“Public-Private Partnerships and the Future of Development Projects in the Caribbean”

Presenter: Resel Melville (PMP, D.E.A, B.A (Hons)

Date: June 13 2013

2

RECAP OF THE FIRST WEBINARi. Key Definitions:

* What is a PPP/ P3?

* Who are the players/ parties

involved?

* Types of PPPs

ii. Recent history of PPPs- 1990’s

to 2000’s

iii. Present day: global context

*Busan Global Alliance

*EU Agenda for Change

*WTO Aid for Trade Initiative

iv. Present day- regional context * CARICOM Single Market and Economy

* CARIFORUM-EU Economic Partnership Agreement

v. P3s for Development- pros and cons

vi. Examples of recent/major Public Private Partnerships in Key Development Sectors in the Caribbean

vii. Part 2: a preview….

“Public-Private Partnerships and the Future of Development Projects in the Caribbean”

• What types of projects in the Caribbean would benefit from a P3

approach?

• What do we need to consider when thinking about setting up

dedicated PPP Units in the Caribbean?– National – Regional

• What are requirements for effective management of P3s for development…and at different stages of the project life cycle?

• What is the project manager’s role in such a complex process?

4

Reminder- what is a PPP?

• “a voluntary alliance between various equal actors from

different sectors whereby they agree to work together to reach

a common goal or fulfill a specific need, that involves shared

risks, responsibilities, means and competencies.” (USAID/CED, Public Private Partnerships for Development- A Handbook for

Business, July 2006)

Presentation Title

“a contractual agreement between public sector

and private sector (for-profit) where resources

and risks are shared to meet a specific public

need.” (UNDP SSC http://ncppp.org/undp/guidelines.html)

5

Case Study- Trinidad and Tobago

Presentation Title

Fast Facts

• Population: 1,305,000

• Capital: Port-of-Spain; 55,000

• Area: 5,128 square kilometers (1,980 square miles)

• Language: English, French, Spanish, Hindi

• Religion: Roman Catholic, Anglican, Hindu, Muslim,

Presbyterian

• Currency: Trinidad and Tobago dollar

• Life Expectancy: 71

• GDP per Capita: U.S. $20,400 (Est 2012)

• Literacy Percent: 99

• Industry: Petroleum, chemicals, tourism, food processing

• Agriculture: Cacao, sugarcane, rice, citrus; poultry

• Exports: Petroleum and petroleum products, chemicals,

steel products, fertilizer

http://travel.nationalgeographic.com/travel/countries/trinidad-tobago-facts/

6

PPP Programme for Trinidad and Tobago

FOMIN: Multilateral Investment Fund (member of

the IDB Group)

Purpose: To strengthen capacity of the

Government of Trinidad and Tobago to

structure and oversee the implementation of

2 Pilot PPP projects in order to create a

demonstration effect

Executing Agency: Ministry of Finance and

the Economy

Related Areas: Infrastructure, Public

Services, Public-Private Partnerships

Approval Date: July 16 2010

Funding: FOMIN- US$864,285

Counterpart- US$1,277,955

Presentation Title

NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)

P3 PROGRAMME RATIONALE/ OBJECTIVES

- Government’s commitment to “improve the

quality of the economic and social

infrastructure across the country”

- to expand access to effective and efficient

infrastructure and infrastructure services

- To meet social needs through better health and

education facilities; improved road networks,

transport systems, water and waste

management, energy, communications

infrastructure

- To provide infrastructure for sustainable

development of the tourism sector

- To improve the value achieved from the

allocation of government resources to identified

sectors/ get best value for money

7

Government of the Republic of Trinidad and

Tobago PPP Policy

Approved by Cabinet June 2012

• PPP Definition

• PPP Value Drivers

• Aim and Scope

• Universal Criteria for Projects

• Project Development/ Implementation Processes

• Institutional Responsibilities for the Programme

Presentation Title

T&T PPP UNIT- Lead, drive, coordinate the National

Infrastructure P3 Programme

- Develop and disseminate guidelines on

processes and criteria for

Identifying, Preparing, Procuring,

and Implementing P3 Projects

- Review, select, evaluate, recommend

projects to be done as P3s

- Work with implementing agencies ,

facilitate agreements

- Provide oversight of P3 projects; ensure

consistency, good coordination

- Repository of skills and knowledge on

P3s

NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)

8

• PPP Definition- a long term contract between a private party and a Government Agency

for providing a public asset or service in which the Private Party bears significant risk and

management responsibility.”

