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  • Bridging the gaps

    Implementation challenges for

    transport PPPs in OIC member

    states

    March 28, 2013

    Vanesa Sanchez, Senior Analyst

    Economist Intelligence Unit

  • PPPs in the OIC member states

    Introduction to the study Bridging the gaps

    Developing transport in OIC member countries is a priority area for COMCEC

    This is part of a broader mandate to enhance economic and commercial cooperation among the

    OIC member states

    PPPs have been identified as one key way to finance and deliver vital transport projects

    In the interest of enabling OIC member countries to better understand, implement and cooperate

    on PPPs in transport, COMCEC commissioned the Economist Intelligence Unit to prepare a study

    on PPPs in OIC member states

    All 57 member states were included and examined in the process

    PPPs are defined as in the previous session

    Existing research and reports; EIU proprietary data and country analysis; interviews with

    government officials and sector experts; international project databases

  • The EIU has experience evaluating and comparing 57

    countries worldwide

    The EIUs Infrascope index assesses country-level capacity

    to develop and implement public-private partnerships

    Evaluates 3 sectors: water and sanitation, transportation and energy

    Focusing on laws, regulations, institutions and practices that affect the

    environment for PPPs

    Looks at the amount and quality of PPP projects in the Asia, Latin

    America and Eastern European regions

    EIU PPP expertise

    Asia 2011

    EECA 2013

    LAC 2009, 2010,

    2012

    EIUs main toolkit includes:

    Thematic reports: based on country-level analysis and

    expert views, best practice

    Learning tools: for country self assessment, allowing to

    produce what if scenarios given changing conditions or

    frameworks

    Benchmarking: the possibility to learn from other countries

    successes and mistakes, to better inform best and worst

    practice

    Economic forecasting models: these allow for

    measurements of country wealth, budgetary position, credit

    risk, and user affordability

  • Objectives

    It is difficult to implement transport PPPs projects well and progress can

    be accelerated with effective use of existing knowledge. Furthermore,

    best practice thinking (as well as challenges) keeps evolving over time.

    1. Highlight global trends

    and best practice

    frameworks

    As obstacles are overcome, it is important for countries to develop

    strategic plans for improvement or expansion.

    2. Identify country

    characteristics in terms of

    legal frameworks and

    experience and establish

    similarities

    3. Discuss challenges for

    implementation and

    indicate pathways for

    improvement/expansion

    An essential part of a countrys learning process in PPP implementation

    is an assessment of existing conditions and reforms in place.

    International comparisons and experiences are useful as practical

    guidance.

