1. Public-Private
Partnership
Prajwal Mani Pradhan
Taifa Siddika
Moyeenul Islam

2. Overviewofthepresentation
• What is PPP?
• Key questions revolving around PPP
• International instruments
• PPP Theories
• Balancing the score board
• Six keys for successful partnership
• PPP making Sense
– Bangladesh
– Nepal

3. INTRODUCTION (P3)

4. Address PPP as
 Public :
 Of or concerning the people as a whole; open to
or shared by all the people of an area or country
(oxforddictionaries.com)
 Government and all its form, federal, state, UN.
 Private:
 Belonging to or for the use of one particular
person or group of people only.
(oxforddictionaries.com)
 Corporations, MNC, foundations, NGO

5. Address PPP as
 Partnership:
 An association of two or more people as partners:
a business or firm owned and run by two or more
partners. (oxforddictionaries.com)

6. Introduction
 It is also referred to as PPP or P3 or P₃.
 PPP’s are used to provide both economic and
social infrastructure.
 The ultimate goal of PPP is to obtain ‘value for
money’.
 Based on the concept that citizens are
considered as client or customer.

7. History
 Long history in many countries but grew popular in
1980.
 longest tradition in the USA. In the 1950’s and 1960’s
P3’s were used as a tool for stimulating private
investment in the inner city infrastructure and regional
economic development.
 UK, 1979 Conservative government concluded that
government is too involved in the economy and
needed to step down in favor of private capital.
Thatcher administration turned to P3’s as a method of
economic regeneration.

8. History
 Spain; early examples 1960’s; Toll roads developed by
1968.
 Netherlands introduced the P3 idea in its government
policy statement of 1986.
 Australia; started back in early 1990’s and developed toll
roads, hospitals, water and power plants, schools,
courts, sea ports and airports.
 Norway initially did not need private capital due to its oil
revenues, but is cooperating with the private sector now
for infrastructure projects.

9. Definition
 ‘… is a contractual agreement formed between
public and private sector partners, which allow
more private sector participation than in
traditional’.
(U.S. DOT 2004)
 “…a cooperative venture between the public and
private sectors, built on the expertise of each
partner, that best meets clearly defined public
needs through the appropriate allocation of
resources, risks and rewards.”
(Canadian Council on Public-Private Partnerships)

10. OBJECTIVES OF PUBLIC-PRIVATE
PARTNERSHIPS
1. to ensure government services are delivered in the
most economical, effective and efficient manner;
2. to create opportunities for private sector growth
and to contribute to the overall economic
development through the stimulation of
competitiveness and initiative;
3. to ensure the best interests of the public, the
business sector and the community are served
through an appropriate allocation of risks and
returns between partners.

11. PPPs how does the public
sectors role change

12. Required shift
 Hit or miss
 Uniformity
 Provisions
 Inputs
 Generalization
 Talk equity
 Received wisdom
 Regulations
 Haphazard
development
 Demarcation
 Looking up
 Sustainable standard
 Diversity
 Choice
 Customer/citizen
 Outcomes
 Specificity
 Deliver equity
 Data and best practice
 Incentives
 Continuous development
 Flexibility
 Looking beyond the restricted area
From To

13. Reason and Typical uses
 To keep pace with infrastructure investment needs and
the growing public demands for services.
 Increased mobility of capital (availability in the private
sector).
 Dominance of new ideas and reliance on market
incentives.
Contracting with a private company to-
 Renovate
 Construct
 Operate
 Maintain

14. Benefits
For Govt. and Taxpayers-
 Improve service delivery.
 Improve cost effectiveness.
 Increase investment in public infrastructure.
 Reduce public sector risks.
 Deliver capital projects faster.
 Improve budget certainty.
 Expedited project completion.
 Access to new sources of private capital.

15. Benefits
For private sector-
 Access to secure, long-term investment
opportunities.
 Expansion of capacity and expertise.
 Generation of business with the relative
certainty and security of a govt. counterpart.
 High return with low risks, at the long term
expense of taxpayers and the public.

