PRESENTED AT THE PUBLIC SERVICE REFORM RETREAT
OPPORTUNITIES FOR PUBLIC PRIVATE PARTNERSHIPS IN PUBLIC SERVICE
PROVISION PRESENTED AT THE PUBLIC SERVICE REFORM RETREAT Aminu
DikoDIRECTOR GENERAL/CEOINFRASTRUCTURE CONCESSION REGULATORY
COMMISSION Africas Most Formidable CV Past and Present
Largest Economy in Africa/First to Eradicate Virulent Form of
Ebola/Guinea Worm in Recent Times.First TV Broadcast in Africa
(before Belgium) One of the oldest locations of human existence
(9000 BC) 521 Languages (Fourth Largest in the world) UCH 8th
Hospital in the Commonwealth Largest Diversity of Butterflies in
the World Mandela hid in Nigeria for 6months to escape the
Apartheid Regime Longest Bridge in Africa (11.8 Kms) 26th Largest
Economy in the World Half a Trillion GDP Largest Black Country in
the World 170 Million (1/5th of Africas Population) Largest
Entrepreneurial Population in Africa 128 Mobile Phone Users Third
Largest Movie Industry in the World Diversifying Economy With
Growing Non Oil Sector 51% Services, Agric 22%, Industry 26%, Oil
15% Richest Man in Africa Aliko Dangote Leading Destination for
Investment in Africa UNCTAD IF YOU ARE NOT IN NIGERIA, YOU ARE NOT
IN AFRICA Nigeria of Our Dreams ABAK ROAD FLYOVER AND THIRD RING
ROAD Outline The challenge in Public Service Provision The
Solution
Public Private Partnerships (PPPs) Understanding PPPs Opportunities
for PPPs Some PPP Projects in Nigeria ICRCs Role Conclusion
$14billion/annum The Challenge $6billion National Annual
Budget
Resource requirement in context $14billion/annum National Annual
Budget $6billion Shortfall for service provision $8billion Source
Shelter Afrique/CME The Challenge Absence of an effective
integrated national planning framework for infrastructure
development Project preparation: The dearth of capacity by public
authorities to carry out economic appraisal of projects, long-term
investment strategy which will provide a planning tool for the
development of infrastructure Faulty project execution framework,
together with the dearth of project execution capacity and
competencies Dearth of long term finance, together with the
inappropriateness and inadequacy of the annual budget The Solution
Long term financing through options such as PPPs
Confirmation of Critical and Urgent projects from the NIIMP to be
executed through a dedicated Project Delivery Framework A Critical
Infrastructure Delivery Leadership Council, Headed by the Vice
President, with key ministers of infrastructure sectors as members
will provide high level oversight and supervision for the delivery
of all critical and urgent infrastructure Actual delivery of
critical and urgent infrastructure will be organized at sectorial
levels (power, transport, others, etc.) Dedicated Project Managers
and Project Delivery Teams (PDT)/Task Forces, will be responsible
for day to day delivery of the projects or group of projects WHAT
ARE PPPs? WBI Video Keywords and Sentences from Video
Traditional public procurement cannot meet all needs PPP offers a
way out Share financing, design and operations with the private
sector via PPP PPP is not privatization, Government leads on a PPP
Competitive Tender Costs recovered by fees paid by government or
users Lifecycle planning, Risk Sharing and Allocation Complex legal
and financial arrangements Good governance principles Economically
warranted, All Stakeholders Environmental protection and
transparent procurement Football Game !!!! Public Service Delivery
Options
Infrastructure Services Direct Public Delivery Privatization /
Divestiture Government creates assets & provides services
Government transfers entire sector responsibility to the private
sector which then creates assets and provides services Contracting
of Services: Government creates assets and contracts service
provision to private sector Government awards concession/license to
private sector for a fixed term under which it creates assets and
provides services PPPs 13
Bath-001-Presentation-ProjectSponsor-TonyHagan-6thNov2008
Asset Procurement Options Public Sector Private Sector Risk
Spectrum Traditional Procurement
The public and private sectors have always worked together
Companies have paid taxes Companies have supplied governments with
goods Companies have constructed projects for the government
Traditional infrastructure procurement Gov designs / finances
Private company constructs Government owns / operates / maintains
Example Government designs a bridge joining 2 islands Runs tender
and gets cheapest construction company to build it Government pays
for the construction from the budget When built the government
operates and maintains the bridge If anything goes wrong the
government pays PPPs A Public-Private Partnership is a contractual
agreement between a public agency (federal, state or local) and a
private sector entity. Through this agreement, the skills and
assets of each sector (public and private) are shared in delivering
a service or facility for the use of the general public. In
addition to the sharing of resources, each party shares in the
risks and rewards potential in the delivery of the service and/or
facility. Wide Infrastructure Gap Growing demand for private sector
participation in infrastructure Small and depleting Government
resources Urgent need for alternative funding of Infrastructure The
goal is to combine the best capabilities of the public and private
sectors for mutual benefit 16 PPPs are Fundamentally
Different
Formal contract between public and private partner (over the years
duration the service will beprovided) usually multiple years
duration Entered through competitive procurement Using output
specification government specifies what, private sector can define
how With suitable risk allocation between parties Putting private
investment at risk With regulation or contract management of
performance of the private partner Example Government defines
output =connection to let 1,000 vehicles p.d. travel between
islands Government tenders for best solution over 30 years e.g.