  • Scope: 57 OIC countries

    Afghanistan, Bahrain, Brunei, Egypt,

    Iran, Iraq, Jordan, Kuwait, Lebanon,

    Oman, Palestine, Qatar, Saudi Arabia,

    Syria, Turkey, United Arab Emirates,

    Bangladesh, Indonesia, Malaysia,

    Maldives, Pakistan

    Albania, Azerbaijan, Kazakhstan,

    Kyrgyz Republic, Tajikistan,

    Turkmenistan, Uzbekistan

    Guyana, Suriname

    Algeria, Benin, Burkina Faso, Cameroon,

    Chad, Comoros, Djibouti, Gabon, Gambia,

    Guinea, Guinea-Bissau, Ivory Coast, Mali,

    Mauritania, Morocco, Mozambique, Niger,

    Nigeria, Libya, Senegal, Somalia, Sudan,

    Togo, Tunisia, Uganda, Yemen, Sierra

    Leone

  • Country groupings

    Group 4

    Countries with a PPP framework that

    have implemented at least one

    transport PPP

    Group 3

    Countries without a PPP framework

    that have implemented at least one

    transport PPP

    Group 1

    Countries without a PPP framework

    and no transport PPP experience

    Group 2

    Countries with a PPP framework and

    no transport PPP experience

    Framework development

    Experience

  • Group 1 Group 2 Group 3 Group 4

    Countries without a PPP

    framework and no

    transport PPP experience

    Countries with a PPP

    framework and no

    transport PPP experience

    Countries without a PPP

    framework that have

    implemented at least one

    transport PPP

    Countries with a PPP

    framework that have

    implemented at least one

    transport PPP

    Afghanistan Bangladesh Algeria Albania Azerbaijan Kuwait Benin Egypt

    Bahrain Kyrgyz Republic Burkina Faso Indonesia

    Brunei Cameroon Ivory Coast

    Chad Comoros Kazakhstan

    Gambia Djibouti Malaysia

    Guinea-Bissau Gabon Morocco

    Iran Guinea Nigeria

    Libya Guyana Pakistan

    Mauritania Iraq Sierra Leone

    Niger Jordan Tunisia

    Oman Lebanon

    Palestine Maldives

    Somalia Mali Tajikistan Mozambique

    Turkmenistan Qatar Uzbekistan Saudi Arabia

    Senegal

    Sudan

    Suriname

    Syria

    Togo

    Turkey

    Uganda

    United Arab Emirates

    Yemen

    Country groupings

    Data for country

    groupings was taken

    from the World Bank

    PPIAF database, which

    spans 1990-2011

    The concessions and

    greenfield categories

    were used to filter

    country results

  • Group 1

    Countries without a PPP

    framework and no

    transport PPP experience

    Afghanistan Azerbaijan

    Bahrain

    Brunei

    Chad

    Gambia

    Guinea-Bissau

    Iran

    Libya

    Mauritania

    Niger

    Oman

    Palestine

    Somalia Tajikistan

    Turkmenistan

    Uzbekistan

    Country groupings

    Countries in group 1 span several regions, across Sub-Saharan Africa, the Middle East,

    North Africa, Central and East Asia

    Many of these countries struggle with overall country and economic competitiveness

    Many are found in the bottom 95 of the World Economic Forum

    rankings, or not included

    Exceptions are Azerbaijan, Brunei, Bahrain, Oman and Iran

    Sub-Saharan African countries have low per capita GDP

    Additional highlights:

    Azerbaijan is the largest economy in central Asia; Iran is the largest of

    all group 1

    Small countries Bahrain, Oman and Brunei have the highest WEF

    competitiveness positions

    Group 1 overview

  • Issue 1:

    Planning approach

    Issue 2:

    Pricing infrastructure

    Issue 3:

    Contracts and competitiveness

    Challenges group 1

    -Change decision-making

    criteria (from politics-based

    to) strategy and market-

    based)

    -Long vs short-term

    -Project bankruptcy or

    renegotiation or distress

    -User affordability and

    willingness are low

    (population is unused to

    tolls)

    -Without good contract

    enforcement, private sector

    interest will be low

    -Unstable economies. Low

    employment, inflation, etc.

    lower user affordability

  • Challenges group 1, contd

    Issue 4:

    Human resources

    Issue 5:

    Country instability

    Issue 6:

    Local financial markets

    -Need understanding of PPP

    procurement, implementation

    and oversight process

    -Difficult to get the right

    people; also costly

    -Regulatory , institutional and

    legal risks deter investors

    -Financial and economic risks

    deter investors

    -Underdeveloped markets

    mean high dependency on

    IFIs, international banks and

    state-run development

    institutions

    -Ultimately means higher

    financial risk

  • Overview of countries without a framework

    Group 3

    Countries without a PPP

    framework that have

    implemented at least one

    transport PPP

    Algeria

    Benin

    Burkina Faso

    Cameroon

    Comoros

    Djibouti

    Gabon

    Guinea

    Guyana

    Iraq

    Jordan

    Lebanon

    Maldives

    Mali

    Mozambique

    Qatar

    Saudi Arabia

    Senegal

    Sudan

    Suriname

    Syria

    Togo

    Turkey

    Uganda

    United Arab Emirates

    Yemen

    These countries all do span every region in COMCEC; however only Turkey and

    Mozambique have implemented more than 3 projects since 1990.

    This speaks to the difficulty of implementing such projects continuously

    and successfully without adequate laws, regulations and institutions in

    place

    Like group 1, many of these countries struggle with overall country and economic

    competitiveness, as well as political and economic stability

    However countries such as Turkey, Qatar, Saudi Arabia, Gabon, Cameroon and the

    UAE stand out thanks to strong macroeconomic indicators.

    Group 3 overview

  • Issue 1:

    Inadequate legal framework

    Issue 2:

    Bidding and procurement rules

    Issue 3:

    Inadequate institutional framework

    Challenges group 3

    -Not all concession forms possible

    -Over-dependence on concessions

    and sea ports and air po