A common goal: More consistency and risk analysis for infrastructure PPPs

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There’s a strong emphasis on “quality infrastructure” afoot and we emphatically support it, as the focus plays a fundamental role as governments seek to deliver on their economic, social, and environmental goals.

Within this context, PPPs are one of the approaches to delivering the quality infrastructure needed and have the potential to better utilize private sector resources alongside public resources.  But we also are keenly aware that good governance, transparency, and sufficient government capability to adequately prepare and implement PPP projects remains a challenge in many regions.

Given the specific challenges associated with PPPs—just as many governments are increasingly focused on such models—the World Bank and the Global Infrastructure Hub (GI Hub) continue to double down on their commitment to build and share good practices in the delivery of better infrastructure and, where appropriate, through PPPs. Specifically, we’ve entered into a partnership that offers practical guidance on and promotion of consistent approaches vis-à-vis structuring PPP arrangements from a risk allocation perspective and the subsequent drafting of PPP contracts.    

A push for more consistent approaches

Both the World Bank and the GI Hub believe that greater standardization of PPP project documentation can help governments looking to deliver sustainable infrastructure that both benefits the public and scales up private investment. More consistency reduces the complexity and costs of PPP project preparation and negotiation, attracts more private investment due to improved predictability, and helps governments compare project performance. 

To this end, we’ve updated and released two sets of guidance materials: the 2019 editions of the World Bank Guidance on PPP Contractual Provisions and the GI Hub PPP Risk Allocation Tool. First editions of these documents were delivered in 2015 and 2016 respectively and offer guidance for governments on these complementary topics.

To be clear, this is how they complement each other: once an appropriate allocation of risks between a government (contracting authority) and a private partner is decided upon, the parties need to document that risk allocation in an agreement to ensure that each party can effectively enforce its rights. Where the GI Hub’s tool provides direction for contracting authorities on good practice risk allocation arrangements, the World Bank document provides guidance and sample drafting for specific provisions typically included in PPP contracts.

Reflecting good practice from around the world

To ensure that the updated guidance documents reflect global good practices in a form that is helpful to government users, we’ve undertaken extensive public consultation, including workshops, online consultation, and dialogue with key stakeholders. Last April we delivered a two-day consultative workshop in Singapore, in collaboration with Infrastructure Asia and Allen & Overy.

Representatives from 11 Asian countries joined us, as did colleagues from the private sector and international organizations. We received feedback that the workshops and online consultation with public and private stakeholders, multilateral development banks, and civil society organizations were instrumental in finalizing both documents. The PPP Knowledge Lab will host a link to a consolidated version of all feedback received.

What’s new?

The 2019 Guidance updates the existing chapters and includes consideration of themes such as climate change as well as environmental and social issues in the context of PPP contracts. Three new chapters address contracting authority step-in rights, termination events, and handback of assets at the end of the PPP contract. The overall objective of the Guidance remains to assist its target audience, namely contracting authorities—and particularly those in emerging markets—with obtaining a more comprehensive understanding of essential clauses in PPP contracts and to help them carefully assess the issues specific to their own projects.

The 2019 PPP Risk Allocation Tool now includes projects in the social infrastructure sector (such as schools, hospitals, and industrial parks), as well as the pre-existing transport, energy, water, and waste projects. The 2019 edition contains 18 annotated risk allocation matrices for PPP transactions addressing the risks and issues on a sector-by-sector basis. It then provides guidance on the allocation of those risks as between the public and private partners. For each sector, there’s also an identification of key risk areas and a discussion of global risk allocation trends.

As the GI Hub and the World Bank jointly disseminate and socialize the tool and document, we look forward to your feedback on their usefulness. Please feel free to comment below.


Download the 2019 Guidance on PPP Contractual Provisions from the World Bank's PPP Knowledge Lab website.

Download the 2019 PPP Risk Allocation Tool from the GI Hub website.
 

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.
 

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Join the Conversation

:François Pascal ILUNGA
August 15, 2019

Very good idea but this must be included in university and high school contents or conférences to be hold

Prof. Dr. Shivanna Honnurappa
August 15, 2019

PPP is essential in all most all works, projects, etc. The climate change and environmental issues could be well addressed and worked out. In this direction evergreen high valued trees may play important role since these trees are long duration which helps in mitigating climate change and improvement of environment. Being the senior faculty of Forestry it is to inspire PPP in planting, monitoring, establishing, managing, logging / harvesting, value addition and creating marketing net work for cultivator / plantation owner of high valued trees such as Santalum album, Dalbergia latifolia, Pterocarpus santalinus, etc. specially in tropical areas. PPP will best forum to tackle any developmental activity which enhance the GDP of the country. I look forward to have initiatives and implementation of PPP in major developmental activities.

Prabhat kumar Mishra
August 16, 2019

In this global revolution the PPP model has both advantages and disadvantages both in terms of social and physical context.The risk are immense and needs critical analysis both in terms of its geographic and demographic context.The demands sometimes surpasses the necessity and this has enormous consequences in the geo-socio setup.Now the climate change and conflict is the buzz word for designing the infra projects.The planners are not aware of the environmental consequences during execution and the users are not aware of the unseen consequences after completion.The human capital is centric in any planning but unfortunately the stakeholders are lost during consultation and the end result is mass destruction of the environment and population as a whole.

We are passing through a new world order where the priority is at stake and the governance is in the hand of God.But positive side is that the probability of the use of the executed projects is still in the hands of good monitoring teams.The guiding principles are important tools to effectively monitor the PPP projects and also it clears the passage for its right use.
The third world and developing countries are nowhere in the picture to showcase their genuine requirement/proposal for developing their infrastructure.The human capital needs to be trained and capacitated in these regions to identify atleast the gaps.
The economies should not be developed only in terms of physical capital but its inhabitants also need due attention.
A comprehensive policy framework is needed to really include the intangible stakeholders who can add to the global infrastructure development which will maintain a perfect balance between nature and its physical development.
We should be much careful to impose forceful execution of infra projects throughout the globe.
The time has come to plan for building global infrastructure for peaceful coexistance than simply adding more concrete.
on this planet.
In this age of global connectivity(virtual) and the time has come to really think to explore the vast physical resource already present on the planet(it may be land or on sea bed on cheaper side and space for the rich) for human settlement.
The PPP models should be developed in the nature(seems wild idea but it needs brain storming).
The technology has developed a lot and the fossil fuels should be used on meter basis(this needs policy to develop a guideline to be accepted by world leaders)
The economic war is taking the happiness of the people and policy should be made to replace GDP either to satisfaction index or degree of happiness(this seems to be out of box but it needs serious introspection from the policy makers)
The change management is applicable to every aspect and why not in the policy design change
The stereotype policy designs will only increase the burden on the planet by increasing more physical structures.Try to learn from the past policy makers who used rocks, forests, mountations,sea bed development.
The ridge lines should be given proper attention while designing infra projects and human settlemnt.
The development as a whole is so imbalance that the coming generations will be bound to shift to a complete new settlement just to avoid contamination, pollution(water to be precise will be worst for survival)

Who will think on these lines to have a fresh look at survival where you can breathe properly and have safe clean drinking water?
Who will think to change the current mindset on management and development of the unplanned existence?

It is my personal view and questions in mind shared instantly