ferry, tunnel, bridge?? Government enters 30-year contract with
private company Private company designs, builds, finances bridge,
then operates and maintains it for 30-years Private company
receives payment if the bridge works and is available for traffic
Government checks on safety and availability If the bridge is
closed, or unsafe, the private company looses money 7 Essential
Conditions That Define Public Private Partnerships
1 Arrangement Between public & private BOT-Toll Road Project
GRANTING AGENCY CONSTRUCTION CONTRACTOR DESIGN CONSULTANT Finance
Ris Risk Demand, Traffic, SPV ROAD USERS Design Consultant
Construction Contractor O&M Contractor Concession Agreement
Design Risk Construction Risk Tolls 2 Provision Of services for
public benefit by private partner The final responsibility for
service delivery continues to remain with the public sector agency
3 Investments In and/or management of public assets by private
partner 4 Time Period For a specified time FINANCIERS Equity
Investors, Lenders, Guarantors, Insurers Service 5 Risk Sharing
Optimally between contracting parties The salient features of any
PPP arrangement are as follows: Contractual arrangement: Bring the
public and private sector together to create better value for money
for the taxpayers through the use of the management skills and
financial strength of the private sector, and conducive legislative
and policy measures of the public sector. Substantial risk transfer
to the private sector: Engage the private sector through a
transparent process and oversee the PPP according to accepted
performance norms. Financial rewards based on performance: The
government pays the private sector for the services it renders;
these services are based on actual performance as against the
targets. Operational Risks Traffic/Revenue & O&M 6
Standards Focus on quality of service / performance 7 Payments
Linked to performance Why Public Private Partnerships
PPPs fill a critical resource and expertise gap in infrastructure
procurement, delivery and operation PPPs engender accelerated
procurement of infrastructureand services (additionality) PPPs
promote faster implementation of projects, and reduced lifecycle
costs and operations /mtce due to private sector efficiencies PPPs
provide for better risk allocation between public and private
sectors, thus offering abetter and sustainable incentive to perform
PPPs engender accountability in resource utilization and
alsoimprove the overall quality of service PPPs often lead to the
generation of additional revenue and overall value for money for
the entire economy
Bath-001-Presentation-ProjectSponsor-TonyHagan-6thNov2008
What characteristics have PPPs got? Characterised by the Public
Sector: Entering into contracts to acquire services, rather than
procuring an asset Specifying the service requirement on the basis
of outputs, not inputs Linking payments to the private sector to
the level and quality services actually delivered Often requiring a
whole life approach to the design, building and operation of
project assets Seeking optimal risk transfer to the private sector
Requiring private partner to be responsible for raising some, or
all, of investment finance required Utilising diverse payment
mechanisms, such as market revenue, shadow tolls, capacity
availability payments and so on Forms of PPP Service
contracts:
Private sector contracted for specific tasks Capital investment and
ownership of the asset is by the public sector Public entity pays
the private company for provision of services but retains the
commercial risk Management contracts: Private sector manages the
utility but does not finance it Capital investment and ownership
are retained by the public Public entity pays private manager a
fixed management fee Commercial risk is held by the public Lease:
Private sector manages the utility and finances the O&M Private
operator collects revenues and pays to the public entity a fixed
fee Commercial risk is shared Concession: Private operator manages
the utility and finances new investments as well as O&M Capital
