The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.
-Jesus, Matthew 7:25-27
The creation of a PPP program requires a well-designed institutional framework, with clear and strong political support. A robust institutional framework organizes, coordinates and focuses the resources of the Government in the manner best suited to encourage and enable PPP. This section will review the institutional framework needed to promote PPP by describing the responsibilities to be allocated to different Government entities, the project development process, the different approvals required at key decision points during the project, and how the Government supports PPP transaction preparation, procurement and implementation.
| Key Messages for Policy Makers |
| • Make sure the different roles are allocated and that the system works, ideological purity is less important. • Institutions are only as good as the people in them, and the funding/mandate they are given. Real capacity building (not just the occasional training or trip abroad) is key to a sustainable programme. • Strong, consistent leadership is key-coordination amongst different institutions and ensuring consistency of practices and focus of efforts generally requires clear direction from the highest levels of Government. • A robust value for money assessment and transparent, competitive procurement can protect the Government and the project from ex-post criticism, and can make the project less vulnerable to change, external shocks and the temptation of future Governments to reverse decisions. |
Creating a PPP program requires the mobilization of significant expertise and effort from dedicated teams, with the resources and political clout to perform their functions. Strong "PPP institutions" can help, as discussed above.
A quick comparison of the PPP programs in India, South Africa, Korea, the Philippines and the UK14 shows a few common themes emerging:
• India, South Africa, Korea and the UK have multi-stage approvals for their PPP projects and all relate to the commitment of public funds or contingent support; all four countries have the MoF leading on approvals based on economic viability (as a project) plus value for money and risk assessment as a PPP
• India, South Africa, Korea, the Philippines and the UK have public finance support mechanisms, such as capital grants to PPPs
• None of the countries' PPP Units are able to effectively select PPP projects and all are dependent on contracting agencies for project identification
• None of them take the risk and responsibility of acting as the procuring authority
• All are publically owned and funded.
The Egyptian PPP Unit provides an interesting contrast, based in the ministry of finance, publicly owned and funded and without the power to select projects, like the others. But unlike most national PPP units, the Egyptian PPP unit takes on the role of procuring entity, driving the process, much like some of the subnational PPP units e.g. British Colombia, Canada or Saint Petersburg, Russia.
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14 Dachs, International Benchmark Comparator Report February 2013.