A New Game
A Public-Private Partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility.
This Game is a Doubles Match
Private Sector Strengths
1.Management Efficiency
2.Newer Technologies
3.Workplace Efficiencies
4.Cash Flow Management
5.Personnel Development
6.Resources
Public Sector Strengths
• Legal Authority
• Protection of Procurement Policies
• Broad prospective/balance the competing goals to meet public needs
• Personnel – dedicated but constrained
• Capital resources
Successful Partnership
• Maximize the use of each sector’s strength
• Reduce project/development risk
• Mobilize excess or underutilized assets
• Improve efficiencies/quicker completion
• Improve services and cost effectiveness
• Share resources; Share risks
• Mutual rewards
Six keys to success
• Statutory and Political Environment
• Organized Structure
• Detailed Business Plan
• Guaranteed Revenue Stream
• Stakeholder Support
• Pick Your Partner Carefully
The Value over longer term
0 2 3 4 5 6 7
Year
Com
pany
Pro
fit
1
Customer acquisition cost
Profit from price premium
Profit from referrals
Profit from reducedoperating costs
Profit from increasedpurchases
Base Profit
Source: Harvard Business Review
What PPP should Not be used for
• To circumvent fiscal constraints for infrastructure investment
• PPPs can, but should not, be used to solely• By-pass expenditure controls• delay borrowing• delay or move public investment• move debt off the government balance sheet
• Can lead to Public Sector left bearing most of the risk involved, facing potentially large fiscal costs over the medium term
Managing for SuccessClassic Model: Design-Build-Finance-Operate
• Arrangements where the private sector supplies infrastructure assets and services that traditionally have been provided by the government.
• Main characteristics:
• Private execution and financing of public investment
• An emphasis on investment and service provision by private sector
• Risk transfer from government to private sector
Managing for SuccessCommitted Model: JV/Special Purpose Entity
An SPE is an entity that is created, through the transfer of assets, liabilities, or rights, to carry out a well-specified activity or series of transactions•These activities are directly related to the specific purpose for which it was formed•SPE’s can be in non-financial and financial corporate sector•In public sector, SPE activities are often instrumental to public private partnerships, BOOT schemes, or joint ventures
Managing for SuccessRisk Transfer, Leasing, and Ownership
•Risk transfer from government to private sector has significant influence on whether PPP is more efficient and cost-effective alternative to public investment and government provision of services
•Have to assess risk transfer and ownership by looking at:• Risks in owning asset• Risks in operating asset• Establish economic owner of asset by asking who bears the ultimate
risk or most of the risks associated with ownership• And how does government, then impute a financial lease through
which government acquires the asset when and if required
Introduction to NEGP
• National eGovernance Program’s goal is the provision of improved, more convenient government services countrywide through on-line delivery at local service centers.
• Fully recognized as key part of national development plans.
• Involves central and all state governments. Is led centrally and implemented locally.
• Is a Implemented over 8-year period (FY2006-2013) at a cost of roughly USD 4 billion.
• Supported by USD 1 billion World Bank project in two phases
Span of Scope
E-CourtsTreasuriesNational IDNational GIS for planning
Other
EDI (customs & foreigh trade)E-BIZE-Procurement
Commercial TaxesExciseCompany affairs
Services to Business (G2B)
Common Services Centres: Single-window public service delivery points eventually reaching all the 600,000 villages in India State Wide Area Network SWAN: fiber optic connectivity up to block levelCountrywide State Data CentersAll India PortalNational E-Governance Gateway
Land recordsProperty registrationRoad transportAgricultureMunicipalitiesPanchayatsPoliceEmployment ExchangeEducationHealthFood Distribution & other welfare programs
Income TaxPassport, visa and immigrationE-Posts
Services to Citizens (G2C)
IntegratedStateCentral
Governing Principals
• Measurably improved citizen/business service delivery
• Ownership by line ministry/ state department
• Acceptable BPR (Business Process Reengineering) & change management plan
• Emphasis on poor & rural communities
• Use of PPP (Public Private Partnership)
Responsibility with Government
PROGRAMME
Leadership & Vision
Program Development
Program Management
Project Development
Project Management
•Policy Formulation•Committing Resources•Taking hard decisions
•Preparing Roadmaps•Prioritization•Frameworks, Guidelines
•Monitoring Progress•Inter-agency Collaboration•Capacity Management
•Conceptualization•Architecture •Definition (RFP, SLA…)
•Bid Process Management•Project Monitoring•Quality Assurance
PROJECT
Summing Up: Mantra for Success
• Good projects• Choose right projects (strategy, prioritize)• Do PPPs for the right reasons (value for money, include in medium-
term budget framework)
• Good laws• Introduce a clear and consistent legal framework• Integrate proposals and guarantees with budget cycle• Clarify roles and responsibilities
• Good institutions• Management and oversight framework
• Good accounting and reporting