PPP: Clearing the decks for successful implementation

PPP projects are of two types. The projects which are identified and listed by the government under 'Private Infrastructure Project List' for development under PPP are called 'Solicited Projects'. These projects are approved by the CCEA (Cabinet Committee on Economic Affairs) and earmarked for private investments. The line ministry/implementing agency invites private investors to submit Request for Qualification (RFQ) and Request for Proposal (RFP) to build and operate the 'Solicited Projects'.

However, a private sponsor may also design a project which is not under the government's consideration for PPP but the private sponsor submits the PPP proposal on its own. This is called 'Unsolicited Proposal' where the private sponsor submits the PPP proposals along with a pre-feasibility or, detailed feasibility studies to the line ministry/implementing agency/ PPP Office.  Initially, the government encouraged solicited proposals only but very recently it has decided to welcome Unsolicited Proposals also. However, there is still a hesitation in the public administration regarding 'Unsolicited Proposals'.

In order to have a real progress in PPP, the GoB has issued a 'Guideline for Public-Private Partnership Technical Assistance Financing (PPPTAF), 2012' accompanied by a 'Scheme for Public-Private Partnership Technical Assistance Financing (PPTAF), 2012' for providing technical assistance and expert services for developing PPP projects under the purview of the Policy and Strategy for Public-Private Partnership (PPP) Projects, 2010. The PPP Office has been given the responsibility to manage and administer the fund as per the approved guidelines. The PPPTAF may be granted only to those projects that are in principle approved by the competent authority. Initially, a fund of 1 billion taka has been declared to be created through the government grant for the purpose of the PPPTAF which is revolving in nature. On successful completion of the process, the PPPTAF is to be fully or, partially recovered from the successful tenderer as agreed. If there would be any further need, it can be supplemented through the budget support. There is also a provision of getting the PPPTAF from the development partners when possible.

Based on the importance of public welfare, the GoB may disburse Viability Gap Financing (VGF) in a few PPP projects where financial viability is not ensured but the economic and social viability is high. The VGF may be allowed in the form of capital grant or annuity payment or in both forms. Apart from this, Infrastructure Financing Facilities (IFF) for PPP projects may also be arranged in the form of equity or debt through specialised financial institutions such as the Bangladesh Infrastructure Finance Fund (BIFF) and the Infrastructure Development Company Limited (IDCOL). The GoB may also participate in such financing arrangements through necessary budget provision.

The attractiveness of a PPP project to private investors depends to a large extent on the way the government addresses fundamental legal issues, such as enforcement of contracts, private ownership, security arrangements, taxes, profit sharing etc. Completing PPP project within a reasonable time is also very much essential and as such, at an early stage of negotiation, the government machinery together with the private party should agree on a time schedule and then take all reasonable steps to make it. Besides, linked components of PPP project should also be provided timely avoiding lengthy bureaucratic procedure. Necessary steps shall be taken to ensure transparency and public accountability for the sake of public interest but over-tightening attitude should be avoided so that things are not made complex and delayed in the name of transparency. In addition, there must also be a mechanism to monitor the progress of PPP by the Prime Minister's Office.

PPP is a partnership business venture and the main consideration in any business is to get expected return on investment at the end of the day. So, the private investors should be given a chance to do a fair business and earn reasonable profit from PPP projects because there is no better incentive than to give investors a good return on their investments.  The officers of the executive agency of PPP projects should have adequate knowledge and negotiation skill to make the PPP a win-win relationship between the government and the private investors. For this purpose, persons engaged in PPP projects should be given proper training to improve their technical, commercial, legal and negotiation skills so that they are able to put their collective and best efforts to attract private sponsors in PPP projects in one hand and protect public interest on the other.

There is no perfect or universal model for a supportive legal and regulatory framework for PPP projects. The main consideration is the government's strong political will and firm commitment for providing necessary support and co-operation for implementing PPP projects. The government's commitment for PPP should be clear and unequivocal. Private sponsors are to be convinced that the total government machinery is firmly committed to PPP. The government officials should also be convinced that PPP is for public interest and as such, they have to have a professional and proactive attitude. In reality, PPP (Public Private Partnership) needs PPP (Professional Proactive Persons). But our bureaucrats are not well trained to handle PPP projects; rather a segment of them is bloated, corrupt and dysfunctional. As such, the concerned officials of public administration need to be motivated to change their mindset and attitude for the purpose of PPP.

PPP is a welcome step in Bangladesh. The government high-ups should realise and admit that the private investors have the ability to innovate and design new credible projects for PPP under 'Unsolicited Proposal'. So, it is time to give due importance on 'Unsolicited Proposals' avoiding negative thinking and hesitation.

Many countries around the world have introduced Product Development Partnership (PDP) that focusses on pharmaceutical product development, particularly in the areas of preventive medicine and vaccines. Bangladesh also has to do the same. There are ample scopes to have PPP projects in Bangladesh in tourism because Bangladesh is a land of natural beauty and it has a rich cultural heritage and glorious history. Higher education under private sector at university level has already got momentum in Bangladesh. The private sector has come forward strongly to offer school and university level education. But in order to improve the quality of education, and maintaining the desired level of standards, the government should come forward to build higher education facilities under PPP projects.

The policy makers in Bangladesh are trying to resolve the bottlenecks one by one; but they should keep it in mind that political and economic uncertainties create additional obstacles to private investments and discourage private sponsors to participate in PPPs. So, it is time for the GoB to bring the opposition into confidence for gaining public acceptance of the PPP projects. The situation demands a truly inspired drive on the part of the total government machinery and for this purpose; the concerned public offices and the private sector players should work together in implementation of PPP projects as a team, as one.

The writer is Vice President of the Institute of Cost and Management Accountants of Bangladesh (ICMAB).  [email protected]