Public Private Partnerships (PPP)

Kalat Al-Bulooshi

CEO

Oman Investment Corporation SAOC

PPP Definition

"a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance“ “world bank definition”

Public

Policy Leadership

• Setting national policy agenda

• Setting policy agenda for the sector

Enabler

• Creating investor friendly environment

• Facilitating the operations of PPP

Provider of Public Welfare

• Regulating and Monitoring to ensure that

public is benefitting from the partnership

Contributor to PPP

• Providing resources

• Sharing risk

• Educator / learner

Private

Contributor to Society

• As a partner deliver public services and goods

Contributor to PPP

• Providing resources

• Sharing risk

• Innovations and new solutions

• New organisation culture

• Educator / learner

Management and Accountability

• Efficient use of resources

• Citizen / customer satisfaction

Public and Private: Both achieve their goals

PPPs: What is the Rationale

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InfraDeals 2015 Trend Report

2014-15

317 PPP deals worth USD142bn

Benefits of PPPs

More Funds: Bridges large funding gaps in physical and social infrastructure

Improving Project Management Skills: Enhances project planning and implementation skills

Lowering Cost: Leads to cost savings over the life of the agreement

Reduces Time Overruns: Time bound agreements and government monitoring improves project implementation

Improves Doing Business Environment: Government adopts new institutional and legal frameworks

Creates Investor Friendly Environment: Government adopts new regulations and reforms financial markets

Competitiveness: Government can select competing bidders as partners for various projects

Partnership Advantage: The capabilities of Government and Private organisations come together to provide

efficient services to society

Diversification of Economy: Government can use funds to take up challenging projects

Private Sector Growth: More investment; more jobs; more tax contributions; regional development

Why PPPs for Oman

▪ Enhancing cooperation between public and private sector

▪ Economic diversification

▪ Using private sector funds and capitals to achieve government plans

▪ Job creation

▪ Country developments and implementation of plans

Typical characteristics of a PPP

▪ Long term contracts

▪ Private sector assumes delivery risk

▪ Optimum risk allocation

▪ Payments are output based

• Better service and cost outcomes

• Improved budget certainty

Oman Government financial outlay under traditional procurement vs a PPP

Comparative Performance of PPPs II

9

Sources:

(1) UK National Audit Report on PPPs

(2) Allen Consulting group, Univ. of Melbourne, 200-07.

Typical PPP contract structure

Risk allocation holds the key to PPP procurement

Risk transfer under procurement methods

PPP project development lifecycle

Progress to date in Oman

▪ The Government of Oman has a strategic intent to adopt Public-Private Partnerships (“PPP”) as a model to involve the private sector to boost economic growth.

▪ There have been several references to the potential of the PPP policy, in various speeches by Ministries and high ranking Government officials.

▪ The 9th Five Year Plan (2016-2020) reflects the Government’s commitment to adopting a stronger and closer collaboration with the private sector.

▪ A Public-Private Partnership Taskforce (“Sharakah”) for PPP was established in 2013

▪ PPP was a key initiative under the “tanfeedh” program

List of projects – Initial assessment

PPP able projects

Many precedents

Potentially PPP able projects

Commercial structuring is a key enabler

Challenging PPP projects

Few / no precedents

Power & water

Roads/Highways

Bridges/tunnels

Ports/Airports

Healthcare

Education

Street lightening

Sewage/wastewater treatment

Solid waste management

District Cooling

Universities

Museums/Leisure theme parks

Social housing

Industrial zones

Logistics/warehouse zones

Rail

Economic cities

Medical cities

Fishing/fruits/vegetables markets

National parks

Water network

Reurbanisation housing

Food security

Fisheries

Oilfield services

Limestone factories

Cement factories

Petrochemical services

Urbanization/real estate

Rail rolling stock factories

Hotel and resorts

Banking

Tourism services

Fundamentals for A Successful PPP

Political Support: For Oman PPP framework

Why is the legal and regulatory framework vital to a successful PPP framework?

Do We Have A Successful Track Record in PPP

The Privatisation of the Power and Water Generation in Oman Power and

Water Procurement Company SAOC have been VERY SUCCESSFUL and

have been role model for others.

Key Success Factors for Privatised Power and Water Sector are;

• Right Policy and Regulations (Power Sector Law issued by RD)

• Independent Regulator (AER)

• Open, Transparent and Competitive Award Process

• Right Risk Allocation

• Competent and skilled procurement body (OPWP)

Thank you