The infrastructure shortage in developing countries is a major obstacle to improved living standards, enterprise development, and the goals of the United Nations Millennium Declaration. This is especially the case in the Middle East and North Africa (MENA), where infrastructure demand had long been rising due to population growth, rapid urbanisation, and economic expansion, and was further amplified as historic MENA-region transitions pressured governments to increase living standards and improve the business environment. In many countries, the high levels of investment required for infrastructure cannot be financed by the public purse alone, and private investment is therefore an option that governments cannot afford to ignore. Private investment goes beyond mere additional capital to mobilise private sector technological expertise and managerial skills in the public interest.
Still, a number of failed public-private partnerships in the infrastructure sector attest to the challenges facing policy makers. Infrastructure investment involves contracts that are by nature complex and of long duration, and that must ensure financial sustainability while meeting user needs and social objectives. The challenges are more acute when foreign investors are involved, as is often the case where the infrastructure project exceeds a certain size. In addition, private infrastructure investment has become increasingly scarce, due to the global economic crisis, commercial bank deleveraging, perceived increased political risk in some countries, and tightened bank prudential regulations.
This handbook aims to identify barriers to the successful tendering and completion of Public-Private Partnership (PPP) infrastructure projects in the MENA region, particularly in Egypt, Jordan, Morocco and Tunisia. It is intended to assist government officials, civil service staff and policy makers by providing knowledge and direction to move projects from a conceptual stage to tender and investment (by the private sector or international financial institutions). PPP projects cover a wide range of models of private participation from limited management contracts to full public divestiture. For the purposes of this Handbook, a broad definition of PPP will be adopted that that considers any long-term contractual relationship between a state or state-owned entity (SOE) and a private-sector entity whereby the latter delivers and finances public services using a capital asset, sharing the associated risks, to be a PPP (OECD, 2012, Recommendations of the Council on Principles for Public Governance of Public-Private Partnerships).
There are limits to the usefulness of any handbook in a field as complex as PPP project development, where the scope of projects and the range of sectors vary tremendously. It has therefore been drafted with a focus on two sectors: renewable energy and transportation. This document does provide detailed technical advice on infrastructure investment, contract formulation or regulation. Nor does it advocate the privatisation or private management of publicly owned infrastructure. The choice between public and private provision of infrastructure should be guided by an assessment of value-for-money and what best serves the public interest. This handbook will discuss this decision, but is more properly intended to come into play after such a determination has been made in favour of private procurement. What this handbook will do is sensitise policy makers to the challenges of PPPs and better-equip them to take advantage of the opportunity PPP represent.