This document discusses principles of good governance for public-private partnerships (PPPs) and provides examples of successful PPPs. It summarizes the success of the Manila Water concession in the Philippines, which improved water access from 26% to 99% of the population over 25 years. It then outlines 7 principles for effective PPPs: having a coherent policy; building government capacity; establishing a legal framework that is simple and clear; cooperatively sharing risks between public and private partners; ensuring transparency in partner selection; prioritizing social outcomes; and achieving environmental goals through incentives rather than penalties. The document argues that these principles are important for PPPs to simultaneously generate profits while achieving social and environmental objectives.

1. The PPP Good Governance
Challenge
Tony BonniciTony Bonnici
Economic Affairs OfficerEconomic Affairs Officer
Chisinau, MoldovaChisinau, Moldova
10 October 201210 October 2012

2. Overview
 Success story: Manila Water Concession
 7 Principles of Good Governance on PPPs
 National Kidney and Transplant Institute: Haemodialysis
Center Project (Philippines)

3. Examples of success:
Manila Water Concession
Background:
−One of the oldest and the least efficient water systems among
major Asian cities
−MWSS was heavily indebted, overstaffed and inefficient
−Three-quarters of the homes in the eastern half of Manila
lacked 24-hour service and only 8% had sewerage connection
−Two-thirds of the water produced was being lost to leaks, poor
metering, and illegal connections

4. Outcome…
In August 1997, the Manila Water Company took over the operation of
the government-owned Metropolitan Waterworks and Sewerage
System under a 25-year concession agreement.
−In 1997, water was available to 3.1 million people or only 26% of the
population in the East Zone. Today, water is provided 24/7 to 99% of
the population in its service area, mostly in low income communities
−36 sewage treatment plants with a combined capacity of 135 million
liters of wastewater per day
−200 kilometers of sewer pipelines have been laid

5. Video case study: Manila Water
Company PPP

6. PPP success factors:
Principles of Good Governance
in 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. Misconceptions…
PPP pilots
will start
the
process…
No!
You need a policy
framework with direction,
responsibilities and goals.
PRINCIPLE 1. POLICY

8. • A PPP Policy is needed to fix a “roadmap”
• Strong social objectives, e.g. increasing accessibility for
disadvantaged
• Core values and principles (fairness, continuation of services,
improved quality)
• Consultation within Government
• Consult investor community
• Identify the right projects to get started
Principle 1. PPP Policy

9. Misconceptions…
PPPs focus
on ring
fencing the
project…
No!
You need to build the skills
within the government and set
up the right institutions.
PRINCIPLE 2. CAPACITY
BUILDING

10. Principle 2. Capacity-Buidling
INTERNALLY
Train personnel for the required skills for PPPs
Establish PPP Unit
Offer National PPP training programmes, guidelines
EXTERNALLY
At same time use qualified independent advisors to
help on projects

11. Misconceptions…
PPPs …
prescriptive
rules and tight
control…
No!
Overall framework
should be simpler,
fewer and better.
PRINCIPLE 3. LEGAL

12. Principle 3. Legal:
Fewer, better and simpler
• Fewer laws - removal of constraints
• Better laws - knowable, secure and
predictable
• Simpler laws - bundling projects,
‘competitive dialogue’

13. Misconceptions…
PPPs provide
assets to
governments
at no risk and
no cost
No!
Governments must
assume some risk and
offer some subsidy.
PRINCIPLE 4. RISK
SHARING

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. Misconceptions…
PPPs …no
tender
required…
No!
Competition allows for the
best partner and the best
project.
PRINCIPLE 5.
PROCUREMENT

16. Principle 5. Procurement
• Open and transparent
• Opportunities should be made public
• Non-discrimination
• Zero tolerance to corruption
• Choosing the right partners

17. Misconceptions…
Keep people
out: they do
not understand
the technical
matters…
No!
People have to be put first.
PRINCIPLE 6. PUTTING
PEOPLE FIRST

18. Principle 6. Putting People
First
• Define the public interest
• Consult with people
• Inform: disclose information in contracts
• Oversee by objective third party
• Involve independent auditors

19. Misconceptions…
…you have to
choose between
profit and social
and environment
development…
No!
Project can make profit and
achieve social and
environmental goals.
PRINCIPLE 7. ENVIRONMENT

20. Principle 7. Environment
• The ‘Green case’ works for PPPs
• Provide incentives to the private sector to
adopt green criteria
• Avoid politically correct ‘add ons’ that mean
nothing

21. Video case study: National Kidney and Transplant
Institute: Haemodialysis Center Project (Philippines)

22. Thank you for your attention!
Tony BonnicTony Bonnic
UNECEUNECE
Tony.Bonnici@unece.orgTony.Bonnici@unece.org