If the thought of summer conjures up visions of national parks, you’re not alone – in 2014, nearly 3 million tourists visited forests, mountains, trails, and rivers at U.S. national parks.
If you crossed the gate into one of these treasures, you probably didn’t care whether that particular forest or mountain fell under government or private ownership. But it’s worth noting, because national park concessions fill a vital role helping the National Park Service carry out its mission, and there are benefits to these partnerships that can keep the parks viable — and the visitors happy — for decades to come.
There are also misconceptions about national park PPPs. To clear the air, I’ve answered some of the most common questions below.
Though Senegal’s situation is unique, insights and lessons from the project can inform and strengthen other rural water PPPs as well.
What changed, and why it matters
In Senegal’s earlier period of reform, government officials looked to community-based management for 1,500 rural water piped systems to serve the 7.5 million people in need of water services across 14 rural regions. (Senegal is divided into three large geographic zones – North, South and Central – with ongoing transactions in smaller areas like Gorom Lampsar and Notto-Diosmone-Palmarin, known as GL-NDP, and the Senegal River region.) At that time, officials thought this would be the best way to eventually scale up management of the rural water system. By 2010, though, discussions between the World Bank Group and the Government of Senegal pushed reform forward by including more private sector management, which also aimed to increase sustainability of the system.
One of the most salient features of a public-private partnership (PPP) arrangement is the flexibility to use out-of-the-box solutions in resolving the many challenges in day-to-day operations. As a result, the PPP setup gives operators the liberty to come up with innovative solutions for more effective and efficient delivery of the most basic services.
In the Philippines, Laguna Water — a joint venture company formed as a result of a PPP between the Provincial Government and Manila Water Philippine Ventures formerly known AAA Water Corporation — is benefitting immensely from that flexibility since it took over the operations of the province-run water system in 2009. Although primarily tasked to improve the provision of water and wastewater in the three cities of Biñan, Sta. Rosa and Cabuyao — collectively known as concession area — Laguna Water’s sustainable business model allows it to participate on matters related to community development (including job generation), as well as programs centered on health, safety and environmental protection.
As a staunch advocate of sustainability, Laguna Water takes pride in having significantly improved access to piped, clean and affordable water to 62 percent of the population of the concession area— a far cry from the 14 percent when it started its operations in 2009. The joint venture’s PPP framework has been instrumental in putting in place water infrastructure that provides easier access and better services to customers. Today, Laguna Water is the biggest water service provider in the entire province, and is also ahead in its service-level targets on coverage, water quality and water loss reduction.
Here are some details about our PPP-empowered approach.
- drinking water
- clean water
- Environmental Protection
- Community Empowerment
- water access
- partenariats public-privé
- public-private dialogue
- public-private partnership
- public-private partnerships
- Social Development
- Private Sector Development
- East Asia and Pacific
First of all, I was in Malawi, together with my World Bank and IFC colleagues, to help with a two-day workshop on public-private partnerships (PPPs) in water with more than 60 professionals from across the region, in collaboration with Malawi’s Ministry of Agricultural Irrigation and Water Development. Over the course of the workshop, we all learned a lot from sharing experiences with our peers both public and private and discussing how the private sector can play a role in expanding and improving water and sanitation services. Everyone took to the exercises with gusto as they played the roles of the public and private sector negotiating the risk allocation of a PPP project.
This lively and stimulating debate was mirrored by the virtual debate I was following on-line in the margins of the workshop. Over the last six months, I have been helping put together a free on-line learning course on how public-private partnerships can help deliver better services.
The PPP MOOC (Massive Open Online Course – yes, that was new to me too) launched on June 1 and will run for four weeks. It includes video lectures, readings, quizzes and other learning materials that are designed and taught by experts from academia, government and the private sector. It has been fascinating to pull together the materials for the course and work with the range of presenters, who so graciously gave us their time and expertise for the course.
The PPI Database’s 2014 full year update for these sectors has just been released, and it confirms the trends we began tracking for the first six months. Total investment in infrastructure commitments for projects with private participation in the energy, transport, and water and sanitation sectors increased six percent to $107.5 billion in 2014 from levels in the previous year. The total for 2014 is 91 percent of the five-year average for the period 2009-13, which is the fourth-highest level of investment commitment recorded – exceeded only by levels seen from 2010 through 2012.
This increase over 2013 was driven largely by activity in Brazil. Without Brazil, total investment commitments would have fallen by 18 percent, from $77.2 billion in 2013 to $63.4 billion in 2014. Although this is lower than H1 2014 (57%), Brazil’s large stake is a continuation of a recent trend.
The Latin America and the Caribbean (LAC) region saw $69 billion of investment commitments, or nearly 70 percent of the total for 2014. Three of the top five countries by investment commitments in 2014 were from LAC. The top five, in order, were Brazil, Turkey, Peru, Colombia, and India.
- Public Private Partnerships
- private participation
- private participation in infrastructure
- ppi database
- infrastructure investment
- infrastructure financing gap
- infrastructure financing
- Africa's infrastructure
- partenariats public-privé
- public-private partnership
- public-private partnerships
- Public Sector and Governance
- Private Sector Development
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
Why is Senegal’s Dakar-Diamniadio toll road, which opened on time and on budget in August 2013, so successful? The road has dramatically improved urban mobility around Dakar, reducing commute times between the city and its suburbs from two hours to less than 30 minutes.