16. Four Basic Dimensions of P3
Although each is unique, all P3’s include four
basic characteristics:
 Shared goals
 Shared resources (time, money,
expertise, people)
 Shared risks
 Shared benefits

17. Risks
 Financial risks.
 Performance/availability risks.
 Demand risks
 Construction risks.
 Residual value.

18. Typical Funding Sources
 Tolls
 Tax Increment Finance
 Fees
 Grants
 Loans
 Bonds
 Other Revenue Streams

19. Privatization vs. P3
 In privatization, Govt. has no longer a direct
role but , whereas with a P3 the govt. retains
ultimate responsibility. (Grimsey & Lewis,
2005)
Pure public
Public-
private
partnership
Pure Private
The level of public control and oversight
High Low

20. Popular PPP Models
Service contract
Operation and
management contract
Leasing-type
contracts
# Buy-Build-Operate(BBO)
#Lease-Develop-Operate(LDO)
#Wrap-Around Addition(WAA).
Build-operate-
transfer(BOT)
#Build-Own-Operate-
Transfer(BOOT)
#Build-Rent-Own-
Transfer(BROT)
#Build-Lease-Operate-
Transfer(BLOT)
#Build-Transfer-Operate(BTO)
Design-Build-Finance-
Operate(DBFO)
#Build-Own-Operate(BOO)
#Build-Develop-
Operate(BDO)
#Design-Construct-Manage-
Finance(DCMF)
Source: IMF, Public-Private Partnerships, March 12,2004,p.8.

21. Public-Private Partnership
Providing policy
support by Public
sector
Capital
accumulation and
investment of
Private sector
Trade
liberalizatio
n
Promoting
FDI
Encourage
Private
sector
investment
Industrial
development
Employment
generation
Poverty
alleviation
National wealth
generation
1. Law and order.
2. Legal
enforceability.
3. Required
infrastructure.
Providing policy
support by Public
sector
Trade
liberalizatio
n
Promoting
FDI
Encourage
Private
sector
investment

22. Balancing the scoreboard
The Result of Serving
the Public Trust
 Legal Authority
 Protection of Procurement
Policies
 Broad prospective/balance the
competing goals to meet
public needs
 Personnel – dedicated but
constrained
 Capital resources
The Result of Market
Competition
 Management Efficiency
 Newer Technologies
 Workplace Efficiencies
 Cash Flow Management
 Personnel Development
 Shared Resources
Strengths of Public sector Strengths of private sector
http://www.ncppp.org/howpart/PPPfundamentals.html

23. Successful Partnership
The secret is to balance the strengths of both
sectors
 Maximizes the use of each sector’s strength
 Reduces development risk
 Reduces public capital investment
 Mobilizes excess or underutilized assets
 Improves efficiencies/quicker completion
 Better environmental compliance
 Improves service to the community
 Improves cost effectiveness
 Shares resources
 Shares/allocates risks
 Mutual rewards

24. Six Keys for Successful Partnership
• Statutory Authority &
Regulations and Political
Leadership must be in
place
-Strong policy statement
-Will to change the
system
-Top Administrative
officials engaged in
execution
Statutory &
Political
Environment
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

25. Call for a good governance
regime
-Best value vs lowest
price
-Dedicated & trained
personnel to monitor
implementation
-Dedicated group (tied
to the purpose of the
partnership
Organized
Structure.
Six Keys for Successful Partnership
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

26. Six Keys for Successful Partnership
Encompasses goal oriented
performances
- Specific milestones and
goals
- Reporting metrics and
frequency
- Risk Allocation
- Dispute resolution
methodology
- Development of
workforce
Detailed
Business
Plan
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

27. Six Keys for Successful Partnership
Long-term financing plan
-Availability of Payments
-Underutilized Assets
-Concession Model
-Creative Approaches
Guaranteed
Revenue
Stream.
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

28. Six Keys for Successful Partnership
Require open discussions,
knowing the FACTS,
Translating each other’s
language
-Public & Private sector
officials
-Labor unions
-End users
-Resolution of
Competing interests
Stakeholder
Support.
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

29. Six Keys for Successful Partnership
Long-term relationship calls
for each sector’s motivation
- Technical capability
- Financial capability
- Reasonable Return on
Investment
- Timely execution vs.
development costs
- Political & statutory
environment
Picking
Partners
Strong leadership makes all the factors together
http://www.ncppp.org/howpart/PPPfundamentals.html

30. P3 Project management
 Crafting the partnership.
 Implementing the partnership.
crafting
• Genesis
• Feasibility
•
• Plan and test
implementing
• Procure
• Implement
• Operate

31. INTERNATIONAL INSTRUMENTS

32. • ICPD (5-13 September, 1994) Cairo,
Egypt
• Phrases like public and private started to appear in
official documents often involved NGO, never
mentioned corporations

33.  Ownership
 Partner countries exercise effective leadership over
their development policies and strategies and co-
ordinate development actions.
 Alignment
 Donors base their overall support on partner
countries national development strategies,
institutions and procedures

34.  Harmonisation
 Donors actions are more harmonised, transparent
and collectively effective.
 Managing for results
 Managing resources and improving decision-making
for results.