investment is made by the private operator but ownership is
retained by the public Private operator collects revenues and may
pay a concession fee to the public entity Commercial risk is borne
by the private operator BOT ( and other variations e.g. BOOT, BTO,
DBOT, DFBOT, etc) Private operator builds new infrastructure,
operates it for fixed period and transfers it to public sector
Capital investment is made by the private operator, but ownership
is by both at different points in time Public utility pays private
operator for services provided by the new asset Commercial risk is
usually private, but could also be shared Types of PPPs Alphabet
Soup
DBFOM Design Build Finance Operate Manage Leasing Joint Ventures
Operations or Management Contracts Cooperative Arrangements LROT
Lease Renovate Operate Transfer DCMF Design Construct Manage
Finance BOOR - Build Own Operate Remove BOT Build Operate Transfer
BOO Build Own Operate BOOT Build Own Operate Transfer DBF Design
Build Finance DBFO Design Build Finance Operate DBO Design Build
Operate BLT Build Lease Transfer BTO -Build Transfer Operate
Advantages of PPPs Maximizes the use of each sectors strength
Reduces development risk Reduces public capital investment
Mobilizes excess or underutilized assets Improves
efficiencies/quicker completion Improves service to the community
Improves cost effectiveness Shares resources Shares/allocates risks
Mutual rewards Government is moving from role of Developer &
Operator to Facilitator
PPPs are about !!! Mobilizing private sectors money, expertise and
capacities for infrastructure development Long- term relationship
between government and private sector (usually>10years) 3.
Sharing of Risks and Rewards (no lop-sided agreements-privatizing
the profits, nationalizing the loses) Private sector performs to
agreed KPIs Life cycle focus (operations and maintenance)
Government is moving from role of Developer & Operator to
Facilitator Developer& Operator Facilitator Suitable Candidates
for PPPs
Transport (road, rail, ports, airports) Fixed links (bridges,
tunnels) Water resources (filtration plants, irrigation, sewage
treatment, pipelines) Tourism (facility development) Health
(hospitals and specialized health services) Specialized
accommodation facilities (courts, police stations) Educational
facilities (schools, museums, libraries) Correctional services
(prisons, remand and detention centres) Arts, sport and
recreational facilities Convention centres Government office
accommodation Social housing Experience is transferable - Lessons
learned from one . . . PPP PROJECTS MUST BE BANKABLE &
AFFORDABLE
IRR > Weighted Average Cost of Capital RoE > Shareholders
Requirement Debt Service Cover Ratio > Bankers or Lenders
Requirements Loan Life Cover Ratio > Bankers or Lenders
Requirements Focus on not just comparative but competitive
advantage !! Ideas dont get funded bankable projects get funded.
You must take to market projects with robust cashflows and cost
reflective returns What a PPP is & what it is not
PPP is not privatisation or disinvestment PPP is not about
borrowing money from the private sector PPP is more about creating
a structure ... in which greater value for money is achieved for
services ... through private sector innovation and management
skills ... delivering significant improvement in service efficiency
levels This means that the public sector ... no longer builds
roads, it purchases kilometres of maintained highway ... no longer
builds prisons, it buys custodial services ... no longer operates
ports but provides port services through world class operators ...
No longer builds power plants but purchases power PPPs: Common
Myths/Concerns
Myth/Concern Clarification Profitmotive of private sector is
incompatible with the service motive of public sector No. The key
is to harness private sectors profit motive, by incentivizing them
to provide better quality service and earn reasonable return. PPPs
increase user tariffs Not Necessarily. When appropriate safeguards
like effective regulation and/or adequate competition are in place.
