4.2 While there may not be much available in terms of separate institutional or policy frameworks for small-scale projects in general, for subnational projects there appears to be a different structure in countries with strong subnational entities. In India, a strong federal structure means that there is a clear bifurcation between national level, and state and local level projects with a completely distinct approval process for these. In addition, national level small projects have a fast track process for approvals at lower levels of government based on project size. Smaller projects are approved by the Standing Finance Committee (SFC)Expenditure Finance Committee (EFC) or by circulation in an inter-ministerial committee. Subnational projects do not need the approval of the Public-Private Partnerships Appraisal Committee (PPPAC), which is constituted at the national level. Each state in India has its own institutional framework with projects up to a certain fixed size being approved by a committee usually headed by the Chief Secretary of the state. In addition, India has a special framework for the processing and approval of rural multi-sectoral PPP projects where the Gram Panchayat8 is the contracting agency. Apart from distinct guidance for structuring these projects, there is also a completely separate inter-ministerial committee constituted within the Ministry of Rural Development that appraises and approves these projects without recourse to the PPPAC, with the relevant state governments and local bodies also involved in the process.
4.3 In South Africa all approval processes are undertaken at the municipal level for tourism projects with an estimated capital value of up to R10 million9 while the normal PPP processes apply to projects greater than R10 million. Since these guidelines were adopted in 2005, the cap has been found to be too low, especially considering that only one project has been approved using the small cap process. In addition, guidelines have been developed for South African National Parks (SANParks) for the development of Community-Public Partnership arrangements to allow communities adjacent to the National Parks to contract for economic developmental activities within or adjacent to the parks. Normal open tender procurement processes as provided under National Treasury Regulation 16 need not be followed for these small projects.
4.4 However, several countries have the same approval process for all PPP projects irrespective of size or type of project. In Indonesia, several small water projects are being undertaken by municipal bodies. While these are outside the scope of this review, one of the major lessons in Indonesia is the long processing time for even small projects, given that all PPP projects have to go through an elaborate approval process regardless of size. While projects below $100 million are considered unviable for processing under VGF due to high transaction costs, no alternate arrangement seems to have been made for the appraisal and approval process of these projects. Kenya is another country where all projects are subject to a uniform approval process. Currently, the Government of Kenya is considering placing a threshold for entry of projects into the three-stage approval process.
4.5 Small projects face lengthy procurement processes, complex legal and technical documentation and due diligence requirements similar to those for large projects in most jurisdictions. HM Treasury carried out an assessment of small capital value projects under £20 million in 2003 using a sample of 35 projects. While the performance of the small projects was found to be as good and in many cases better than large projects, average procurement time was around 2-2.5 years, which was similar to that of large projects. Moreover, small projects had transaction and bid costs that were similar to those of large projects for bidders as well as the authority due to the same complicated legal and technical documentation and due diligence as required for large projects.10
4.6 Increasingly, countries appear to be realizing the need to build new models and structures for small PPPs where smaller investors or community groups are likely to have a greater stake. Similar to the South African model for SANParks, Brazil has recently initiated work on environmental PPPs. The Multilateral Investment Fund (MIF), the Chico Mendes Institute for Biodiversity Conservation (ICMBio), and the Brazilian Institute of Municipal Administration (IBAM) have collaborated to build innovative PPP models for the protection of environmental assets in federally owned Conservation Units. However, so far PPP models in Brazil, as in other countries, have catered mostly to large projects with models that facilitate the participation of larger firms in financing and operations.11
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8 Elected body at village level.
9 Approximately $1 million.
10 HM Treasury. 2003. PFI: Meeting the Investment Challenge. London, United Kingdom: HM Treasury. http://webarchive.nationalarchives.gov.uk/20130129110402/http://www.hm-treasury.gov.uk/media/F/7/PFI_604a.pdf
11 Multilateral Investment Fund.