INFRASTRUCTURE SUMMIT: Significance of PPP in development

KATHMANDU:

What is PPP?

Public private partnership (PPP) is the mechanism of involving the private sector in developing and managing infrastructure (facilities) and services that are to be developed and delivered by the government.

Therefore, PPP is an arrangement of combining the interest of public and private sector for mutual benefit in the form of business. Hence, effective implementation of PPP requires changes in the traditional mindset. Countries across the world are defining PPP through their respective Acts or policies.

The government of Nepal enacted the PPP Act in 2006 as Private Financing in Build and Operation of Infrastructures to make necessary provisions on making services and facilities available to the general public in a reliable, cost-effective and easily available manner by getting the private sector involved through the build, operate and transfer (BOT) policy, in line with the liberal economic policy pursued by the country.

The government has defined PPP in its White Paper on PPP (March 2011) as a contractual agreement between a public entity and private entity for delivery of infrastructure or services in the public interest.

PPP experience

The involvement of the private sector in infrastructure development in Nepal traces back to 1992, when Electricity Act 2042 and Water Resource Act 2042 were enacted.

Similarly, BOT policy for road sector was prepared in 1998 and Private Financing in Build and Operation of Infrastructures Act 2063 was enacted in 2006.

In this backdrop, it is not appropriate to say that PPP in new to Nepal. However, we have to admit that except in hydropower, the country has not been able to yield considerable results from PPP implementation. We are failing to learn from experience — neither from our own continuous failure in PPP implementation, nor from the success of others.

The unlearning and myopic mindset of both the public and private sector participants are hindering effective implementation of PPP modalities in the country.

Despite its long history (more than 50 years), the only central planning authority — National Planning Commission (NPC) — has not yet been able to demonstrate that it has learned from the past experiences.

Similarly, the bureaucracy of the country has also not been successful in exhibiting their guiding and professional role in effective implementation of laws and policies for the benefit of the country, including implementation of PPP.

However, despite various difficulties, constraints and controversies there are some large projects operating under PPP modalities.

Also to be noted, there have been certain initiatives at the local level, such as vegetable markets, public toilets, bus parks and fish ponds. However, they need substantial upgrading in their overall service standards. Now, at this stage, the prerequisite is to identify the constraints and challenges from our own experiences and learn from the success of others, especially neighbouring countries.

Major barriers

Identification and screening of candid PPP projects and successful implementation of such projects are critically important. Now the time has come to revise the existing Act.

The Private Financing in Build and Operation of Infrastructures Act, 2006, for example, has provisions regarding formation of committees to institutionalise the PPP process. For example, there is a provision of Project Coordination Committee for coordination, implementation as well as to suggest the government for identification and prioritisation of the projects, which shall be formed under vice-chairperson of NPC.

Similarly, there is a provision of Technical Committee under the chairmanship of the secretary of the concerned ministry to give suggestions to the government regarding project implementation and provision for Infrastructure Service Fees Review Board.

Despite these provisions, the committees do not exist.

Lack of dedicated and well-equipped functional institutional mechanism with motivated and skilled staff to look after the overall PPP issues is one of the major barriers. Besides these, there is lack of clear understanding of the concept, approach, and procedures of the PPP in public system.

Changing the behaviour and attitude of high-level government officials is necessary to overcome all these constraints. Private sector driven by immediate self-benefit (lacking corporate culture) and the politicians’ lack of vision and self-interest are contributing to further complicating the matters.

Conclusion

For Nepal to enhance its status from least developed to a developing nation, large investment in infrastructure is a must.

Moreover, to uplift the social sector, including creating employment opportunities, infrastructure plays an important role.

Generation of more electricity in a shorter period requires considerable investment. Construction of roads and bridges, airports, hotels and recreation centres, management of drinking water supply and solid waste, all demand high investment. For mobilisation of large investment, we must be able to attract foreign investment and PPP is the only alternative for this.

Hence, we need to forcefully destroy and demolish the barriers, including the attitudinal barriers.

In such an environment, the role of the media becomes critically important in informing the people. Media also has the responsibility of developing positive outlook of the people and in enhancing the moral value of the person and the society as a whole.

(The author is chairperson of Advanced Research and Training

Institute (ARTIst) and procurement/contract management specialist)

Source: THT