Public-Private Partnerships: Let us get on with it! Part 1

There is clear precedent in this very country. That precedent goes back to the early 1990s. The South Asia Gateway Terminal is perhaps the first PPP

Ideas are a dime a dozen, but those who implement them are priceless. Public-Private Partnerships (PPPs) are a “several decades old” concept. PPPs have been tried and tested and here to stay. My anxiousness to see things happen arises from decades of background in policy dialogue on the subject, since returning to the country for good, and my firm belief that we cannot afford to indulge in the luxury of time that we do not have, but rather, need to progress to implementation stage, in earnest. 

As an advocate of PPPs in Sri-Lanka over the years, I have participated in and provided policy guidance and advice on institutional mechanisms, on an honorary advisory basis. In a formal consulting setting, I have also analysed the merits and demerits of some, rejected some, the latter, with a request to the foreign private sector promoters, that they get back on the drawing board and re-present their proposals in a manner where there is greater equity and fairness between the private party and the Government. In essence my message is “do not attempt to steal a deal from my country, even if you were to be my client”.

Thus, when a Government and political party I have been closer to took office once again in January 2015, I submitted many recommendations on the need to develop policy, strategy and structure, and to legally enable an institution as an appropriate medium to catalyse PPPs. 

Let us not reinvent the wheel – There is precedent at home 

There is clear precedent in this very country. That precedent goes back to the early 1990s. The South Asia Gateway Terminal is perhaps the first PPP. Globally and regionally, there are numerous models of successful as well as failed PPPs. We can learn from the lessons of all of these. We do not have to re-invent the wheel or await the advice of Harvard, Boston Consulting Group or Mckinsey, or the encouragement of Ricardo Haussmann, Joseph Stiglitz, or George Soros. 

There is also lot of background activity, which preceded the first PPP. It may be useful to share with readers, thinkers, detractors, policy planners and politicians, only to help build awareness and enhance the quality of the debate, in and outside Parliament, thus giving legislators – the representatives of the people – necessary comfort to proceed to implementation. 

Protestors and detractors are as good as terrorists

Prior to January 2015, ours was a nation in a rut, burdened with debt. A debt-burdened rut, which we might yet be in, and that is our formidable challenge. If the nation was moving in December 2014, it was certainly moving in a less than desirable direction. 

The incumbent Government of National Unity has many irons in the fire to get the nation moving in the right direction. That process has begun, and many desirable initiatives have indeed taken root. But there are obstacles. Some are self-inflicted by those “in office”, while others are perpetrated by detractors, who are “out of office.” I have a message for those in office, and the message is from the words of Martin Luther King Jr.

When evil men plot, good men must plan

“When evil men plot, good men must plan. When evil men burn and bomb, good men must build and bind. When evil men shout ugly words of hatred, good men must commit themselves to the glories of love. Where evil men seek to perpetrate an unjust ‘status quo’, good men must seek to bring into being a real order of justice.” – Coretta Scott King from ‘The Words of Martin Luther King’

WB, ADB, JICA, and USAID, etc., have a role

Multilateral and bilateral development partners can well be tapped for technical and financial, assistance. A flashback to two decades ago may offer an example of a laudable initiative by USAID. Immediately on my return to the country for good, and at the request of the then Minister of Industries, the present Prime Minister, I had been providing honorary assistance to USAID while guiding the Ministry of Industries on the development of the ‘Strategy for Industrialisation’. Among the many initiates we jointly conceptualised were USAID TIPS and AgEnt. I was also quite active in the Ceylon Chamber of Commerce, during the time of the much-respected Secretary General S.S. Jayawickrema and Assistant Secretary Chula Jayasuriya. 

PPPs in economic infrastructure

Thus, it was more than 20 years ago, that USAID conducted the first-ever seminar on ‘Public-Private Partnerships in Economic Infrastructure’. Though designed primarily for the public sector, USAID sponsored private sector participants through mainly Chambers of Commerce and a few other nominating authorities. This was to facilitate what key officials at USAID and I creatively termed “a proactive ‘public-private’ policy dialogue with a larger majority of Sri Lanka’s public officials, and a cross section of representatives of the private sector, rather than limiting the discussion to passive learning only.” 

USAID urged me to find the time to attend. I was approached by SSJ, as we respectfully referred to him then, and I was thus named as a private sector nominee of the CCC. We had an almost three-day workshop at the Aitken Spence-owned Triton Hotel in Ahungalle. 

Potent learning outcome

We discussed several real life case studies implemented in many parts of the world, in Malaysia, Philippines, and Thailand as well as, in South Asia – in India and Pakistan and elsewhere. Resource people had been brought down from overseas, and they included public officials and private consultants from Washington DC. It was a great learning experience. 

On my return to Colombo, I wrote to then Minister of Industries, Ranil Wickremesinghe, suggesting the setting up of a Secretariat for Infrastructure Development, to conceptualise, design and facilitate the implementation of Public-Private Partnerships in economic infrastructure. 

