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Session 5: Making a choice: partners and options
1. Identifying partners2. Role of different partners in providing public
services3. Partnership processes 4. Selecting PPP options
PPPUE/Capacity 2015 Public-Private Partnership training
1. Identifying partners
Private – local and international, small
and largeFor profit: owners, operators, financiers
Not for profit: community development, NGOs,
unions
Individual: consumers, users, neighbors,
workers, voters
Identifying partners Public – all levels, but working up from those
with the least capacityLocal: municipal utilities, mayors' officesState/Provincial: regional utilities, economic
development and environmental agenciesNational: national/capital city utilities, finance,
economic development and environmental agenciesMultilateral: sources of finance (loans, grants,
guarantees)
Sectors Core Assets and Weaknesses
Government Business Civil Society
Assets Laws/regulation Enforcement Taxation
revenues Policy knowledge Longevity Reputation
Capital/financial assets
Production sys. Sector knowledge Innovation Reputation
Inspirational/ member assets
Community bonds
Community knowledge
Reputation
Weaknesses Limited finances Inflexible rules Slow decisions Complexity of
systems Desire to control
Pull to monopoly Disregard for
externalities Short-term focus Inequality of
outcomes Transactional
focus
Narrow focus Amateurism Scarce materials Fragmentation Ideological
parochialism
Adapted from Plummer and Waddell 2002
How to identify partners?
1. Carry out a stakeholder analysis Drawing up stakeholder table, identifying
stakeholders their interests likely impact setting priorities
Assessing the likely impact Identifying assumptions and risks about
stakeholders
How to identify partners?
2. Identifying possible roles in PPPs Enablers: setting the frameworks for
service provision Providers: supplying the services Users: paying fees to obtain the services Overseers: monitoring and ensuring
service quality and price
3. Define relationships and gaps
Possible Roles in PPPsEnabler Provider User Overseer
Public
Municipal
Regional
National
Multilateral
Donor
Private for profit
Local
Int'l
Private not for profit
CBO
Local NGO
Int'l NGO
Individuals
3. Each party brings its own processes Public sector
RegulationPublic procurement
Private SectorDue-diligence
CommunityParticipation in decision-making
4. Selecting a PPP option
MisconceptionsOften this stage is considered as the most
important stepOften refer to the main pubic ad private
sectors interactions form as the PPPs
FullyPublicSectorBuilding
Awareness
FullyPrivateSector
For-profitNon-profitBuilding
Awareness
PassivePrivate
InvestmentGov’t bonds
ServiceContractsOperateMaintainLease
Build,Operate
and InvestBOT
Concession
AgreeingFrameworksRegulatoryDialogue
Covenants
AgreeingFrameworks
Local Agenda 21CommunityVisioning
TraditionalPublic
ContractingDesignBuild
JointVentures
Co-ownershipCo-responsibility
Passive PublicInvestmentEquity, DebtGuarantees
Grants
Broadest Definition of “Public-Private Partnerships”
Public PrivateInvestment Responsibility
Provider Enabler & Regulator
Government Role
Spectrum of possible relationships between public and private service providers
Bradford S. GentryYale/UNDP Programme on Public-Private Partnerships
Often used PPP options
OptionAsset
ownership
Operations &
maintenanc
Capital investment
Commercial risk
Scope of contract
Duration, years
Service contract
PublicPublic and
privatePublic Public
Meter reading, bill collection,
leak repairs
1–2
Management contract
Public Private Public Public Full system 3–5
Lease Public Private Public Shared Full system 8–15
ConcessionPublic/ Private
Private Private Private Full system 25–30
Divestiture Private Private Private Private Full system Indefinite
20–30
Build-operate-transfer (BOT)
Bulk supply, wastewater treatment
plants
Private Private Private Private
Objectives met by different forms of PPPs
Government objective
Service contract
Manage-ment
contract Leasing
BOT/ ROT
Conces-sions
Dives-titure
Improve efficiency √ √ √ √√√ √√√ √√√
Transferring investment risks
X X X √√√ √√√ √√√
Improving quality of service
√ √ √√√ √√√ √√√ √√√
Maintaining conttrol over the serice provision
√√√ √√√ √ X √ X
Key: √√√ to a large extent; √ to a small extent; X not usually. PPIAF/WB Toolkit
Prerequisites of successful PPP (WB’97)
Stakeholder support & political
commitment
Cost-recovering tariffs
Good information about the system
Developed regulatory framework
Good country financial
rating
Service Contract
Unimportant Not necessary in the short term
Possible to proceed with only limited
information
Minimal monitoring capacity needed
Not necessary
Managment contract
Low to moderate
levels needed
Preferred but not necessary in the
short term
Possible to proceed with only limited
information
Minimal monitoring capacity needed
Not necessary
Lease Moderate to high levels
needed
Necessary Good system information required
Strong capacity for regulation and co-ordination needed
Not necessary
BOT Moderate to high levels
needed
Preferred Good system information required
Strong capacity for regulation and co-ordination needed
Higher rating will reduce
costsConcession High levels
neededNecessary Good system
information requiredStrong regulatory capacity needed
Higher rating will reduce
costsDivestiture High levels
neededNecessary Good system
information requiredStrong regulatory capacity needed
Higher rating will reduce
costs