Building on this positive experience, in 2014 the Government of Senegal awarded a further concession to extend the motorway to connect it to Dakar’s new Blaise Diagne International Airport. Excluding South Africa, this is the first greenfield road PPP in sub-Saharan Africa. What lessons can we draw?
- Political commitment. The Government of Senegal set the project as a priority. The first driver on the road was the President – who paid the toll. But commitment alone isn’t enough; it needs to be turned into action by government agencies. An intra-agency coordinating committee was set up. The National Agency for the Promotion of Investments (APIX) oversaw the preparation of the concession. The Public Private Infrastructure Advisory Facility (PPIAF) supported APIX with technical assistance, including the design of a framework for the oversight of the project.
- Consensus-building and stakeholder engagement. Part of PPIAF’s US$250,000 grant to the Government of Senegal helped to pay for seminars with stakeholder groups to discuss structuring options for the road and socio-economic drivers of the willingness to pay. The final structure chosen involved a relatively low toll, with an upfront contribution by the government to the cost, with the concessionaire taking full construction, operating and traffic risk. The combination of careful outreach to stakeholders, a fairly low toll, significant time savings and a well-maintained road meant that the first toll road in the country was accepted by the population. In addition, the fact that there is a free alternative road helped the Government and other stakeholders point out that motorists could always choose to use the other route.
- Experienced concessionaire with strong commitment to Senegal. The concessionaire, the Eiffage Group is one of Europe’s leading construction and toll road operating companies, with a long history of involvement in, and commitment to, Senegal. Eiffage, through the special purpose company set up to construct and operate for 30 years the road, SENAC S.A., ensured that the road was constructed and is being operated to a high standard, on time and within budget.
As you prepare to take off for summer travels to parts unknown, leave your paperbacks behind and take that stack of must-read magazines to the recycling bin, because I’ve compiled a selection of recent articles related to PPPs that will engage, educate and inspire. It’s also intended to answer some common questions – because many people are not fully aware of the complexities of PPPs and how risks are shared between the public and private sectors.
For those in search of a broader perspective on how PPPs contribute to global development, their challenges and their potential, these articles will give you something to think about before, during and after your vacation.
Transparency is always an important issue, whether we are talking public procurement or PPPs, and there has been a push recently for all government contracts to be made public. The argument is that transparency not only inhibits corruption and builds trust in governments, but can help improve the contracts themselves. For example, in Slovakia, the publication of contracts led to a 50 percent increase in the average number of bids on government tenders. In Buenos Aires, Argentina, it reduced variation and lowered average prices for hospital supplies.
In this editorial, the authors make their case. But what does this mean for PPPs, where openness and commercial confidentiality must find a balance? Can the two be reconciled?
During these debates many examples are quoted – the early 20th century oil concessions in the Persian Gulf, the late 19th century cross continental railway in the USA and the İzmir-Aydın railway concession in present-day Turkey, the Rhine river concession granted in 1438 and so on.
As debate on the origin of PPP continues, the modern-day popularity of PPPs is more commonly acknowledged to have emerged from the United Kingdom, following the introduction of Private Finance Initiatives in 1992’s autumn budget statement by RH Norman Lamont, then Chancellor under John Major’s Conservative government.
In the intervening years, many developed and developing nations have started PPP programs of their own. Indeed, the growth of PPPs in developing countries is nothing short of phenomenal, with the mechanism being used in more than 134 developing countries and contributing to 15–20 percent of total infrastructure investment.
This is also true of Bangladesh. In 2009, the Government of Bangladesh announced the introduction of a revised PPP program in the 2009/10 Budget Session, and then introduced a new PPP policy in August 2010 (PPP Policy 2010).
We’re excited to launch this new dedicated blog platform around public-private partnerships (PPP). We envision it as a space for sharing experiences, disseminating knowledge and generating discussion. We hope that this space will be enriched by perspectives from PPP practitioners in governments, from investors, financiers, advisors, associations and so forth.
Why? There is a danger that public-private partnerships are being oversold.
A “disappointment gap” currently exists between high expectations and the sober reality of successfully concluded partnerships. Too much attention is often paid to financing, and not enough to the less glamorous hard work of preparation. There isn’t enough information being collected about performance. And there are different interpretations about what PPP means, exactly.
Right now, the PPP discussion is rhetoric-rich and data-poor. It is expectation-heavy, and cold-light-of-day reality is tougher. That’s a shame, because, when prepared carefully, with full assessment of the different options, and the fiscal/economic/environmental/social implications, PPPs can be a useful tool to help governments improve the quality and reach of their physical and social infrastructure services.
We’re working alongside the world’s other multilateral development banks to prepare a joint website for PPPs, which will be called the PPP Lab. That upcoming website – launching in June – will contain quantitative and qualitative information about PPPs and private infrastructure, including the Private Participation in Infrastructure Database, the Public-Private Partnerships in Infrastructure Resource Center, Infrascope reports, and the PPP Reference Guide.
In addition, our new online course on PPPs will introduce real-world cases to an audience that doesn’t attend PPP conferences or read development banks’ annual reports.
There are plentiful examples that illustrate the realities, challenges and opportunities that PPPs offer. With your help, we intend to share and explore many of them on this blog. We invite you to read, share and engage with us on these topics and follow us on Twitter at @WBG_PPP.