We all, at one point in life, create a wish list: a comfortable house, a strong education, places we may like to see, healthy family, loyal friends. Governments do that too—for the benefit of the citizens; these are public goods and services. And perhaps like our own wish lists, the need for public goods and services grows so fast that governments fail to fulfill due to limited resources, time, or other constraints. In this case governments are always seeking new ways of meeting these demands, sometimes from the private sector in the form of PPPs. But wise governments know to move cautiously here.
Governments can identify many, many projects for PPPs, but only a limited number of them are really appropriate candidates for successful PPP implementation. At this stage, a PPP Screening Tool is applied to make sure that before significant new resources are spent on a PPP feasibility study, it has been confirmed that the project is an appropriate candidate for a PPP.
Meet the tool:
It allows careful selection of projects to save time and costs that would otherwise be used to prepare and procure projects that fundamentally are not fit as PPPs. The tool assesses the project in six areas: strategic suitability, preliminary suitability, risk assessment, PPP suitability, fiscal suitability, and institutional capacity.
The tool also tests the preliminary feasibility and fiscal affordability of projects, in addition to assessing risks using pre-set qualitative as well as quantitative variables. Going further, the screening tool evaluates the robustness of the country’s legal and regulatory framework as well as the institutional capacity of the contracting authority to prepare and procure PPP contracts. This is critically important.
Our experience in Tanzania has proved the usefulness of the PPP project screening tool. In 2015, when the Tanzania PPP Support Program started working with the local government authorities, eight of these contracting authorities submitted a long list of 65 projects. These ranged from shopping malls, to aquamarine parks, sports stadiums, convention centers, bus terminals, markets, and abattoirs—to mention a few. Using the tool, the long list was evaluated jointly with teams from the contracting authorities, where a number of projects fell off the list. Some fell off easily—say because they didn’t offer any public service—while others failed to meet the criteria for readiness, such as availability of land.
We used the screening tool also as a learning tool, where the parameters set became benchmarks for future projects that were identified as best candidates to proceed to the pre-feasibility study stage and through to full feasibility and procurement. This way, contracting authorities saved both time and costs for project preparation. Currently about 45 projects are at the pre-feasibility study stage, making a robust PPP pipeline for the country.
At a recent regional civil society conference on public debt, PPPs were criticized for their high preparation costs—making them unaffordable and sometimes politically selected. My presentation on the PPP screening tool offered hope for a more strategic and systematic way to identify and select PPP projects. The tool was not only praised for its trail of decision points, but mostly for its well-articulated parameters that link PPP projects to national priorities and emphasize affordability.
I’m optimistic that the screening tool will find its way into the PPP regulatory framework—ideally so that it becomes mandatory for contracting authorities to disclose the criteria for selection and prioritization of PPP projects. I look forward to the giant leap this will represent with respect to public accountability.
The screening tool is available on the PPP Knowledge Lab here. The World Bank team is currently working on a new iteration so that it can screen and prioritize hundreds of projects at the same time. We would love to have your views and comments on the tool to help us refine it. You can provide your feedback to my colleague and team leader Shyamala Shukla at [email protected].
The World Bank’s draft Guide to Community Engagement for PPPs is open for public consultation. Our aim is to improve the development outcomes from PPPs. Follow the link to access the guide and leave your comments: http://wrld.bg/WaDf30p8MBj