However in sectors where existing tariffs are inadequate to cover
costs of specified level of service tariffs may initially require
some upward adjustment. Over time efficiency gains expected to
rationalize tariffs. Money for PPPs comes from private sector
pockets Initially, YES.But private sector would make those
investments provided they can recover those investments either from
users or the government with reasonable return. Once a private
sector partner is brought in, there is little or no role for the
public sector No. Public sectors role changes from direct
involvement in construction and service provision, to ensuring that
the PPP delivers value for money for the government and better
services for users. In most sectors tariffs regulated by government
or independent regulator. In competitive sectors tariffs are
determined by market. Government could mitigate the impact of
increasing tariffs on weaker sections through subsidy payments. Key
Benefits of PPPs Rigorous project preparation since the focus
shifts to developing bankable projects Delivery of a whole life
solution going beyond asset creation and including Operation and
Maintenance (O&M) Focus shifts to service delivery construction
responsibility is integrated with O&M obligations and together
with appropriate quality monitoring and service delivery-linked
payments such an arrangement could enhance the levels of
servicedelivery It is possible to adopt a programmatic approach to
infrastructure development and service delivery various time bound
projects can be integrated under a programme and have a time-bound
implementation plan Can lead to better overall management of public
services transparency in selection and ongoing implementation
OPPORTUNITIES FOR PPPs IN NIGERIA Some PPP Projects In
Nigeria
Bridges Project Name:2nd Niger Bridge Client:Federal Ministry of
Works Description: Bridge is a 6-lane dual carriageway of
approximately 1.760m long and 32.4m wide including 14km long
approach road with three (3) river bridges and three (3)
interchanges on the approach road Preferred PPP Model:Build Operate
Transfer (BOT) for bridge alone. Approach roads via traditional
procurement Project Status: Ground breaking ceremony performed in
March, 2014 by the President. Early works ie. mobilization and
hydrographic studies by concessionaire in progress PROPOSED IBOM
DEEP SEA PORT
Mission: To provide an efficient, safe and customer friendly port
and free trade zone as an additional gateway to the Nations economy
Vision: To be the world-class economic engine in Western Africa and
a destination hub for countries around the Gulf of Guinea and their
hinterland Some PPP Projects In Nigeria
Seaport Infrastructure Description: Greenfield Deep-Sea Port
Project in Akwa Ibom State, Nigeria part of 14,400 hectare Ibom
Industrial Cityto be supported by large-scale Free Trade Zone
development Current status Outline Business Case (OBC)completed and
certificate of compliance issued. Investment required is US $2
Billion. Project Objectives Eastern Maritime Gateway for Nigeria
Serve national/regional needs & facilitate the adjacent Free
Trade Zone & Ibom Industrial City Provide container handling,
storage capacity and import capacity for petroleum products and
vehicles Provide dedicated import capacity for food and
agricultural products Provide dedicated export capacity for
industrial output and natural resources Provide a supply route base
for the regional oil & gas sector and serve as logistics park
base and regional trans shipment & trading hub for West Africa
The National Theatre, Lagos The National Theatre, Lagos
Urban Infrastructure Project Name: Development and Concession of
Land Area around the National Theatre Client:Federal Ministy of
Tourism, Culture & National Orientation& The National
Theatre Management Board Description: The Federal Government wants
to realize the original master plan for the National Theatre
complex by full utilization of the land area for tourism and
entertainment destination facilities ie. Leisure Park, Recreation
Centre, Multi Level car park, Shopping Mall and a five (5) Star
Hotel etc. The National Theatre and the entire land mass is
approximately hectares and only about 20 hectares is currently
being utilized. The National Theatre will also be fully refurbished
with use and control retained by the Public Sector. Will complete
the Lagos Metro blue line major station located near the National
Theatre. Preferred PPP Model: Rehabilitate, Design, Build, Finance,
Operate and Transfer (RDBFOT) model Project Status: OBC approved by
FEC and HE Mr. President. Procurement process about to commence via
road shows in Dubai, South Africa and London. EoI evaluation
completed and six prospective investors short listed. National
Theatre - Proposed Design National Theatre - Current State of
Facilities National Theatre Proposed Some PPP Projects In
Nigeria
Power Infrastructure Client:Federal Ministy of Power Project
Name:PHCN 3 Large Hydro Power Plants Description: Concession of
Kainji, Jebba and Shiroro as part of Power Sector reforms Preferred
PPP Model:Rehabilitate Operate Transfer (ROT) model Project Status:
Handover occurred as part of PHCN unbundled asset handover in 2013.
Project Name:Small and Medium Hydro Power Projects Description:
Generation of up to 43 MW from existing Ten (10) Small and Medium
dams. Preferred PPP Model:Rehabilitate/Build, Operate Transfer
(RBOT) model Project Status: : PPP Development in progress. OBC
review by ICRC completed Some PPP Projects In Nigeria
Roads Project Name:Rehabilitation and Upgrade of Murtala Muhammed
Airport Road Client:Federal Ministry of Works Description: 2.8km
dual carriage Apakun - Murtala Muhammed Airport (MMA) road is to be
expanded from its present width of 4 lanes to 8 lanes with 2.75m
shoulders on either side, including vehicular bridges and
pedestrian bridges at appropriate locations. Preferred PPP
Model:Build Operate Transfer (BOT) Project Status:: Procurement -
selection of preferred bidder and preparation of FBC for approval.
