formidable task in this audit is the minimization ofThe formidable task in this audit is the minimization of
risks, which is achieved through comprehensive auditrisks, which is achieved through comprehensive audit
planplan
 The SAI is very careful in assessing the capacities ofThe SAI is very careful in assessing the capacities of
the private sectors in delivering the “public goods”the private sectors in delivering the “public goods”
through partnershipthrough partnership
 A public-private partnership within the SAI itself inA public-private partnership within the SAI itself in
terms of cooperation with the professional accountingterms of cooperation with the professional accounting
bodies and hiring of private sector experts is alsobodies and hiring of private sector experts is also
being contemplated in this type of auditbeing contemplated in this type of audit