Many months later, USAID had an event in Colombo, and to trigger a reminder I wrote once again to Wickremesinghe, and attached my suggestions for a secretariat to encompass PPP policy, strategy and structure. At his request, I contributed thoughts for his speech that evening and having been invited to the event, was encouraged to hear him demonstrate his grasp of the concepts. He articulated a role for Government exceptionally well.  

Secretariat for Infrastructure Development and Investment (SIDI) 

I was happy that soon thereafter, perhaps triggered by my concept paper for a secretariat, the Secretariat for Infrastructure Development and Investment, (SIDI), was born under the Ministry of Planning. Dr. Ramanujam played a key role in attempting to make things happen. 

I was once invited to a session where the Southern Expressway was being conceptualised. I recall that when the trace or route was discussed, many alternative paths were proposed, and it was clear that many ministers were pulling in different directions, in order to have the accesses or exits or the highway itself, within or outside their electorates!! Of course SIDI achieved very little. The Southern Expressway finally happened almost a decade and a half later! So much for implementation.

PSIDC, BII et al

The above was followed by the Private Sector Infrastructure Development Company, (PSIDC), for the formation of which I participated in many sessions and later the Bureau of Infrastructure Investment (BII) under the BOI (an initiative of then Chairman BOI, Thilan Wijesinghe). 

President Kumaratunga’s Visions of 2001, for 2010 in her Budget Speech of 2001, and President Mahinda Rajapaksa’s 10-year plan for the period 2006-2016 which followed and the subsequent Vision of the Future, as well as the present Government’s master plans, all focus on infrastructure. I will elaborate upon these, in a second part to this article, due to constraints on my time, and limitations of space in the print media. 

My argument

However, the above is sufficient background for me to present my argument. Do we have an apex institution for infrastructure design, development, financing and implementation? Do we have an apex institution, legally enabled, technically and financially adequately resourced, to implement PPPs in economic infrastructure? Perhaps we need one. 

Alignment of interest and Sri Lanka first

My message to Government and the Opposition, policy planners and project participants, well-wishers and detractors, is that we must move beyond the academic discourse, and even the drawing board, to get on with PPPs. But private parties, both on and offshore, should be well advised not to “steal a deal” from the Government and the country but to necessarily have an alignment of interest and if I may adopt the words (rather than the deeds!) of Donald Trump – Let us think Sri Lanka first and not “grab” a deal as it were.

The Cabinet decision is refreshing

It was refreshing to learn that finally, at least 24 months after January 2015, the Cabinet of Ministers approved proposals to formally embrace Public-Private Partnerships (PPPs) as a policy and strategy. The Ministry of Finance is expected to handle this subject through a PPP division, which together with PPP cells in relevant ministries, is intended to facilitate selection and implementation of the Government’s priority projects. The main aim of the PPP division is to provide oversight in execution, transparency, good governance, formulation of policies and recommendations to the Cabinet Committee on Economic Management. 

However PPP design must be a win-win for both partners

It is an imperative that PPP’s are conceptualised and designed well, if they are to be a credible, feasible, potent vehicle for rapid, but what I like to term “equally partnered” economic development. Governments will have to ensure that PPP Agreements are negotiated carefully, and a “win-win” achieved for both key partners, if it is to secure the “buy in” of genuine stakeholders as well as disruptive detractors. But we must walk the talk, so let us get on with it. My motivation to put pen to paper is driven by the fact that, there has been far too much talk of PPP’s by successive Governments, over well more than two decades. 

A legal, regulatory, and institutional framework is a necessity 

We need to take off and take off rapidly, and the momentum of that PPP journey has to be maintained. Hence before the programme gets stuck in the mud, falls in a rut, sometimes a self-inflicted one and that sadly is becoming a habit, it is important that the Government ensures that implementation of PPPs are facilitated by an appropriate legal, regulatory, institutional and financial framework. In essence we have to have a policy, a strategy, a structure, and a general and sector specific PPP programme, rather than attempt PPPs based on unsolicited proposals alone or on an ad hoc basis. 

I am optimistic of the future. Let me close with the words of US President Bill Clinton when he said in his year 2000 State of the Union address: “As long as our dreams outweigh our memories, we will be forever young. That is our destiny. And this is our moment.”

[Ranel T Wijesinha, FCA (Sri Lanka), MBA (USA), a Chartered Accountant, is presently an Independent International Management Consultant. A Past President of CA Sri Lanka, and a Past President of the 23 nation strong Confederation of Asian Pacific Accountants, he is a former Partner and Head of Consulting of PricewaterhouseCoopers, Sri Lanka. He established the first Business Development Division of the John Keells Holdings Group and served as Director Business Development. Since February 2015, he is an Independent, Non-Executive Director and Chairman of the Audit Committee of State Owned Bank of Ceylon, the nation’s largest and most profitable bank and commercial enterprise. He is also a Commissioner of the Securities and Exchange Commission since January 2015, having served before as a Commissioner, between 2000-2001. The views expressed here in the article are entirely his personal, independent, national perspectives.]