35.  Mutual accountability
 Donors and partners are accountable for
development results

37.  Istanbul 1996
 UN agenda 21, (3-14 June 1992)
 International Health Partnership (Sept 2007)
 Agenda for action, Accra, Ghana (4 Sept
2008)

38. International Health Partnership signatories

39. CONTEMPORARY THOUGHTS ON PPP
(P3)
The group
Joan Veon

41. Thoughts
• Uncertainty over a long horizon.
• Changing govt. objectives.
• Lack of commitment for both-
– Private sector (Bankruptcy/exit).
– Government (Break contract/renegotiation)

42. Thoughts
• Private financing is more costly and risky than
public financing.
• Risk transfer is mostly one-sided or often
results heated debate.
• Private sectors profit maximizing tendency.

43. Thoughts
• Public private partnership is just like marriage,
you discover each others strength and
weakness as time passes by.
• Partners have different footings,
(equal footing partnership needed)

45. Joan veon
• Re-inventing government,1999
– Citizen/tax payers addressed as CUSTOMERS!!!
• To the point where we won’t even recognize
the government.

46. Joan veon
• How the private control over public asset
• Solution for government that is broke.
• GLOBAL CORPORATE FACISM
• Transfer of wealth
• Uses deceit, deception and distortion
• Fleecing of tax payers

47. Joan veon
• A lady asked Franklin as they were debating
what kind of government structure 13
colonies would have? She asked what kind of
government do we have? He replied “Madam,
you have a republic IF you can keep it.”

48. “… the players with the
most money control the
partnership.”
Joan veon

49. PPP MAKING SENSE
BANGLADESH

50. History of PPP in Bangladesh
1996- Private Sector Power Policy To promote private sector participation
1997- Infrastructure Development
Company Limited (IDCOL)
To promote private sector investment in
infrastructure development
IIFC- Infrastructure Investment and
Facilitation Centre
To provide Technical Assistance to
ministries and divisions

51. History of PPP in Bangladesh
2004- Public Sector Infrastructure
Guideline (PSIG)
Serve as the basis for present PPP
policy
2007- Investment Promotion and
Financing Facility (IPFF)
A fund of Bangladesh Bank to support
govt. PPP (4.18 billion)
2008- Public Private Partnership
(PPP)
Policy to encourage participation in
public sector

52. Continues…..
• 1970 and 1980- BIRDEM Hospital Established
under ADP by diabetic association.
• One road in Sirajgonj district constructed which
is the first toll road in the country.

53. Resource Gap
Fiscal Year 2009-10 10-11 11-12 12-13 13-14
GDP growth (%) 6.0 6.8 7.5 8.0 8.0
Required Investment
(billion USD)
24.59 30.63 37.18 43.82 49.69
Investment (billion
USD)
23.55 27.10 31.36 35.54 40.29
Deficit (billion USD) 1.04 3.53 5.82 8.27 9.40
Source: Preliminary Estimates of Finance Division under
Mid-term Macroeconomic Framework

54. Benefits of PPP
Public Sector
 Helps to Maintain Economic Stability
 Importing Innovation and Expertise from Private
Sector
 Competitive Costing and Efficient Management
 Help to Achieve Desired Growth Rate
 High Quality Project Implementation.

55. Benefit Continues…..
Private Sector
 Expansion of Business
 Get a Ground for Implementing Innovations
Public or User
 Accountability Ensured
 Make Government more Responsible
 Risk Avoidance

56. PPP Models in Bangladesh
• BOO- Build-Own-
Operate
• BOT- Build-
Operate-Transfer
• BOOT- Build-
Own- Operate -
Transfer
• Private sector manages
the infrastructure.
Example: Independent
Power Producer.
• Private sector manages
the structure for a
specified time.
• Pvt. sector manages for a
specified time then
transfer to the govt.

