Development partnerships

The prolonged tussle over who will develop the long-delayed East Container Terminal (ECT) appears to be resolved for now, but it could be at significant cost to Sri Lanka’s relations with India and Japan. The Government, leaning towards appeasing its internal forces, is in danger of looking at the issue from too domestic a perspective, which also means that it skipped considering another option to finance the terminal, such as a Public-Private Partnership (PPPs).   

Obviously there are obstacles to this, especially since the Government has demonised PPPs numerous times in the past as selling of State assets and conflated it with privatisation. However, infrastructure development is necessary for growth and if utilised properly it can be beneficial to the public and resolve many transparency issues usually connected to many large-scale projects in Sri Lanka. 

Interestingly Sri Lanka has one of the most successful PPP stories in the shipping sector. The South Asia Gateway Terminal (SAGT) was developed as a PPP and demonstrates who well this can work for Sri Lanka’s benefit. 

It would also enable to the Government to be proactive in deciding what development projects to focus on based on the most returns to the public and the worries of unsavoury unsolicited proposals would also be addressed to some extent. In the case of ECT one of the concerns raised by detractors was the involvement of an Indian company who had competing interests across in the subcontinent, if a PPP approach was used then the Government would have had greater autonomy in selecting a development partner it was more comfortable with.

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 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. Unfortunately, without clearly identifying what investment is needed, the projects and what returns it will bring the Government runs the danger of increasing debt and allowing loopholes for corruption. Both the previous administration and the current Government had the option of exploring PPPs to develop the ECT. This would have made sense financially, economically and politically. But now having decided to go it alone the Government has a new set of challenges to navigate.