BOT and public service

Prime Minister Ranil Wickremesinghe recently received Cabinet approval to allow government departments and ministries to enter into Public-Private Partnerships to provide key public services. According to details released to the media, universities, vocational training centres, hospitals and other government buildings will be established under the Build-Own-Transfer system with the private company tasked with maintaining them for 15-20 years before they are taken over by the Government. 

Under this measure the Government will enter into a negotiated agreement to make payments to the private sector company and retain a percentage of ownership. Under the current system projects often stall for years as the Government struggles to find funds and if PPPs are utilised public facilities would be improved significantly over a short span of time even when the State does not possess the fiscal space to do so.      

In theory PPPs make great sense. Today, PPPs are considered “creative alliances” formed between a Government entity and private developers to achieve a common purpose. But what Government ministers must remember is that this partnership is a process not a product. Successful navigation through the process results in net benefits for all parties and without buy-in from the public a successful PPP is impossible. 

The Sri Lankan Government has managed successful PPPs such as Sri Lanka Telecom (SLT), when each member of the staff was sent letters clearly explaining the point of the foreign investment and what the company as well as the staff gained from the change. Repeated rounds of meetings made workers a key part of the transfer process to ensure that the PPP could be sustained, a worthy example for policymakers to remember as they mull dozens of new projects.  

The vision for the program should be the result of a consensus-building process that identifies the opportunities, objectives and ultimate goals for the community. The local government must consider and establish its long-range public interest goals and resolve any conflicts that it might have for the specific project in question. It is essential that the overall development strategy is described both verbally and graphically to ensure that both the public and private partner understand the program.

It is also important to manage expectations. During this stage of the process, establish a schedule that clarifies the expectations of the public decision-makers. It is a good idea to craft a public awareness program to inform stakeholders of the goals of the development strategy and the specific projects that are identified. Bridging the trust deficit is the biggest challenge of all as many do not distinguish between PPPs and privatisation. 

Tabling agreements in Parliament, getting independent valuations and dealing with credible companies will be essential steps to ensuring that PPPs are done in the best interests of the country. In addition, the nexus between public jobs and votes is a deep one that should not be underestimated by any Government. Already Government plans to tap a private company to handle rail services in the Hambantota District have created public concern. This is largely because the Government’s overall anti-corruption track record remains unimpressive and policy direction remains opaque. Tackling these challenges would be imperative if the planned public services are to be delivered with confidence and accountability.