Some PPP Projects In Nigeria
Bridges Client: Federal Ministry of Works Project Name:River Niger
Bridge at Nupeko Description: New bridge on critical crossing for
Agriculture Products Preferred PPP Model:Build Operate Transfer
model with tolling Project Status: Due to insufficient tollable
traffic PPP delivery model being reviewed Some PPP Projects In
Nigeria
Inland Ports Project Name:Operations and Management of Onitsha
Inland Port Client:Federal Ministy of Transport/National Inland
Waterways Authority (NIWA) Description: The Onitsha River Port has
a 180m quay length berth with other facilities which include:
warehouse, mechanical workshop, administrative offices and cargo
handling equipment fully built by the Government. Preferred PPP
Model: Operate Maintain & Transfer (OMT) model Project Status:
Interim operations in place; TA procured via WB support.
Procurement of concessionaire in progress. Some PPP Projects In
Nigeria
Seaport Infrastructure Project Name:Rehabilitation and Upgrade of
Kiri Kiri Lighter Terminals I & II Client:Federal Ministy of
Transport/Nigerian Ports Authority (NPA) Description: NPA is
undertaking the process to concession the terminals to private
operators for a variety of possible uses including fishing and
container operations PPP Model: Landlord Port Model for the
Nigerian ports in line with the ports reform programme Project
Status: TA procured via WB support. Procurement of concessionaire
in progress. Some PPP Projects In Nigeria
Agricultural Infrastructure Project Name:31 Silo complexes
Client:Federal Ministy of Agriculture & Rural Development
Description: The Federal Ministry of Agriculture and Rural
Development intends to concession 31 Silo Complexeslocated in
different parts of the country to allow for greater participation
of farmers and the private sector in the Agricultural
Transformation Agenda. Preferred PPP Model: Rehabilitate/Build
Operate Transfer (RBOT) model Project Status: Review of harvested
EoIs in progress. Some PPP Projects In Nigeria
Oil & Gas Infrastructure Project Name:Trans Nigeria Gas
Pipeline (TNGP) Project (subset of Trans Saharan Gas Pipeline)
Client:Nigerian National Petroleum Corporation Description: The
Trans Nigeria Gas Pipeline (TNGP) Project is a subset of the Trans
Saharan Gas Pipeline Project valued at $5 Billion. Preferred PPP
Model: A mix of models Project Status: The TNGP Project is under
development presently, and will be in the market soon PPP Pipeline
Other Project Opportunities
Roads Power Transport (Rail and Maritime) Housing Health Urban
Infrastructure List of projects published ICRCS ROLE The ICRC Act
2005 Establishes the Infrastructure Concession Regulatory
Commission (ICRC) Sec. 14.1 MDAs may enter into a contract with or
grant concession to any duly pre-qualified private sector proponent
for the financing, construction, operation, and maintenance of any
infrastructure that is financially viable or any development
facility of the Federal Government. (Section 1.1). Empowers the
ICRC to; Provide general policy guidelines, rules and regulations.
Take custody of every concession agreement entered by the Federal
Government Ensure efficient execution of any concession agreement
or contract entered by the Federal Government. Section 11
(Arbitrary Variation etc)No agreement reached in respect of this
Act shall be arbitrarily suspended, stopped, cancelled or changed
except in accordance with the provisions of this Act. General
Lessons Learned: Project Development
Project Preparation: A well prepared project will attract funding
and support during implementation. A poorly prepared project will
ultimately fail, no matter how well funded. There is Need for
experienced transaction advisers and thorough project Preparation
(time spent in preparation is always regained during smooth and
effective implementation) Operating Environment: Only a conducive,
transparent, and competitive environment can attract the right
partners Data: Technical and Economic data are critical for
thorough project preparation. Data gathering must be a continuous
programme Transaction Management: Agency responsible for
implementation must take Ownership and Responsibility from
inception to completion Stakeholder Consultation: Engagement should
include all stakeholders that will be directly or indirectly
affected throughout the life of the project General Lessons
Learned: Procurement and Contracts
Procurement is Most Critical to ensuring a vibrant PPP market.
