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Tuesday, 27 September 2016 00:03 - - {{hitsCtrl.values.hits}}
By Charumini de Silva
Public-Private Partnerships (PPPs) are set to become a core policy component as the US Government, together with its Sri Lankan counterpart, seeks to establish a national PPP unit and PPP committee, which will also be supported by wide ranging proposals in the upcoming Budget.
Finance Minister Ravi Karunanayake, addressing the inaugural session of the first national conference titled ‘PPPs: The Way Forward’, said that due to budgetary constraints, PPP has emerged as an alternative solution where there is an urgent need to accelerate economic development through private sector investments.
The Minister said that future Budgets would allow most capital expenditure proposals to be implemented through PPPs. “As you know, in the next 45 days the 2017 Budget will be presented. The President and the Prime Minister have instructed me and our team that we lay a lot of emphasis on the public-private approach,” he told the gathering.
He said the Government was relying on the public-private approach for infrastructure, housing, renewable energy, water and water resources sectors, which will help to unblock sectors starved of investment.
Noting that the current tender process in Sri Lanka was “archaic, corrupt, inefficient”, and not in the true spirit of transparency, Karunanayake justified the importance of the private-public process; “It is quicker, it has a sense of transparency and most importantly it doesn’t block the Government’s limited capital.”
The Minister said in a recently concluded Development Policy Loan (DPL) mission, the World Bank and Japan Agency for International Cooperation (JICA) have agreed to help Sri Lanka with a number of Public Financial Management (PFM) reforms.
“The PFM bill is the most significant among these reforms. The United States Agency for International Development (USAID) will also support to introduce PPP mechanisms, which are coming at the right time. The Public Finance Department under the Ministry of Finance is working on these reform initiatives at the moment,” he added.
While insisting that senior Government officials should create a conducive climate for investors, he said: “We look forward to seeing these American companies. Now you are giving us capacity building, but I would prefer a couple of American investors coming in and taking advantage of the PPPs. That is the most important thing.”
US Ambassador to Sri Lanka Atul Keshap acknowledged that USAID was working closely with a host of Government agencies in Sri Lanka to help them meet their democratic and economic reform goals.
Stating that they recently assisted the Department of Public Finance of the Ministry of Finance to publish a report on PPPs and to develop a roadmap to assess the current legal, regulatory, and business environment around PPPs in comparison to international best practices, he said they were helping the Government to create a PPP framework based on the report and roadmap.
“We are helping the Government of Sri Lanka to implement some of the recommendations included in the report such as setting up a National PPP Unit and a National PPP Committee, the development of a national policy and strategy on PPPs, and assistance with revisions to the legal and regulatory framework,” he pointed out.
According to ADB’s research, the Asia and Pacific region requires infrastructure investments of at least $ 8 trillion from 2010 until 2020, but traditional public funding sources fall far short of this investment need. Therefore, many countries are seeking to mobilise private funds, often through the use of PPPs. In Asia, PPPs are most commonly found in the energy sector, followed by transport and water and sewage sectors. PPPs are increasingly used in the social sector as well.
Commending Sri Lanka for being at the forefront of establishing PPPs, he said the country had been implementing these partnerships since the 1990s and had forged more than 70 such partnerships with an approximate investment value of more than $ 6 billion in the electricity, telecommunications, ICT and ports sectors.
“The US Government is happy to assist the Government and people of Sri Lanka to adapt and institutionalise the PPP model. As we have done during the last 60 years, we will continue to provide development and humanitarian assistance to improve your lives and futures.”
Promoting PPPs is one of the US Government’s key agendas where they have solid experience in helping stakeholders plan, build and support sustainable PPP programs across the world. “PPPs may be used to procure a national electronic-government procurement system that will make Government processes more transparent and accountable, which will further strengthen governance. PPPs often require modernisation and the use of new technologies which are capital intensive and expensive. Therefore having the private sector perform e-government or ICT services on behalf of the Government will be a potential ‘win-win’ solution,” Keshap said.
The Ambassador commended the Government for taking a major step towards establishing more PPPs in infrastructure by the Megapolis and Western Region Development Ministry as well as the East Container Terminal of the Colombo Port — in wherever Government contributions are required PPPs should be considered as the first option.
The seven-day program, which ends on 4 October and includes a national conference, workshops and roundtable discussions, is organised by the USAID through its STAIR project, in collaboration with the Department of Public Finance at the Ministry of Finance to help the Government to meet the infrastructure needs of the economy.
Senior Government officials, donors and representatives from the Chambers of Commerce will learn about the different approaches to PPP projects and identify relevant guidelines, actions, plans, techniques and strategies for effectively managing PPPs.
