PPP Training Program 1 4 PPP Framework Requirements

PPP Training Program 1. 4: PPP Framework Requirements & Examples

Session Overview 1. Plenary Session: Group Exercise Introduction & Background Information 2. Working Groups: Discuss & Analyze Case & Develop Answers to Assigned Questions 3. Plenary Session: Groups Report Back, Share & Discuss their Answers 2

Group Exercise: Background Information • • Azanialand is a developing country in Sub-Saharan Africa. Population: 20 million (Growth rate: 3%/Yr. ) GDP Per Capita/Year: USD $1, 500/Year Economy was growing at 2. 5% during past 10 years, but the New Government’s economic reform program aims to increase it to 4 – 6% • The New Government’s new National Development Plan (NDP) showed that it requires a total of $15 billion of new investments in infrastructure (across all sectors) during the next 5 years, in order to meet all approved investment projects in the NDP • The Ministry of Finance noted that the Government’s own capital budget could fund just $10 billion of this, and therefore some 33% ($5 billion) in financing would need to come from the private sector. 3

Group Exercise: Background Information • The new government announced it was adopting a new long -term strategy of pursuing Public-Private Partnerships in infrastructure and public services, when appropriate, in order to: • Expand the quantity and improve the quality Azanialand’s infrastructure • Reduce the financial burden of the State of financing longterm infrastructure • Promote economic growth and new employment opportunities, especially for low-income citizens • Support the decentralization of responsibility for public services to regional and local governments • Improve the competitiveness of the economy, the business and investment climate, and reduce the public sector’s domination and monopoly over key infrastructure sectors 4

Group Exercise Assignments: • The Government has asked you, as a member of an up-and-coming group of international PPP specialists, to advise it on how to translate these ambitious new PPP policy principles into a practical, effective and sustainable PPP institutional strategy. • Based upon your knowledge of the PPP institutional frameworks and lessons learned in countries like Mainland Tanzania & Zanzibar, South Africa, Kenya, India and elsewhere please provide responses to the following questions (justify your answers): 5

Question #1 • PPP Law: A recent review of Azanialand’s infrastructure-related laws by a team of local and international lawyers has revealed that there are no explicit legal prohibitions against PPPs. However there are stakeholders such as labour union leaders and appointed managers of Govt from the previous regime infrastructure corporations who have voiced opposition to any new PPPs. • Should Azanialand try to draft and pass a new PPP Law or not? Explain • If so, what do you recommend are the 2 -3 main provisions to include in such a law. 6

Questions #2 & #3 • PPP Institutions: Where should PPP institutional capacity be sited? Should there be one central PPP Unit? Should there be multiple PPP institutions, such as within each sector or line ministry/infrastructure agency? • • Authority: • What official, legal powers and functions should the PPP institution(s) be provided with? • Should these authorities focus on PPP project preparation and promotion? – PPP screening and review? Or both? 7

Question #4 • PPP Projects & Capacity: None of the infrastructure line ministries or public authorities in Azanialand have previous practical experience with managing PPP projects. Moreover, most claim they have no funds to analyze and prepare any new candidate PPP projects. • Several ministries/authorities want to accept unsolicited proposals & sign Memoranda of Understanding (Mo. Us) with private investors to get these investors to undertake and fund all of the project preparations (PPP feasibility studies, the draft PPP contract, etc. ). • Do you advise that line ministries adopt this strategy? If not, what alternative strategies to propose to deal with these challenges? 8

Question #5: • PPP Standard Procedures, Models & Guidelines: What (if any) models, standardized documents or Guidelines should be developed for Azanialand’s PPP strategy? For example, for: • PPP Project Analysis & preparation, • PPP Tendering & Procurement • PPP Contract Management and Performance Monitoring? 9

Question #6: • Making it all work in Practice: If you were allowed to have a 10 minute meeting with the highest -level leaders in Azanialand (the President, the Cabinet, the Minister of Finance, each of the Ministers of the infrastructure sectors; the leading private contractors, investors, and banks; leaders of the Labour Unions; as well as leaders of the main consumer associations) and they were to ask you, • “What is single most important thing that we should do to really make this whole How would you respond? 10