Good Governance in PublicPrivate Partnerships

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Good Governance in Public-Private Partnerships

• Mr. Geoffrey Hamilton
• Chief, Cooperation and Partnerships Section
• United Nations Economic Commission for Europe
• __________________________________________________
  ____________
• Advancing public-private partnerships for
  e-business standards
• Geneva, 18-19 September 2008

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POSITION IN A NUTSHELL

• Governance deals with the grey areas in
  relations between organizations
• It brings to the fore issues of trust and
  personal integrity
• No easy right and wrong answers/ rules
• But governance does matter and needs to be
  addressed

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Governance issues arise in the UN

• Case study 1 Contract to external supplier
• After docs prep, the Steps to follow
• 1. Ensure that you have the funds allotted in the
  correct budget line of the project/trust fund/UN
  Dev.account - DONE
• 2. Signed and agreed TOR and estimated budget
  from UNDP Moscow, Russian Fed and UNECE (ECID and
  EO)
• 3. Email showing the agreement of UNDP Moscow,
  Russian Fed to organize the seminar/workshop
  based on agreed TOR and estimated budget.
• 4. Based on 1,2 3 above, you can then prepare
  in IMIS pre-encumbrance document (General
  reservation of funds (GROF)) to commit the total
  organization costs of the seminar/workshop.
• 5. EO will prepare the OBMO (Miscellaneous
  obligating document) and submit to UNOG FRMS for
  approval.
• 6. Once OBMO is approved, EO will prepare the
  financial cable to UNDP Moscow, Russian Fed for
  UNOG FRMS's approval authorizing them to
  organize/arrange the seminar per TOR/budget.
• HOW MUCH WAS THE CONTRACT FOR?

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Case study II Money and Ownership

• UNECE has the big idea !
• Goes to the Multilaterals for support
• They like it! And apply for money
• They get the money!
• Our idea becomes their idea!

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Lessons and questions

• No easy answers
• Personal fury, morality, integrity versus wider
  dissemination of a public good
• Logos do not matter at the end of the day?
• Money talks?
• Does the end justify the means?

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WHAT IS A PPP?

• The term PPP is used internationally with a wide
  variety of meanings, but for this purpose
• PPP private investment in public infrastructure
• long-term service provision
• risk transfer to private sector
• An old concept which has found a new life
• Concession model
• the user pays (tolls, fares, etc.)
• Based on legislation contract
• N.B Many PPPs outside UK are Concessions
• UK Private Finance Initiative (PFI) model
• the public sector pays
• Contract-based (may be in legislative framework)
• N.B In some countries only this model is called a
  PPP
• PPPs v. privatisation
• No transfer of public ownership
• Public sector remains accountable
• Contract-based not regulator based

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WHY PPP?
WHY PPP?

• Access to capital
• Certainty of Outcome
• Off balance sheet borrowing
• Innovation
• Transfer of risk

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THE GROWTH OF PPPs IN EMERGING MARKETS

• 3 Distinct Evolutionary Phases

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PPP MARKET MATURITY CURVE
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KEY CHALLENGE Improving governance and
institutional certainty

• TO AVOID
• Protracted negotiations
• Lack of transparency in partner solution
• Conflict of interest
• Cancellation of projects
•  

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UNECE GUIDELINES ON PROMOTING GOOD GOVERNANCE IN
PPPS 7 PRINCIPLES

• A coherent PPP policy
• Strong enabling institutions
• Legal framework fewer, better, simpler
• Cooperative risk sharing and mutual support
• Transparency in partner section
• Putting people first
• Achieving sustainable development

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Misconceptions
No! You need a policy framework with direction,
responsibilities and goals. PRINCIPLE 1. POLICY
PPP pilots will start the process
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Principle 1. PPP Policy

• A PPP Policy is needed to fix a roadmap
• Strong social objectives, e.g. increasing
  accessibility for disadvantaged
• Core values and principles (fairness,
  continuation of services, improved quality)
• Consultation within Government
• Consult investor community
• Identify the right projects to get started

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Misconceptions
No! You need to build the skills within the
government and set up the right
institutions. PRINCIPLE 2. CAPACITY BUILDING
PPPs focus on ring fencing the project
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Principle 2. Capacity-Building

• INTERNALLY
• Train personnel for the required skills for PPPs
• Establish PPP Unit
• Offer National PPP training programmes,
  guidelines
• EXTERNALLY
• At same time use qualified consultants to help
  on projects

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Misconceptions
No! Overall framework should be simpler, fewer
and better. PRINCIPLE 3. LEGAL
PPPs prescriptive rules and tight control
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Principle 3. Legal Fewer, better and simpler

• Fewer laws - removal of constraints
• Better laws - knowable, secure and predictable
• Simpler laws - bundling projects, competitive
  dialogue

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Misconceptions
No! Governments must assume some risk and offer
some subsidy. PRINCIPLE 4. RISK SHARING
PPPs provide assets to governments at no risk and
no cost
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Principle 4. Risk

• Cooperative sharing and mutual support
• Risk sharing key to PPP success
• No science to allocating risks
• Yes to some government subsidy but with care

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Misconceptions
No! Competition allows for the best partner and
the best project. PRINCIPLE 5. PROCUREMENT
PPPs no tender required
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Principle 5. Procurement

• Open and transparent
• Opportunities should be made public
• Non-discrimination
• Zero tolerance to corruption
• Choosing the right partners

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Misconceptions
No! People have to be put first. PRINCIPLE 6.
PUTTING PEOPLE FIRST
Keep people out they do not understand the
technical matters
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Principe 6. Putting People First

• Define the public interest
• Consult with people
• Inform disclose information in contracts
• Oversee by objective third party
• Involve independent auditors

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Misconceptions
No! Project can make profit and achieve social
and environmental goals. PRINCIPLE 7.
ENVIRONMENT
you have to choose between profit and social and
environment development
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Principle 7. Environment

• The Green case works for PPPs
• Provide incentives to the private sector to adopt
  green criteria
• Avoid politically correct add ons that mean
  nothing

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CASE STUDIES

• Demonstrate that projects which apply
• the Good Governance principles achieve success
• Canada The Vancouver Landfill Project
• France The Centre Hospitalier Sud Francilien
• Israel The Cross-Israel Highway
• Tajikistan The Pamir Power Project
• USA The Chesapeake Forest Project

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KEY Learnings for ACHIEVING SUCCESS In Improving
Goverance commitment to training of public
administration

• Situation today in transition economies
• there are few capacity-building programmes
• No practical training for policy makers and
  implementers
• Numerous international conferences on PPPs but no
  substitute for real practical hands-on training

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Key learnings contd

• Create institutions that facilitate
• Open decision-taking
• Transparency and accountability

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• IN CONCLUSION
• Poor governance will ruin what you want to
  achieve even e-business standards
• End does not justify the means
• You must deal with the governance issue
• It is sometimes good to become personally
  furious

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THANK YOU FOR YOUR ATTENTION!

• FOR MORE INFORMATION
• Please visit http//www.unece.org/ceci/ppp.html
• Or contact geoffrey.hamilton_at_unece.org