PUBLIC-PRIVATE PARTNERSHIPS IN MONGOLIANow and Futures Prospects

E.Enerelt, ADB

June 6, 2014

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WHAT IS PPP?

ADB’s PPP Operational Plan (mid-2012) defines public-private partnership as: “… a contractual arrangement between public

(national, state, provincial, or local) and private entities through which the skills, assets, and/or financial resources of each of the public and private sectors are allocated in a complementary manner, thereby sharing the risks and rewards, to seek to provide optimal service delivery and good value to citizens.”

Public procurement PrivatizationNOT

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WHY CHOOSE PPP?

Risk transfer

Whole of life-costing/ maintenance

Innovation

Maximization of asset utilization

Mobilization of additional resources

Disadvantages:

- Off-balance financing

-Cost of capital is expensive

-Can be complex and difficult to

implement

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HOW TO IDENTIFY A PPP PROJECT?

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PPP MODALITIES

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SHARE OF PUBLIC INVESTMENT DELIVERED THROUGH PPPS IN 2011

Country Share (percent)

Australia >10 - 15Canada >1 - 3Czech Republic >0 - 1 Finland >10 - 15Germany >3 - 5Italy >1 - 3Korea >5 - 10Luxembourg >5 - 10Mexico >15New Zealand >1 - 3Norway >3 - 5South Africa >3 - 5Spain >3 - 5United Kingdom >15Source: Burger and Hawkesworth (2013). OECD.

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ADB SUPPORT FOR PPPS IN MONGOLIA

ADB’s country partnership strategy for Mongolia,

2012–2016 - Inclusive and sustainable growth; - Support for PPPs will bring in private financing for the infrastructure

needed to improve access to essential public services.

Current Status - ADB has supported Mongolia’s PPP work since 2009:

1. The first technical assistance (TA) helped draft the Concessions Law and establish a PPP Unit as a coordinating body for PPPs;

2. A follow-on TA strengthened PPP regulations, helped build the capacity of the PPP Unit and develop a pipeline of PPP projects and more;

3. The third TA, “Developing a Conducive Environment for PPPs”, was approved in December 2012.

- In June 2011, ADB was appointed as the mandated adviser to the PPP for CHP5, the mandate was renewed in December 2013 (A $1.2 million TA that will fund additional advisers);- Other IFIs and countries such as the World Bank Group are in discussion with the government.

PPP LEGAL FRAMEWORK

• Parliamentary Ad hoc committee on PPPs - Nov 2008

• State Policy on PPP - Oct 15, 2009• to promote private sector participation in all sectors of

economy

• The Law on Concession - Jan 28, 2010• Defines the processes of PPP implementation.

• In 2010, the Government has approved several regulations regarding the detailed bidding process and evaluation of bid proposals

In 2010, the Government approved the list of 121 concession projects.

The Cabinet made amendments to the list of Concession projects (reduced to 51 projects) 2013.09.06 №317

III. LIST OF CONCESSION PROJECTS

BY SECTORS Infrastructure – 7 Road and transportation – 17 Pipeline transport – 2 Airport – 2 Energy -12 Environment – 4 Education - 2 Health – 1 Culture and sport - 4

BY TYPES OF PPP

BOT – 8 BOO – 12 BT – 19 OTHER - 12

Contact:

Enerelt Enkhboldeenkhbold@adb.org