A Public Private Partnerships symposium took place on 20 and 21 May 2008 in Rabat, Morocco within the framework of the Good Governance for Development (GfD) in Arab Countries Initiative.
The PPP symposium’s objective was to provide a forum to:
Outcomes/Content of discussions and policy dialogue
Fiscal deficits and public debt burdens led since the mid 1990’s in OECD and Arab countries to a redefinition of the roles of the public and private sector in delivering services. The private sector increasingly finances large infrastructure projects and delivers services that have traditionally been provided by the public sector.
The selection of PPPs over other procurement methods raises economic, financial, legal and organisational questions that countries have to deal with. Solutions may differ significantly from country to country. At the Public Private Partnership symposium, delegates from OECD and Arab countries discussed the use of PPPs taking into account the concerns of economic affordability, financial risk sharing, competition, and transparency. Participants also addressed the importance of appropriate regulatory and oversight mechanisms and institutional capacity to initiate and manage PPPs. Moreover, participants raised ethical issues related to PPPs, in particular integrity in procurement and the threat of conflict of interest.
In the first session, Mr. Philippe Burger, Professor, Department of Economics, University of the Free State in South Africa, defined the nature and purpose of PPPs and provided an overview on some key issues at stake when using PPPs, notably the questions of affordability, value for money and risk share. When the government must decide between traditional modes of public service delivery and a private-public partnership, affordability, an increased value for money and the allocation of risks are the benchmarks that will determine whether a PPP is the viable solution. PPPs attempt to enhance the value for money of governmental service delivery, but financing projects off the regular budget sheet doesn’t imply automatically that the project becomes more affordable and service delivery cheaper. PPP projects are only affordable when they are implemented in line with the government’s long-term budget constraints. When making use of PPPs, governments thus have to carefully evaluate potential endogenous and exogenous risks and agree with the private contractor on risk sharing and bearing. Adequate risk management does not imply that a maximum of risks are transferred to the private partner, but to analyse for each risk whether the public or private body are best placed to effectively carry and handle it.
Delegates from Arab and OECD countries discussed in session 2 methods for undertaking ex ante comparisons to find out whether traditional procurement or the use of a PPP will deliver a better value for money. Countries exchanged on the different methods used in their countries to assess value for money prior or after the bidding process.
In sessions 3 and 4, participants reported on their experiences with implementing PPPs. The United Kingdom has a long experience in implementing PPPs that can serve as a model. At the meeting, two PPP projects have been analysed in depth: the Elisabeth II bridge (1987) and the Skynet contract (2003). The presentation described planning and execution phases as well as evaluation methods and legal frameworks that can be used as benchmark by other countries. In France, the intensive use of PPPs is recent, even though the country has a long experience with related procurement techniques such as concessions. For the implementation of PPPs, the French government uses since 2004 partnership contracts that are long term agreements between a public entity and a private partner. The latter delivers the service in such a manner that the objectives of the collectivity and those of the private partner are aligned. However, a new law is currently being discussed.
In session 5, delegates exchanged on methods and institutions to regulate the use of PPPs in the MENA region. Governments have to review existing legislations and regulations to ensure the effectiveness of PPPs and protect the interests of public and private stakeholders. Regulations have to ensure that partners are accountable without over-regulating the use of PPPs what would destroy incentives and opportunities. Egypt considers PPPs as a key lever for increased private sector involvement in public services and therefore seeks to create a favourable environment for PPP implementation, notably by enhancing the legal framework for PPPs through a new PPP law. Likewise, the Government of Morocco currently deals with the implementation of a new legislative framework for PPPs. Morocco has recently modified public procurement rules by the decree of February 5th, 2007 and implemented law 54-05 of February 14th, 2006 that proposes a legal device allowing either public entities or local authorities to conclude partnerships for the performance of a public service.
In the last session, participants from Arab and OECD countries exchanged their experiences on the viability of their respective PPP strategies and visions. Delegates reported whether key expectations in terms of value for money to governments and citizens have been met. In this context, participants analysed to what extent progress has been achieved in identifying conditions for PPPs in order to fulfill these expectations. Furthermore, the discussion addressed persisting challenges, potential perils and new constraints in the use of PPPs. Participants raised questions on prospective PPP use and tried to forecast how fast the use of PPPs will expand in the Arab region and in which new sectors, apart from infrastructures. In this context, they considered also possible reasons for a trend break.
Session 1: PPPs - Overview of issues
Session 2: Methods for comparing PPPs and other procurement approaches
Session 3: The UK evolution in using PPPs since 1991: Regulation and central assistance, sectors, and remaining challenges
Session 4: Implementing PPPs
Session 5: Regulating PPPs in the MENA region: Methods and institutions
Session 6: The future of PPP use