57. Potential Areas of PPP in Bangladesh
• Power and Energy
• Transport Infrastructure
• Pure Drinking Water and Sewerage
• Information and Communication Technology
• Air Transport and Tourism
• Industry
• Education
• Health
• Housing

58. Project Implemented under PPP
IDCOL 22 projects worth BDT 13 billion
IPFF 5 power sector projects worth BDT
8.67 billion. IPFF- 51%, Private
sector-32%, Banks- 17%
IIFC Under contract to design 30,
technical support to 8 and
consultancy support to 16 projects

59. Selection of Appropriate Options
Required
Technical
Skill
Quadrant 3:
RTS-High
RC- Low
Quadrant 4:
RTS- High
RC- High
Quadrant 1:
RTS- Low
RC- Low
Quadrant 2:
RTS-Low
RC- High
Required Capital

60. GOVERNMENT PLAN FOR PPP
In Energy Sector

61. Govt. Plan for PPP in Energy Sector
• Initial fund BDT 1500 crore
• A professional fund manager from pvt. Sector
• 5 member investment committee by FM
• Tenure 12- 15 years
• 7000 megawatts (mw) electricity by 2013 and
20,000 mw by 2021
• Next 5years govt. needs BDT 66,000 crore for
generation, transmission and distribution
• Saling of bond to expatriates/ share to stock
market

62. Govt. Plan Continues…..
• Creation of 3 new expenditure heads-
• Technical Assistance- for feasibility study and
preparatory work- BDT 1.0 billion
• Viability Gap Funding- BDT 3.0 billion for
subsidy or seed money to attract pvt. Initiative
• Infrastructure Investment Fund- BDT 21.0 billion
to provide loan to pvt. Investor.

63. SUCCESS STORIES

64. Chittagonj Custom House Automation
Customs House
GoB
Chittagonj Chamber
of Commerce
Data Soft
Army backed taskforce- ‘Bravo’
Active
Stakeholders
(17)
Policy
Patronization
Facilitation
Communication
Coordination
Support
Fund Return on
Investment
Software
Source: Idea taken from Baniamin, H.M and Monem, M., 2010.

65. Achievements of the Project
• Glowing example of ‘BOOT’
• 42 steps cargo assessment process decreased
to 6 steps only
• Entry cost reduced from BDT 180 to BDT 50
• Doubling of revenue income in 2 years
• Saving business cost up to 70%
• Saving custom processing time about 80%
• Ensuring transparency
• Better risk management.

66. Partnership in EPI
NGOs
Government
Coordination
Community
LG
UHFPO
UP
Coordination
Imams
Private Sector
Policy, Vaccines, Training,
Monitoring, Quality Assurance
Human Resource, Training,
Advocacy, Reporting
Reporting
Communication materials
and Community mobilization
Community Mobilization
Dissemination
Community
Mobilization

67. Involvements….
 Donors- JICA, WHO, UNICEF, USAID,
Rotary International, Swedish International
Development Agency, GAVI (Global Alliance
for Vaccination and Immunization).
 BRAC, CARE, RDRS (Rangpur Dinajpur
Rural Services), PROSHIKA and ICDDR,B.
 EPI program was launched in Bangladesh in
1979 but got the momentum in 1985-90 with
GO-NGO participation.

68. TEAM PROPOSAL FOR PPP
In
Bangladesh

69. Manpower Development
Civil
Construction
Driving and
Maintenance
Hi-tech and Heavy
Industry
Garments and
Textile
Consortium
Manpower
Skilled
Labor
Force
Labor
Market
Government
Embassy and
High Commission
Training
Policy
Financial Support
Remittance
Loan
Recruiting
Agencies

70. Risks Associated with PPP
 Loss of ownership of public properties
 Approval of inflated costs
 Overlooked public interest when pricing the
services
 Dysfunctional infrastructure once ownership
is handed over to the government.

71. Challenges in PPP Implementation
 Absence of unique formula to develop a sound PPP
framework.
 Private investors want to privatize the profit i.e. profit
will be personal but loss will be social.
 Judging the economic viability of the project (since
costing and pricing is crucial).
 Formation of a comprehensive policy and regulatory
framework.
 A match between asset, liability and cash flow is
vital. Because repatriation of foreign currency may
create pressure on reserve.

72. Our Suggestions
 Careful and project specific policy formulation
 Public ownership of the property is maintained
 Technical assessment to be done meticulously
 For pricing and costing people’s welfare must be kept
in mind
 Quality of the infrastructure ensured even after hand
over to the govt.

