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Public Private Partnerships (PPP)
Kalat Al-Bulooshi
CEO
Oman Investment Corporation SAOC
PPP Definition
"a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance“ “world bank definition”
Public
Policy Leadership
• Setting national policy agenda
• Setting policy agenda for the sector
Enabler
• Creating investor friendly environment
• Facilitating the operations of PPP
Provider of Public Welfare
• Regulating and Monitoring to ensure that
public is benefitting from the partnership
Contributor to PPP
• Providing resources
• Sharing risk
• Educator / learner
Private
Contributor to Society
• As a partner deliver public services and goods
Contributor to PPP
• Providing resources
• Sharing risk
• Innovations and new solutions
• New organisation culture
• Educator / learner
Management and Accountability
• Efficient use of resources
• Citizen / customer satisfaction
Public and Private: Both achieve their goals
PPPs: What is the Rationale
Glo
ba
l In
fra
De
als
, 2
01
5
InfraDeals 2015 Trend Report
2014-15
317 PPP deals worth USD142bn
Benefits of PPPs
More Funds: Bridges large funding gaps in physical and social infrastructure
Improving Project Management Skills: Enhances project planning and implementation skills
Lowering Cost: Leads to cost savings over the life of the agreement
Reduces Time Overruns: Time bound agreements and government monitoring improves project implementation
Improves Doing Business Environment: Government adopts new institutional and legal frameworks
Creates Investor Friendly Environment: Government adopts new regulations and reforms financial markets
Competitiveness: Government can select competing bidders as partners for various projects
Partnership Advantage: The capabilities of Government and Private organisations come together to provide
efficient services to society
Diversification of Economy: Government can use funds to take up challenging projects
Private Sector Growth: More investment; more jobs; more tax contributions; regional development
Why PPPs for Oman
▪ Enhancing cooperation between public and private sector
▪ Economic diversification
▪ Using private sector funds and capitals to achieve government plans
▪ Job creation
▪ Country developments and implementation of plans
Typical characteristics of a PPP
▪ Long term contracts
▪ Private sector assumes delivery risk
▪ Optimum risk allocation
▪ Payments are output based
• Better service and cost outcomes
• Improved budget certainty
Oman Government financial outlay under traditional procurement vs a PPP
Comparative Performance of PPPs II
9
Sources:
(1) UK National Audit Report on PPPs
(2) Allen Consulting group, Univ. of Melbourne, 200-07.
Typical PPP contract structure
Risk allocation holds the key to PPP procurement
Risk transfer under procurement methods
PPP project development lifecycle
Progress to date in Oman
▪ The Government of Oman has a strategic intent to adopt Public-Private Partnerships (“PPP”) as a model to involve the private sector to boost economic growth.
▪ There have been several references to the potential of the PPP policy, in various speeches by Ministries and high ranking Government officials.
▪ The 9th Five Year Plan (2016-2020) reflects the Government’s commitment to adopting a stronger and closer collaboration with the private sector.
▪ A Public-Private Partnership Taskforce (“Sharakah”) for PPP was established in 2013
▪ PPP was a key initiative under the “tanfeedh” program
List of projects – Initial assessment
PPP able projects
Many precedents
Potentially PPP able projects
Commercial structuring is a key enabler
Challenging PPP projects
Few / no precedents
Power & water
Roads/Highways
Bridges/tunnels
Ports/Airports
Healthcare
Education
Street lightening
Sewage/wastewater treatment
Solid waste management
District Cooling
Universities
Museums/Leisure theme parks
Social housing
Industrial zones
Logistics/warehouse zones
Rail
Economic cities
Medical cities
Fishing/fruits/vegetables markets
National parks
Water network
Reurbanisation housing
Food security
Fisheries
Oilfield services
Limestone factories
Cement factories
Petrochemical services
Urbanization/real estate
Rail rolling stock factories
Hotel and resorts
Banking
Tourism services
Fundamentals for A Successful PPP
Political Support: For Oman PPP framework
Why is the legal and regulatory framework vital to a successful PPP framework?
Do We Have A Successful Track Record in PPP
The Privatisation of the Power and Water Generation in Oman Power and
Water Procurement Company SAOC have been VERY SUCCESSFUL and
have been role model for others.
Key Success Factors for Privatised Power and Water Sector are;
• Right Policy and Regulations (Power Sector Law issued by RD)
• Independent Regulator (AER)
• Open, Transparent and Competitive Award Process
• Right Risk Allocation
• Competent and skilled procurement body (OPWP)
Thank you