Stephen Harris

Chairman: TheCityUK PPP and Projects Group

President and Chief Operating Officer

Global Infrastructure Group Ltd

Business Specialist UK Trade and Investment

Public Private Partnerships: Key Lessons for Governments based on the UK and

International Experience

TheCityUK PPP and Projects Group

Set up June 10, 2010 - successor to IFSL group founded in 1999 Chairman: Stephen Harris, Global Infrastructure Group Ltd Secretary: Richard Normington, TheCityUK To be the central co-ordination and information body for enquiries

relating to PPP from overseas  To organise meetings, roundtables and visit programmes from

overseas groups. To provide a focal point for UK-based foreign diplomats, trade

envoys and externally organised delegations wishing to conduct visits to the UK.

To provide papers and reports as necessary: including the on-going IFSL reports on European and World PPP trends. 

To provide material for press releases, articles for trade journals and other media outlets. 

What are Public Private Partnerships?

Definition of PPP

Varies from country to country Covers a wide range of projects where the Public and

Private sectors work together. Key issue is ensuring that you are all talking about the

same form of PPP! Importance of being clear because opponents will try to

confuse the issue

PPP

…is about… Better procurement Public sector reform Better strategic planning Building and maintaining

good infrastructure Public and private

sectors working together Sharing of risks between

most appropriate parties Social change Better public services for

the taxpayer

is not… Free infrastructure Just about finance Just building things Just about involving the

private sector Privatisation, simple

concessions, outsourcing or property development

A method to make a bad project good

from theory to reality key lessons from UK and international experience

KEY LESSON 1:Political Support

High level political support crucial Politicians need to convince their

colleagues Lead and Support Public Sector Reassure and engage with Private Sector Communicate Objectives and Justification

to Public and Media Without High Level Political support their

will be no PPP

KEY LESSON 2:PPP Task Force or Knowledge Centre

Need to invest in the process Money Other Resources

Central, Ministry, Municipal Policy and Project Public and Private sector Facilitate co-operation between different tiers of government and

other PPP units Communication is a key task Advisory role v Regulatory role Needs to be properly resourced

KEY LESSON 3:Legal Framework

Legal framework Flexible

Powers to contract - is a PFI law necessary? Vires Procurement law Regional and Municipal aspects Ownership of Public Utility Assets

Tax Regime

KEY LESSON 4:Communications

Communication of policy by government To different levels of government To press and public –generate an informed

debate To local private sector –must be involved To Unions To international investors and operators

Policy v project Explaining reasons for PPP

Private sector better able Local issues

Trade press

KEY LESSON 5 :PPP Association

PPP Association Czech Republic, Slovakia, Canada, USA, Mexico, Poland, Russia,

France, Japan, Turkey, UK To create a forum for private sector and government organisations

for the development and promotion of PPP models. provides neutral forum to assist government organizations (at Central,

and Municipal level) developing PPP policies to engage with private sector in order to assist in policy and project development including: feedback on the structure and viability of projects, processes and legislation.

builds capacity and understanding in the private sector of PPP so as to encourage the building of a domestic PPP market to service government projects.

develops and encourages internationally recognized, transparent best practice in PPP processes to ensure that projects attract appropriate investment internationally and locally.

educates all sectors of society as to the benefits and issues surrounding PPP and to encourage an informed debate within the country.

KEY LESSON 6:Expert Advisors

Selection of Advisors is critical One of biggest mistakes governments make

Private sector will have good advisors Need international PPP experience

Individuals not just organisation Mentor-type advisors Must be available Cheap, inexperienced advisors are a false economy Beware those who claim experience but have none

KEY LESSON 7:Training

Training for public sector key in order to ensure best value for money National Audit Office EU

Developing internal capacity Reducing reliance on advisors Retaining expertise

Training for private sector

KEY LESSON 8:relationship between public and private sector

PPP should be a Partnership Public and Private sectors have very different drivers

Many relationships between public and private sectors are unbalanced

Problems caused by: Lack of understanding of other party’s key drivers Lack of equality in bargaining power Poor advice or understanding

We see the result in many privatisation, concession and outsourcing deals “Bad” deal damages image of PPP

Of process Or private sector

Fall out can make investors wary of market A PPP programme should aim to give more balance

Between public sector, private sector and citizen

KEY LESSON 9:The Pilot Project

Identify Prioritise Reasonable size Not too technically complex No political ”pet” projects Manageable political sensitivities Clearly defined from the start Realise it will be slow and expensive Incentives to private sector GET IT RIGHT!

KEY LESSON 10:Cost of process

PPP projects usually cost more to procure PPP projects usually cost more to construct Over the whole life of the project the cost is often less

than conventionally procured projects BUT: comparison is often not like with like

KEY LESSON 11:Affordability

PPP does not make a bad project good PPP does not make an unaffordable project affordable

Barts Hospital Over specification

It’s a long term financial commitment The government client mustn’t over extend itself Portugal roads

growth in the international market

international Interest in PPP 1999

International interest in PPP 2012

growth in international interest

Everyone needs infrastructure US needs $1.6trillion in next 5 years

Everyone needs public services A real world-wide market developing More competition for capital, expertise and operators Only the best organised countries will benefit Many markets are disorganised, lacking in expertise and corrupt! UK acknowledged as the world leader

contact details

stephen.harris@globalinfrastructure.co.uk

+44 (0)7702 464 366

Global Infrastructure Group

78 York Street

London

W1H 1DP

United Kingdom

www.globalinfrastructure.co.uk