73. Suggestions Continues…..
 Only potential and high investment project
should be considered.
 Politically non-biased projects should be
taken in PPP project so that continuity
maintained even after regime change

74. PPP MAKING SENSE
NEPAL

75.  Joint ventures: Salt Trading Corporation, founded
in 1963
 not quite a PPP: completely devoid of competition
and the full rigours of the market mechanism.
http://telegraphnepal.com/news_det.php?news_id=5237

76.  Liberal economy in 1990 resulted in very
prominent Nepali innovations towards PPP in the
infrastructure sector, as for example,
 Hydropower Act 1999;
 BOT Policy 1999.
 Public private partnership, 2003 etc
http://telegraphnepal.com/news_det.php?news_id=5237

77.  After 2000 the concept got well underway in full
steam with the initiative of the UNDP to bring
about mass awareness and to formulate and
promote projects for implementation at the level
of the municipalities.
http://telegraphnepal.com/news_det.php?news_id=5237

78.  first incorporated as a part of the national budget
for 2003-04 under the theme ‘people-public-
private partnership’ (P4 as it were) by Finance
Minister, Dr. P.C. Lohani.
 The 4th P, so to speak, was added to imbibe a
sense of ‘people’s participation’ in development at
the grass roots by mobilizing cooperatives and
user groups in the agro-forestry, irrigation and
energy sectors --- areas of opportunity not quite
yet perceived by the envisioned scope of PPP
prevailing in Nepal at the time.http://telegraphnepal.com/news_det.php?news_id=5237

79.  FNCCI with its call for a One-Village-One-Product
(1V1P) based on the tried and tested model of
Thailand.
 e.g. cold storages; chilling centres, cooperatives
in the dairy product areas.

81. Different ppp models used in the
health sector of nepal
Service Contracts
 Blood transfusion NRCC
 Family planning services FPAN
 Safe abortion service marie stoppes clinic
 Eye services with nepal netra jyoti sanga
Management Contract
 Lamjung district hospital and dadeldhura hospital
with NGO human dev and community services
 Jiri hospital with local community

82.  Build Own Operate and Transfer (BOOT)
 Maternity hospital thapathali by Paropakar national
NGO
 Manipal medical college, pokhara 50 years contract
 Bharatpur medical college, chitwan 50 years
contract

83.  Build and Transfer
 Lahan hospital
 Several eye hospital
 Build Operate and Transfer
 Trisuli hospital, nuwakot
 Build, Transfer and Operate
 Western regional hospital, Pokhara with INF

84.  Joint Venture
 Nepal eye hospital
 Leasing
 Pharmacy services in several hospital
 Contracting + pay for performance
 Prevention and surgery of uterine prolapsed cases
(under design)
 Contracting via social franchising
 Potential model for drug supply management

85.  2005-06 Budget welcomed PPP in social
sectors like school education and public
health.
 They consume around 20% of the national
budget and employ most human resources
with the government.

86.  Budget of 2008-09 presented by the
Finance Minister, Dr Babu Ram
Bhattarai, accepts PPP as the basis of
the new economic policy for the new
Nepal.
 Prime Minster Pushpa Kamal Dahal,
alias Prachanda, is on record as having
said that there no alternative to this
model of development.

87.  One perceives that the neo-Maoists ideology
believes that this is the only way forward to build
a ‘nationalist capitalist society’, which is so vital,
for them, to eradicate the remnants of feudalism
and thus move forward rapidly towards socialism
and ultimately communism.
 Its projected 7% GDP growth in 2008-09 and 10
% per year in 3 years later is premised on this
model.

88.  2008-09 Budget, unlike 2005-06, totally rejects
privatization.
 On the contrary, it seeks to revive liquidated
public enterprises- albeit mostly founded on
Chinese aid to Nepal in the 1960s-70s.

89.  the concept of PPP seems, on the one hand, to
have received a national consensus as an
appropriate—or even ‘best’ -- model for Nepal’s
economic growth and development.
 However, on the other hand, it remains to be
seen under what macro-economic paradigm it is
to proceed henceforth: namely, in
 ‘mixed enterprise system’ or
 ‘liberal market system’ embodied in the full and free
play of market forces under WTO regulations --
being duly regulated by law to protect consumers,
environment and labour from monopolistic, rent-
seeking practices.

90.  Will the benefits and costs of PPP
be maximized under a regime of
‘market capitalism’ or ‘state
capitalism’?
 It also remains to be seen if the
scope of PPP is to be limited to
economic sectors or also extended
to social sectors.

91. We may see many PPPs in such projects as:
 Petrol pipeline from Raxaul to Amlekhganj;
 Kathmandu- Terai Fast Track Road under
BOOT;
 Construction of an international airport at
Nijgarh, and

92. THANK YOU !!!
Address for correspondence
prdhan.pm@gmail.com