• PPP Value Drivers- risk transfer; whole of life costing; innovation; asset utilization; focus

on service delivery, accountability

• Aim and Scope- achieves value for money, is fiscally responsible, ensures transparency

and honesty, is environmentally and socially sustainable

• Universal Criteria for Projects- feasibility & economic viability; commercial viability; value

for money; Fiscal responsibility

• Project Development/ Implementation Processes- Project Identification; Business Case;

Transaction; Contract Management

• Institutional Responsibilities for the Programme- Ministerial Committee, PPP Unit, PPP

Project Execution Teams incl. contract management team

Review and approval: A PPP must be approved by Cabinet at 2 stages- (a) Business Case -

to approve the P3 Transaction; (b)Transaction- to sign the P3 Contract

Presentation Title

NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)- LEGAL FRAMEWORK

9Presentation Title

NATIONAL PPP PROGRAMME OF TRINIDAD AND TOBAGO (T&T)- INSTITUTIONAL FRAMEWORK

MINISTERIAL COMMITTEE- Ministers of: Finance (Chair), Planning, Education,

Health, Housing &Environment, Public Utilities, Transport, Works &Infrastructure, Attorney-General. (can be expanded to incl. specific Ministry leading a P3)

- Strategic direction, oversight, change management

PROJECT EXECUTION TEAMS

- Constituted for each P3 project

- Experienced advisors, Ministry

reps, P3 Unit, other Gov’t entities,

other special advisors

- Develops business case, leads

proj. implementation/P3

transactions

- Reports to Ministerial Committee

PPP UNIT (MOFE)(Secretariat to MC)

CONTRACT MANAGEMENT TEAMS

- Legal and other expertise

- Manages contracts for P3s

- Reports to Ministerial

Committee/ consults same

to manage change

INFRASTRUCTURE DEVELOPMENT

BANK???

- loans/ equity

- Guarantees, capital

mobilisation, interest

rate subsidies,

insurance

products…

10

CASE STUDY: HAITIFast Facts

• Population:8,288,000

• Capital: Port-au-Prince; 1,961,000

• Area:27,750 square kilometers (10,714

square miles)

• Language: French, Creole

• Religion: Roman Catholic, Protestant,

Voodoo

• Currency: Gourde

• Life Expectancy:51

• GDP per Capita: U.S. $1,400

• Literacy Percent:53

• Industry: Sugar refining, flour milling, textiles,

cement

• Agriculture: Coffee, mangoes, sugarcane,

rice; wood

• Exports: Manufactures, coffee, oils, cocoa

11Presentation Title

NATIONAL PPP PROGRAMME OF HAITI4 Strategic Lines of Action:

1. Development of Overarching National Framework

a. Definition of a P3 in Haitian contexti. Identify various forms/

structures for P3s

b. Definition of Strategic Priorities/direction/ operations of the Programme

c. Elaboration of specific legal and regulatory frameworks for the operations of P3s

d. Development of detailed guides and manuals (based on int’l standards:

- Management of tendering process- Evaluation of projects- Project implementation- Contract management- Monitoring and evaluation of P3s

12Presentation Title

NATIONAL PPP PROGRAMME OF HAITI4 Strategic Lines of Action:

2. Mobilisation of Resources for the development of P3s.

a. Mobilisation of financial resources ($$) by the State- US$25 Million- 2012-13 budget for launch/ start-up- Grants- Co-financing- Leveraging of private capital/ investments

- Other State Contributions to P3s- public/government assets(quantity, description, strategic contribution/ value for money TBD)

13Presentation Title

NATIONAL PPP PROGRAMME OF HAITI4 Strategic Lines of Action:

3. Establishment of Institutional Framework for development and management of P3s.

Strategic Steering Committee- Strategic priorities/ policies- Key Ministries, Central Bank,

Recognized Private Sector Rep.

Industrial Development

Fund (FDI)-Trust (financial pole);

management of financial

resources for MEF; financial

partner to participating financial

institutions

-Banking and financial institutions

Central Management Unit

- “promotion and management of P3s”

- research; advisory; evaluation;

- technical assistance; capacity building

- Core staff of National experts/ ad hoc short term specialists

Network of Chartered/ Accredited Management

Centers- guarantee permanent follow-up of P3 operations, guarantee creditable financial and managerial performance; ensure company compliance with tax requirements -key accounting and management professionals

14Presentation Title

NATIONAL PPP PROGRAMME OF HAITI4 Strategic Lines of Action:

4. Implementation of the Haiti National P3 Programme- promotion and management of P3 projects in key Sectors

Strategic Sectors for implementation of P3s in Haiti…

-Tourism-Agri-business-Maritime Infrastructure-Airports-Housing

Sectors where existing/ previous P3 implemented…

-Electricity-Potable Water-Agriculture/ agri-business-Transport-Communication-Manufacturing-Tourism-Mobile Banking….

15Presentation Title

Fig.1: PPP Reference Guide OverviewSource: Public Private Partnerships Reference Guide V.1.0, World Bank/ PPIAF 2012www.ppiaf.org

16Presentation Title

www.caribank.orgTHE CARIBBEAN DEVELOPMENT BANK

Established: 1969Entry into Force: 1970Members – Antigua and Barbuda; The Bahamas; Barbados; Belize; British Virgin Islands; Cayman Islands; Dominica; Grenada; Guyana; Jamaica; Montserrat; St. Kitts/Nevis/Anguilla, St. Lucia, St. Vincent and the Grenadines; Trinidad and Tobago; Turks and Caicos Islands; Canada and the United Kingdom; Venezuela; Colombia; Anguilla ( formerly part of the State of St.Kitts/ Nevis/Anguilla); Mexico, Italy, Germany; China, Haiti, Suriname and Brazil

For additional details on the CDB see: http://www.caribank.org/uploads/2012/11/cdbpurpose-2013.pdf

PURPOSE: to contribute to the harmonious economic growth and development of the member countries in the Caribbean and to promote economic cooperation and integration among them, having special and urgent regard to the needs of the less developed members of the region

MISSION: to be the leading catalyst for development resources into the Region, working in an efficient, responsive and collaborative manner with (BMCs) and other development partners, towards the systematic reduction of poverty in their countries through social and economic development .”