Procurement processes must be Transparent and Competitive Govt.
must understand, in totality, what they are committing to, with
clear roles and responsibilities (conditions of contracts) In-depth
due diligence (Legal, Technical, Financial, Environmental and
Social) must be captured at the OBC level of all potential PPP
projects Risks must be thoroughly assessed and shared between
parties, with clear Understanding of the responsibilities Public
partners must understand that PPPs imply a Loss of Management
Control to the Private sector True Partnership implies equality in
the relationship. Govts must appreciate and imbibe the qualities of
partnership in a PPP environment PPP Procurement can be Lengthy and
Costly. MDAs must appreciate this fact, and exercise Patience and
Discipline, to maintain best practices NATIONAL POLICY ON PPP
Government Commitment Policy Objectives
Economic Social Environmental Enabling institutional environment
Guidelines for the PPP Coordination and planning Capacity building
Effective communication Roles and responsibilities Market
development Collaboration with states and other stakeholders ICRC
at a Glance Who is ICRC? WHAT ICRC DOES WHAT ICRC DOES NOT DO
Policy, Guidelines, Regulations, and Capacity Building Ensure
Bankability of PPP Projects Ensure VfM and Appropriate Risk Sharing
between Parties Pre Contract Post Contract ICRC is the agency of
the FGN responsible for regulating public private partnerships for
the development and implementation of a viable PPP framework
towards the development ofbrownfield and greenfield infrastructure
for the benefit of Nigerians WHAT ICRC DOES NOT DO Project
Initiation & Approval Determine Output Requirements Contracting
Authority PPP LIFECYCLE in line with National Policy
Development Phase TRANSACTION ADVISER NEEDS ANALYSIS PPP OPTIONS
APPRAISAL VALUE FOR MONEY AFFORDABILITY SUSTAINABILITY PRELIM RISK
MATRIX VIABILITY/BANKABILITY VGF OBC OBC APPROVAL BY FEC PREPARING
AND IMPLEMENTING EFFICIENT AND EFFECTIVE PPP TRANSACTIONS PPP
LIFECYCLE in line with National Policy Procurement Phase EoI/RFQ
Phase AND RFP BIDDING BIDDERS CONFERENCE BID EVALUATION VALUE FOR
MONEY TEST PREFERRED BIDDER FULL BUSINESS CASE BY FEC
Implementation Phase INDEPENDENT ENGINEER MONITOR DESIGN AND
CONSTRUCTION COMMISSIONING TEST VERIFY OUTPUT REQUIREMENTS CONTRACT
MANAGEMENT Project Identification Project Prioritization Project
Selection Preliminaries ICRC ICRC-MDA Interface MDA Post-Contract
Identification
Pre-Contract Post-Contract Technical Adviser Project Monitoring
Commissioning Test Verify Output Requirements Contract management
Development Phase Procurement Phase ImplementationPhase Needs
Analysis PPP Options appraisal Value for Money Affordability
Sustainability Prelim Risk Matrix Viability/Bankability VGF
assessment OBC approval Transaction adviser EoI and RFP Bidding
Bidders Conference Bid Evaluation Value for Money Test Preferred
Bidder Full Business Case FEC Approval ICRC MDA Take custody and
Ensure Compliance with Terms and Conditions of Agreement Policy,
Regulation, Capacity Building Ensure Bankability Recommend OBC
Approval Ensure VFM and Appropriate Risk Sharing Create a Robust
PPP Market Interface Recommend FEC Approval Preliminaries
Identification Prioritization Selection MDA; NPC; BOF; MoF THE KEY
PPP PRINCIPLES BEING DRIVEN BY ICRC
Value for Money Ensure project appraisals take into account not
only cost but also risks and service quality Public interest
Adequate and prior consultation with end-users and other
stakeholders of an infrastructure projectas standard. Output
requirements Concept of verifiable service standards to be used as
basis for output or performance based specifications. Transparency
Very high world class standards of public and corporate governance
to enhance credibility and transparency. Risk allocation Risks
allocated to the party best able to manage them. Competition Ensure
business activities are subject to competition and appropriate
commercial pressures, dismantling unnecessary barriers to entry,
and implementing and enforcing adequate competition. Capacity to
deliver Ensure authorities responsible for privately operated
infrastructure have the capacity to manage the commercial processes
involved and to partner on equal basis with their private sector
counterparts. PPP Process Solicited Route Unsolicited PPP Proposal
Route
Initiated by Private Party (must be full proposal with development
phase complete or nearly complete ie, bankable OBC) (Unsolicited
proposals means moving straight into PPP procurement phase)
Contracting Authority Receives and Makes Preliminary Review Does
proposal certify OBC requirements Send to ICRC (Confirm OBC
requirements met) Decision to use Swiss challenge to introduce
competition FEC approval sought ie. OBC approval Counter proposals
requested for Process followed till full business case as for
solicited proposal. ICRC commends MDAs for establishing PPP
Unit
PPP Next Steps ICRC commends MDAs for establishing PPP Unit But
there is immediate need to strengthen the Units Allocate
Budget/Carryout PPP Capacity Building Identify and Select Pilot PPP
Projects Seek ICRC and Min of Finance Concurrence Procure
Transaction Advisor/s Prepare Pilot Projectsie. Outline Business
Case and seek PPP partners Obtain FEC approval, operate and monitor
pilot PPP projects Build on Success of Pilot PPP Projects Whats The
Road Block to Good Public Service Provision?
