Getting service delivery right in Albania through effective PPP monitoring

|

This page in:

Albania has one of the largest infrastructure gaps in the Western Balkan region. Yet, high public debt and limited project management capacity in the public sector have created a need for looking beyond traditional means to provide society with infrastructure. In the last two decades, successive Albanian governments have increasingly resorted to PPPs as the most feasible way to build roads, energy infrastructure, hospitals and schools among other infrastructure.

PPPs offer many benefits, including crowding-in private sector finance and expertise, while allocating risks to the party best equipped to handle them. Currently, Albania boasts a portfolio of over 200 PPPs, 186 in energy  with the rest in transport, health, environment and agriculture. This portfolio represents investments that exceed 30 percent of GDP half of which is actually foreign direct investment in the energy sector.

In a context of constrained fiscal space and a rule that caps the stock of PPP fiscal commitments at 5 percent of the general government revenues, PPPs represent many benefits including the allocation of risk to the party best equipped to handle it. However, the growing PPP portfolio in Albania has given rise to the issue of the potential fiscal risks from PPP contracts. It is therefore vital that Albania continue to bolster its PPP management framework. The objective of a strong monitoring and disclosure framework for PPPs is, precisely, to address fiscal risks and ensure value-for-money. 

We want to meet several objectives:

  • Better management of fiscal risks – a centralized framework gives a bird’s-eye view to monitor aggregate PPP budget commitments and contingent liabilities across government contracting authorities, ensuring that new PPPs remain consistent with overall fiscal sustainability.
     
  • Timely intervention in underperforming projects – a standardized monitoring framework ensures that contracting authorities systematically review the performance of their PPPs and that they intervene quickly in case of underperformance.
     
  • Learning from successes and failures – monitoring enables parties to learn what works and what doesn’t across the government portfolio, strengthening the quality of future PPP designs.
     
  • Increasing government accountability and value-for-money – government becomes more accountable to ensure that PPPs meet value-for-money targets.
     
  • Strengthening market confidence – transparency allows markets to more accurately assess the fiscal sustainability of the government’s PPP portfolio, strengthening investor confidence.


In 2019, recognizing the importance of PPP monitoring, the government of Albania, with technical assistance from the World Bank’s Macroeconomics, Trade & Investment and the Infrastructure Finance, PPPs & Guarantees practices, has therefore designed a new comprehensive PPP monitoring framework.

Beginning with the 2019 budget execution instruction, contracting authorities across government are required to submit to the Ministry of Finance and Economy regular and systematic information on the current and expected future performance of their PPPs. PPP risk analysis follows the framework set out by the World Bank-IMF PPP Fiscal Risk Assessment Model (PFRAM). The Ministry of Finance and Economy will use these regular submissions to publish a detailed annual report on the performance of Albania’s PPPs. This report will outline not only the general performance of the portfolio, but also do deep-dives on the performance of the most strategic infrastructure projects, including their efficacy at service delivery—as well as any potential risks.

With the establishment of this monitoring framework, Albania is joining a select group of countries that have taken the crucial step to develop a systematic approach to manage PPPs.  As is evidenced by the table below, the frequency, institutional arrangements, capacity, and protocols needed to implement such a framework vary from country to country, reflecting the local legislative, political, and institutional context. Nonetheless, all approaches reflect the fundamental insight that a formal monitoring framework is an important step towards managing fiscal risks from PPPs and ensuring that projects deliver value-for-money for the public. 

Country Example

India

Philippines

Chile

Croatia

South Africa

Roles

Unit for PPP monitoring designated in each contracting authority

Yes

Yes

Yes

Yes 

Yes

Central PPP monitoring unit for the Government designated

Yes

Yes

Yes

Yes

Yes

Location of the central PPP monitoring unit

National Planning Commission

National Economic and Development Authority

Ministry of Public Works

Agency for Investments and Competitiveness

National Treasury

Is the staff of the central PPP monitoring unit solely dedicated to monitoring?

