A few years ago, I participated in a meeting to discuss best practices in Public-Private Partnership (PPP) regulation. There was no shortage of examples. In fact, PPP practitioners were eager to share their experiences from countries around the world, but we did not have a systematic way to make all that information accessible to policy makers. Moreover, at the time, I kept thinking that there were many more good examples beyond those we were sharing at the meeting.
The lack of systematic data on the quality of PPP regulation was a serious issue. What we needed was a comprehensive way to go beyond individual examples. How could we collect available information, organise it in a rigorous and systematic way, and make it all accessible to policy makers?
A new report, Procuring Infrastructure PPPs 2018, is designed to address that data gap and help governments make informed policy decisions. By benchmarking the regulatory frameworks of economies around the world against internationally recognised good practices in procuring PPPs, this assessment identifies a number of key areas of improvement in the preparation, procurement, contract management, and treatment of unsolicited proposals.
The report puts data at our fingertips that have not only been scrutinised for consistency, but also makes it easily comparable. Reliable, systematic data can help policy makers allocate resources more wisely in areas that deserve more attention. For example, one of the most discussed topics among PPP practitioners has been the lack of well-prepared PPP projects and most of them agree that a sound appraisal of a project requires at least seven assessments during preparation phase: (1) socioeconomic analysis; (2) fiscal affordability; (3) environmental assessment; (4) risk identification; (5) financial viability; (6) comparative assessment with traditional procurement; and (7) market sounding. These assessments would help gauge the procurement authorities’ understanding of the key elements of the project, enabling them to properly structure the project and design the draft PPP contract. This would then ensure a project of optimal quality most likely to attain financial closure.
However, we knew very little about how countries typically addressed requirements for the relevant government agencies to perform those assessments during preparation phase, or how they developed methodologies to provide guidance and guarantee consistency across PPP projects.
Data compiled for 135 economies reveal that most perform six out of the seven assessments that are considered recognised good practices (see Figure 1)—the exception is market sounding for potential investors. However, less than one-third of the economies have developed specific methodologies for conducting such assessments. Only 11 economies among the 135 economies surveyed provide specific methodologies for all seven assessments measured by the report (Canada, Germany, Ireland, Lithuania, Netherlands, New Zealand, Peru, Philippines, Slovakia, South Africa, and the United Kingdom).
Most PPP practitioners agree that the disclosure and publication of the assessments allow all stakeholders to gain a full understanding of the projects. Moreover, the transparency achieved by publishing the assessments is likely to exert pressure on the procuring authority to choose the right projects, reducing the scope for inefficiencies and potential corruption. Similarly, it can help bidders make informed bidding decisions and submit better prepared bids.
For these reasons, this year’s survey also inquired about whether the required assessments are made available to the public and published online. Procuring Infrastructure PPPs 2018 reveals that only a small percentage of economies (22 percent) make the assessments available online. This is only one of many areas of improvement identified in the report, and only one of 55 data points assessed in the survey in 135 economies.
I am very hopeful that by providing these data, Procuring Infrastructure PPPs 2018 will enrich the debate on PPPs and help to increasingly get PPPs right so that people in countries around the world can gain access to much-needed, quality infrastructure services.
This article originally appeared on the World Bank Blogs website
About the Author
Fernanda Ruiz Nunez
At the World Bank, Fernanda has worked in the infrastructure sector in East Asia and the Pacific, South Asia, Latin America and the Caribbean regions. Fernanda has worked in both the bank´s research and operations, focusing mainly on transport, energy, and urban sectors. She has provided strategic directions for these operations and a range of analytical work related to infrastructure policy, economics and financing.