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PPP initiative

By Rodney Gonzales,2014-11-22 01:50
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PPP initiative

    PPP initiative PPP initiative

    ; THE PPP CONCEPT

    ; FORMS OF PPP

    ; GOVERNMENT STRATEGY

    ; ORGANISATIONS IN PLACE

THE PPP CONCEPT

    A Public-Private Partnership is a new way for Government to deliver services to the population. The objective is to achieve more and better services, at a lower cost for society.

    It can be defined as a contractual arrangement whereby a private party performs part of a Government organisation's service delivery or administrative functions, and assumes the associated risks. In return the private party receives a fee according to predefined performance criteria, which may be:

    1. Entirely from service tariffs or user charges

    2. Entirely from a Ministry's budget or other budget

    3. A combination of both

    The essential aspects of a PPP arrangement, as distinct from the direct delivery of a public service by a Ministry are:

    1. A focus on the services to be provided, not the assets to be employed

    2. A shift of the risks and responsibilities to a private provider for the

    activities associated with the provision of services

    PPP can have a number of benefits, which include:

    1. Operational gains: ensuring that one delivers better or more services

    for the same price (efficiency gains), or making savings to release

    money for investment elsewhere. Operational gains can be achieved by

    focusing on outputs rather than processes, by generating economies

    from integrated design, building, financing and operating phases.

    2. Strategic clarity: partnership contracts enhance accountability by

    clarifying responsibilities and focusing on the key deliverables of a

    service. The managerial efficiency of a Ministry can benefit significantly

    as existing financial, human and management resources can be

    refocused on strategic functions.

    FORMS OF PPP

    A PPP project can take 2 forms: a contract to supply services to the public sector or to sell services or assets from the public sector, or a Joint Venture. The various contractual forms are illustrated below:

    1. Service Contract: the Government bids out the right to deliver a specific

    service and sometimes provides the assets needed. Such contracts are

    of a shorter duration than concession contracts. E.g security services

    2. Management Contract: the assets of the institution continues to be

    public, but operational management becomes private. E.g management

    of hospital.

    3. Leasing: under this contract, the private sector finances and builds a

    new facility which is then leased to the public sector The public partner

    makes scheduled lease payments to the private sector and thus

    acquired equity in the facility. At the end of the lease period, the public

    agency owns the facility. Under the lease arrangement, either the

    public agency or the private operator may operate the facility during

    the term of the lease. E.g equipment

    4. BOT/BOO: the private sector contract builds a facility in accordance

    with a design prepared by the public sector. In the case of the BOT, the

    private sector finances the construction of the facility but the facility is

    owned by the public sector, while in the case of the BOO legal

    ownership rests with the contractor until the end of the contract term.

    E.g of a BOT project is the construction of roads.

    One end of the spectrum would be a mere outsourcing of some routine operations such as maintenance of building or provision of office accommodation. The other end would be large infrastructure projects like the Light Railway Transit System, which the private sector undertakes to finance, design, construct, maintain and operate, and takes a considerable proportion of the risk.

GOVERNMENT STRATEGY

    The government has designed a strategy to develop PPP in Mauritius, as follows:

    a. Design and implementation of a legal and policy framework. The

    objective is to design a policy and legal environment which will enable

    PPP projects. A joint public/private Task Force will make

    recommendations and benefits from the support of the PPP-Secretariat.

    One key output is the PPP-legislation, which will be enacted early 2003.

    b. Establishment of a list of PPP projects and identification of pilot

    projects. The Government will communicate to the public a list of

    projects that would fit into the PPP scheme. The PPP-Secretariat is

    currently working with several Ministries to identify potential PPP

    projects. A list of pilot projects will be prepared and, once approved by

    the Cabinet, will be communicated to the private sector. During the

    stage of project identification, it is important to ensure first that the

    concept of PPP is fully understood and the PPP-Secretariat is taking the

    opportunity of this exercise to clarify all concerns/questions about the

    concept.

    c. Capacity Building for the Public and Private Sector: A series of training

    and seminars will be held in Mauritius during the next months. At that

    stage of the initiative, the focus is on the development of PPP

    awareness and the web site as well as the newsletter are tools to

    ensure a broad diffusion of knowledge. The next stage is to organise

    training sessions on the application of the PPP concept to the

    preparation, procurement and contract monitoring.

    d. Promotion of PPP scheme and specific projects: This component's

    objective is to promote Mauritius as a destination for firms with

    expertise in PPP. The PPP-Secretariat is working closely with the Board

    of Investment (BOI) to design and implement a strategy for promotion.

ORGANISATIONS IN PLACE

    The PPP-Secretariat is composed of 4 full-time members of the Ministry of Economic Development, Financial Services and Corporate Affairs (MEDFSCA). The role of each member is described as follows:

    1. Head of the PPP-Secretariat: Mr. Vickram Cuttaree, Adviser on PPP

    2. Mrs. R. Boodhoo, Senior Economist (Policy)

    3. Mr. D. Koodeeram, Economist (Projects)

    4. Ms. S. Appadoo, Economist (Training & Promotion)

    The team benefits from the experience of Dr. K. Baguant of the University of Mauritius as well as Mr. K. Vencatachellum, Senior Economic Adviser to the Minister.

    A Task Force, chaired by the Director of the MEDFSCA has been set up jointly with the Private Sector and is already working on designing and implementing a favorable legal and policy environment to enable a fast development of PPP in Mauritius. The Task Force is supported by the PPP-Secretariat, which makes recommendations for discussion and approval. Membership of the Task Force is as follows:

    Public Sector Private Sector

    Ministry of Economic Development,

    Financial Services and Corporate Joint Economic Council

    Affairs

    Building and Civil Engineering Ministry of Finance Contractors Association

    Ministry of Public Utilities Institution of Engineers

    Ministry of Public Infrastructure Mauritius Bankers Association

    PricewaterhouseCoopers (local

    Board of Investment representative of member of the IFSL

    PPP Working Group)

    KPMG (local representative of member Business Parks of Mauritius of IFSL PPP working group)

    State Law Office

    A team of consultants will prepare the legislation, based on the recommendations of the Task Force and will complement the work done by the PPP-Secretariat. The consultants will also undertake a medium and long-term institutional review to design the best organisation(s) to ensure the success of PPP in Mauritius.

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