Yes

Monitoring + implementation

Yes

Yes

Monitoring + implementation

Speciation of qualifications needed by staff needed in central PPP monitoring unit

Yes

Yes

Yes

Yes

Yes

Responsibilities

Frequency of reporting from PPP to contracting authority

Monthly

Monthly

Ongoing

Ongoing

Ongoing

Template for reporting of PPPs to contracting authority specified in national guideline

Yes

Yes

Yes

Yes

Yes

Frequency of reporting from contracting authority to central PPP monitoring unit

Quarterly

Quarterly

N/A

N/A

Ongoing

Template for reporting of contracting authority to central PPP monitoring unit specified in national guideline

Yes

Yes

Yes

N/A

Yes

Frequency of consolidated reporting by the central PPP monitoring unit

Quarterly

Yearly

Quarterly

N/A

Yearly

Disclosure of the consolidated PPP monitoring report

No disclosure

Disclosure

Disclosure

N/A

Disclosure

Frequency of disclosure of fiscal risks statement, including on PPPs, by the Ministry responsible for Finance

N/A

N/A

N/A

N/A

Yearly

Content of consolidated PPP monitoring report

Summary of signed PPP portfolio: no of contracts and value by sector and project status

Yes

Yes

Yes

N/A

Yes

Baseline projection of PPP investment and budget commitments for already signed projects by year

Yes

Yes

Yes

N/A

Yes

If baseline projections are presented, is a project-by-project breakdown available?

Yes

Yes

Yes

N/A

In contracting authority

Section highlighting operation statistics in key sectors (traffic on toll roads, customer satisfaction etc.)

Yes

Unclear information

Yes

N/A

In contracting authority

Discussion of key performance outliers in the signed PPP portfolio (highlighting successes and setbacks)

Yes 

Yes

Yes

N/A

In contracting authority

Analysis of fiscal risks for key at-risk PPP projects of the Government

 No

No 

No 

N/A

Yes

Section describing plans for future PPPs to be signed

 Yes

Yes

Yes

N/A

In contracting authority

Useful links

Link to website

link

link

link

link

link

   Source: Technical Assistance Recommendations on PPP Monitoring Framework for the Government of Albania.

Where does the government of Albania go from here? Its PPP monitoring and disclosure framework will gradually improve over the coming years, as technical staff gain more hands-on experience in monitoring PPPs, monitoring procedures are further anchored in the regular operations of government, and the framework is further fine-tuned to reflect lessons learned. The evolution of this process towards more transparency and accountability will include continuing to advise the government on the next phase of disclosure, which would include a platform widely available to the public.

Do you have experience to share about PPP disclosure frameworks or want additional information? Feel free to reach out in the comments section.

Technical assistance has been financed through a SAFE Trust Fund supported by the EU and the Swiss Confederation.



Related Posts
 

Stories from the field: World Bank-IFC collaboration on new PPP legislation in Albania

Kenya's PPP deal information: now open to the public!

Honduras launches new PPP disclosure portal

Nigeria blazes the trail for PPP disclosures with new web portal
 

 

Authors

David Duarte

Senior Public-Private Partnership Specialist

Lorena Meco

Operations Consultant, World Bank Group

Join the Conversation

Muhigirwa Charles
July 11, 2019

Great achievements for Albania as outlined above, but at what expense? As a procurement specialist and professional civil engineer, the right skilled and professional human resource in negotiating value for money PPP contracts and implementation are key aspects. The monitoring and evaluation activities are symptoms but not route causes for failed or exorbitantly implemented project at the expense of Albanian citizens. Even monitoring framework alone will need qualified personnel to implement.
It would be prudent to build local capacity in PPP and procurement fields for enhanced negotiation and taking ownership of the projects processes; in monitoring and evaluation skills; operations (projects) management skills as these may be the reasons Albanians are not involved fully in the projects.

July 15, 2019

Undoubtedly, the enabling environment for the effective implementation of PPPs has a lot of components of which monitoring and evaluation is just one part.

The government has made an important step in recognizing the need for such a function in a centralized place such as the Ministry of Finance and Economy and that’s a good start. This blog is the highlight of just part of the story. For sure, improvements will have to be made even in the implementation of this PPP Monitoring Framework and there are other efforts to improve not just monitoring but also project preparation and making sure that PPPs are designed sustainably to ensure value-for-money and service delivery.

As you mentioned, capacity building at all levels needs to be worked on. Just as an example, as part of this technical assistance the WB trained not only the central unit in charge of monitoring PPPs within the MoFE but more importantly the contracting authorities and technical people that sit closest to the project to make sure their inputs are relevant and of good quality.

We can also confidently say, that the government is very conscious of the capacity that still remains to be built at all stages of PPPs (prioritization and pipeline development, project preparation and structuring, and contract management).

Sadiq Shiekh Mohamed
August 14, 2019

I admired all the issues which were published on this blogs So I suggest to start in Somalia like this blogs.