FUNCTIONS: - To assist Borrowing Member Countries (BMC) to optimize use of

resources, develop their economies & expand production & trade- To promote private & public investment, encourage development

of the financial upturn in the region & facilitate business activity/ expansion

- To mobilise financial resources from within & outside the region for development

- To provide technical assistance to regional BMCs- To support regional & local financial institutions & a regional

market for credit/ savings- To support & stimulate development of capital markets in the

region

17

The CDB and Private Sector Development in the Caribbean

CDB Strategic Priorities for the Private

Sector• Business and Product Development

• Financial Intermediation

• Direct Support

• Facilitate Participation in Private Infrastructure

• Privatisation

• Technical Assistance

• Environmental management

• Guarantees

• Research & Development

• Catalysing Investment Flows

• Capital Market Development

• Equity ( Funds, Investments)

• Creating an enabling environment (legal and

regulatory framework)

• Policy Dialogue

• Public and Corporate Governance

• Risk Management

Presentation Title

Extract: “Assistance may be considered for projects to establish, expand, diversify and modernize productive facilities in various sectors including energy, manufacturing, agribusiness, tourism, transportation, infrastructure, telecommunications and financial services.”

CDB will give due consideration for investment to projects which are deemed to be beneficial to the economy of the BMCs. Priority is given to those activities which will enhance the region’s foreign exchange earning capabilities, generate employment, and those which promote poverty reduction, social equity and environmental protection.http://www.caribank.org/about-cdb/organisation/projects-department/psdd

18

Key characteristics of a Public

Good (national, regional or

international)

- Non-rivalry between users- can be

used by more than one “user”

simultaneously;

- Non-exclusion from use- must be

available to more than one user at no

or negligible additional cost.

e.g: policy and other frameworks,

institutions, databases…

Sectors where RPGs can be

created, using PPPs :Health,

Transport/ Infrastructure, Citizen

Security, Environmental management,

Energy, Investment, Communication,

ICTs etc.

Presentation Title

PUBLIC PRIVATE PARTNERSHIPS FOR REGIONAL PUBLIC GOODS (RPG)

Types of P3s for RPG- Consultation between public and private actors

- Concertation (or agreement) of policy between

actors; collaboration on standard setting, and

- Operational functions such as joint research and

product development or programme implementation

Examples of Caribbean Regional P3s for RPGs:

- PanCaribbean Partnership against HIV & AIDS;

- Caribbean Cooperation in Health (CCH III);

- Caribbean Disaster and Emergency Risk Agency

(CDERA)-Regional disaster risk management for

sustainable tourism in the Caribbean.

19

• Public Partners- traditional and emerging International

Development Partners (IDPs) bilat. countries; multilateral

organisations, international and regional financial institutions;

Caribbean Governments

• Private Partners- for profit corporations, not-for-profit

corporations, Non-governmental organisations, civil society (at

various levels)

Presentation Title

PUBLIC PRIVATE PARTNERSHIPS FOR REGIONAL PUBLIC GOODS (RPG)-

RESOURCES AND FUNDING

20

REALITY CHECK- the Challenging reality for P3s in the Caribbean

• “less effective Governments tend to have less effective PPP Units… lack of political

commitment, transparency and coordination in Government agencies reduces the

Units chances for success.” (PPIAF Info.Note 4, 2012)

• Political will or lack thereof

• Prior experience of the Government in P3s

• (Deficiencies in ) Relevant existing laws and regulatory authorities/ enforcement capacity

small market size and difficulties in achieving economies of scale

weak enabling environment for business

limited access to financial services and capital markets,

inadequate infrastructure for competitiveness

a dearth of management skills

insufficient support for Innovation and Technological development

Limited capacity to manage environmental risks

Presentation Title

21Presentation Title

The Public Private Partnership Lifecycle…

for more details and tools see- www.thepartneringinitiative.org

22

The Partnering Initiative- Questions for Partnership Practitioners…

• A. ORGANISATIONAL ISSUES

1. What are the underlying motivations / drivers for my organisation’s interest and involvement in the partnership? How can I help the other partners understand these?

2. How do the other partners regard my organisation? How can I help partners to understand my organisation better?• B. PROFESSIONAL COMPETENCY ISSUES

3. What professional skills & competencies do I have and how are they useful to the partnership?

4. What new skills/ competencies do I need to have to partner effectively? How can I acquire them?

5. How do other partners perceive my skills/ competencies?

• C. PARTNERSHIP ISSUES

6. What do I see for the Partnership in the future? Do others share my vision?

ANY OTHER ISSUES TO EXPLORE**

Presentation Title

23Presentation Title