Awareness & Education, Political Will, Execution Discipline and
Due Process PPP & TIME CHALLENGE The biggest challenge to
procuring infrastructure services via PPP is time PPPs require:
TIME to undertake a proper feasibility study/business case TIME to
secure approvals TIME to conduct a fair, equitable, transparent and
competitive procurement process. .Challenges INTEGRATED PLANNING
Planning data/statistics still weak and unreliable (NIIMP)
Capacity/Skills & commitment to Planning Tendency to
short-circuit procedures PROJECT DEVELOPMENTAND PROJECT MANAGEMENT
Lack of funding for project preparation Requires paradigm shift in
looking at PPP projects as focused on SERVICE PROVISION rather than
ASSET DEVELOPMENT Ability to differentiate between PPP and
traditional procurement lacking FUNDING Adequate funding required
to carry out pre-contract & post-contract activities GOVERNMENT
COMMITMENT Needs patience & commitment to follow through
Cooperation and Collaboration between ICRC and MDAs LEGAL &
REGULATORY Need harmonized and aligned laws and regulatory
framework INSTITUTIONAL CAPACITY Project identification,
evaluation, -VfM-risk analysis, financial modeling are key
requirements for PPPs FINANCE Nigerian Financial Systems majority
short term based balance sheets so lacks long term funds Bond
market still evolving but dominated by Govt. Bonds Project
structuring & financing skills not adequate It is our
expectation that with the passage of the revised ICRC Act, and the
acceptance of PPPs by key stakeholders for service delivery; the
Commission is ready to go the next performance level, after the
present teething phase Message to All Poverty anywhere in the
Nigeria.is a threat to prosperity everywhere in the Nigeria If you
agree on this. .Lets be bold, daring and fearless, lets focus on
big fast results we have nothing to loose, except the decadent
status quo lets do things differently to move Nigeria forwardlets
transform the Nigeria with PPPs and the Private Sector as outlined
in the Presidents Transformation Agenda. A transformed Nigeria
would be a most lovely place.Lets just do it. Conclusion PPPs offer
a dependable and sustainable funding option, increased
accountability, accelerated infrastructure provision and faster
implementation of projects. The huge infrastructure deficit is an
opportunity to partner with the private sector in virtually all
economic and social infrastructure space. Project preparation is
key. PPP also stands for Preparation Preparation Preparation and
Patience Patience Patience Stakeholders must take the lead to
create, nurture and foster the enabling environment for maximum
private sector participation in infrastructural developmentby using
the institutional, legal, regulatory and finance support framework
being put in place by the ICRC to incentivize the private sector to
partner with the public to upscale the infrastructure space in the
country. S. Brian Samuel, Vice-President, Castalia
The Seven Deadly Sins of PPPs Presented at Public-Private
Partnerships for Sustained Growth, Barbados Hilton, Nov 19-20, 2013
S. Brian Samuel, Vice-President, Castalia The Seven and how to
avoid them
Sin # 1: Badly chosen projects Sin # 2: Weak procurement processes
Sin # 3: Direct negotiation of unsolicited proposals Sin # 4: Lack
of capacity Sin # 5: Inadequate risk allocation Sin # 6: No
budgeting for fiscal costs Sin # 7: Going it alone Good governance
lessons for PPPs from other climes?
