The main institutions involved in the regulation of PPPs are national or subnational PPP units, government agencies responsible for procurement, ministries, departments, sector regulatory agencies, and local government agencies. Although regulatory functions are performed by different institutions, they should nevertheless be allocated to the institutions that have a clear mandate and sufficient resources to carry them out to ensure prudent processes and clear lines of accountability. Coordinating and streamlining multiple layers of regulations that may affect PPPs in infrastructure services across one or different levels of government are essential for reducing regulatory obstacles to promote PPPs.
While vital regulatory tasks can be carried out effectively nationally or subnationally, the importance of adapting regulation based on sector characteristics cannot be overstated. In some sectors, the case for monopolies could be significantly weakened by emerging technologies or changes in industries, and so existing regulations may not be justifiable and should be reformed. Further, the benefits of regulation should be weighed against their costs since they are a part of the overall regulatory system. Rushing into PPP projects before essential reforms are adopted may make it harder to undertake sector regulatory reforms in the future.
Effective regulation requires adequate capacity. Regulation, especially economic regulation, involves a high level of technical expertise across different areas, and resources need to be available for regulatory functions. Indeed, the monitoring, enforcement, and adjustment requirements of regulation are complex technical activities that require not just sufficient resources but also skills and information to be effective. Progress can be made gradually, as regulatory capacity is being developed; for example, by collecting and publishing information on the performance of PPPs to increase transparency and accountability, or setting up a sector or national unit to benchmark the performance of PPPs across localities and sectors.
Public participation can be vital for the success of PPPs in infrastructure services, and regulation can play a role in enhancing this participation by finding ways to involve the public and consumers in the regulatory process. Mechanisms can be established to allow the public to make submissions about planned PPPs, and public sessions held for utilities to present their case for tariff changes to the government. Setting up customer complaint units with a mandate to assist customers with complaints they cannot resolve directly with PPP project companies can also help involve consumers in the regulatory process.