Stable policy & regulatory framework competition/ entry
criteria, role of the private sector, use of limited natural
resources, setting of tariffs, real estate Long term strategy/ plan
owned by the govt. Adequate project development capacity to develop
projects of requisite scale Equitable contractual framework risk
allocation Transparent selection process competitive bidding
Reliable revenue sources - sustainability Managing the unexpected
implementation & monitoring/ partnership in practice Political
will central to governance (Source Cherian Thomas IDFC India)
Private Sector Strengths
WELCOME TO A GLOBALLY COMPETITIVE NIGERIA..World Class
Infrastructure, Good Governance, Industrial Power House with an
educated workforceWelcome to Nigeria in !!!! Abuja Palms - JABI
Wise Words THANK YOU Barr. Aminu Diko Director General/CEO
Infrastructure Concession Regulatory Commission Website:
Prerequisites for Successful PPP Environment TRADITIONAL OR
CONVENTIONAL PROCUREMENT
Procurement of goods and services through annual budgetary
allocation: Inefficient, volatile and rarely meets crucial
infrastructure expenditure requirements in a timely manner Exerts
constant pressure on fiscal budget due to competingdemands Funding
generally inadequate and receives a larger brunt offiscal
retrenchment in times of financial crises Leads to constant
abandonment of Projects or Projects thattake for ever to complete.
Many Universities in Nigeria arestill at their temporary sites.
Need for another way.....PPPs.....but no silver bullet Key
Differences between Privatisation & PPPs
Accountability/ Responsibility Responsibility and accountability
for delivery and fundingservice rests with the private sector
Responsibility and accountability for service delivery lies with
the public sector Ownership Ownership rights and associated costs
and benefits are sold to the private sector Legal ownership of
assets retained by government Nature of Service Private sector
determines the nature and scope of services Both public (govt.) and
private sector contractually determine the nature and scope of
services Risk and Reward Private sector assumes all inherent risks
Public and private sector share risks and rewards Public
procurement: Traditional v/s PPP
Characteristic Public procurement PPP Focus Procuring Assets
Procuring Services Project management Public sector is responsible
for all project management roles Private sector manages overall
project - design, construction, operations and maintenance. Focus
on project life cycle expected to bring efficiency. Service
Delivery Public sector directly responsible for service delivery to
users Private sector directly responsible for service delivery to
users Financing Public sector responsible forfinancing the project.
Thus financing impacted by budgetary allocations and then actual
disbursements Private sector may contribute finance through debt
and equity issuances Risk Sharing Public sector bears all project
risks. Risk sharing limited to the extent of warranties. Risks
allocated to parties whichcan manage them most efficiently
Contractual Arrangement Short term, generally segregated contracts
for asset creation (BOQ based) and maintenance. Long term
contracts- Public sector/users pay for services linked to
performance. Concept The above table summarizes key differences
between traditional public procurement and PPP. Note that financing
by the private sector is not a necessary condition in a PPP.
PPP:The public sector procures a service, not an asset, from the
private sector. WORDS OF ADVICE Capacity for preparing bankable
& sustainable PPPs is currently very limited in the public
service Establish your PPP Units as required by Extant Circular
PPPs are complex legal and financial arrangements that are not
easily amenable to SAFE SELF HELP Getting a PPP Adviser is often
via Traditional Public Procurement PPP procurement can be expensive
and time consuming Best use if there is a clear business case Short
cuts can lead to a life time of troubles for your institution Get a
Competent Advisers or Consultants INSTITUTIONAL FRAMEWORK
Critical Success Factors for PPPs ACCESS TO CAPITAL Availability of
long tenor private capital SUCCESSFUL PPPs POLITICAL WILL AND
TRANSPARENT POLICY A PPP Champ with the transperency Track record
and power to make it happen cleanly INSTITUTIONAL FRAMEWORK
Publicsector competence and expertise to ensure efficient and
effective detailed preparation of projects and faithful
implementation of transact ions LEGISLATION To enable private
sector participation in an efficient and effective manner Six Keys
to Successful PPPs
Statutory and Political Environment Organized Structure Detailed
Business Plan Guaranteed Revenue Stream Stakeholder Support Pick
Your Partner Carefully
Bath-001-Presentation-ProjectSponsor-TonyHagan-6thNov2008
What are the ingredients of a good PPP? Contractual arrangement
should be based on: Substantial risk transfer allocation of risks
to parties best able to manage them Quality of service & output
specification focus on services associated with procured assets
Performance-related rewards payment only if performance standards
met M&E plan over life of contract achievement of whole-life
performance FINAL POINTS PPP are a form of Public Procurement
Each form of Public Procurement has due process requirements
Compliance with these requirements Earns stakeholder trust and
commitment Assures Financial Bankability Assures Legal
Bankability