Public-private partnership (PPP) units are specialized units in a government ministry designed to promote or improve PPPs by trying to develop more projects and ensuring that PPPs meet such quality criteria as affordability, value for money, and appropriate transfer of risk.
PPP units have existed for many years in developed countries to facilitate and manage infrastructure investments. PPP units have been created to concentrate the skills involved in entering into PPP arrangements, or to create “one-stop-shops” for the promotion of PPPs. As governments in developing countries begin to turn to the private sector to provide services formerly delivered by the public sector, they need to learn new skills to manage the relationship with the private sector and to structure infrastructure projects. The common way to provide the new capacities needed has been to create PPP units—as new agencies or special cells within a cross-sectoral ministry such as finance or planning. Particularly for post-conflict countries, such an arrangement would substantially assist infrastructure rehabilitation and ensure construction can be maximized to the benefit of users of infrastructure services.
Before designing a PPP unit, governments first need a clear understanding of the problems they face in implementing their PPP program and design the PPP unit to address these problems. Governments should also identify areas where they are failing, and design PPP units specifically to address those failures. A critical question to be asked in creating PPP units is what role they should play in relation to line departments, where they should be placed, and how conflicts of interest should be handled. In answering this question, governments need to be cautious to ensure that there is no overlap or unnecessary duplication in tasks between a PPP unit and the line departments, as this can be both inefficient and can prohibit effective decision-making. Other challenges that need to be addressed include a need to establish adequate legal and regulatory frameworks, dealing with risks, and how to mobilize finance.
PPIAF has been providing technical assistance to various developing country governments to answer these questions and challenges as well as improve the environment for private sector participation in infrastructure development. Some of these assistances provided have supported efforts to establish a dedicated PPP unit and/or strengthen an existing unit. Read about PPIAF's support to PPP units in Africa
here.
Below are some examples of activities that PPIAF has supported. Final reports from these activities are attached where available.
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In 2006 PPIAF commissioned a research to determine the role of centralized PPP units in developing countries in facilitating successful PPPs. The report reviewed and analyzed case studies from various developing and developed countries, and identified several lessons for other countries looking to create PPP units. The lessons can be read in the full report and this PPIAF-funded publication.
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In 2006 PPIAF provided funding to the government of Kenya to develop a PPP strategic implementation framework, which would create an environment conducive for investment in PPPs. This supported the development of a legal, regulatory, and institutional framework for PPPs in Kenya, and led to the government issuing detailed PPP guidelines as well as establishing a PPP unit in March 2010. PPIAF is currently supporting the PPP Secretariat in providing the requisite advice and support in fulfillment of its mandate to assist ministries, departments, and government agencies in identifying and developing PPP projects; assisting the development of institutional procedures, including a revised PPP guidance manual; and assisting contracting authorities to review the work of PPP transaction advisors.
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The government of Egypt established a central PPP Unit with a vision to communicate the government’s PPP agenda and message to the private sector and broader community. PPIAF provided support to the government in 2008 to prepare a comprehensive diagnostic report on PPP development issues and the legal, financial, and regulatory framework for PPPs, the preparation of a business development plan for the central PPP Unit, and on-the-job technical assistance to review policy issues arising in the design of pilot PPP projects. Click here to read the related Impact Story on this activity. One of the components of this support focused specifically on transaction support for the 6th October Wastewater Treatment Plant. It included a PPP options study, a conceptual design and capital investment plan for the plant, as well as draft bidding documents for the tender stage. Following the PPIAF report, the Central PPP Unit, together with the Ministry of Housing Utilities and Urban development (MHUUD), decided to invite bids for the design, build, financing, operation, and maintenance of the 6th October Plant. PPIAF’s Impact Story on Legal and Institutional PPP Development in Egypt and PPIAF’s support to in the Wastewater Sector in Egypt can be found here.
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In 2008 PPIAF provided support to the PPP unit in Mauritius to improve the framework for PPPs and strengthen the PPP project pipeline. The report provided two options for revising the PPP Act and its implementing regulations. To see the full report on the analysis of the PPP legal and institutional framework click here. A second report on “Identification and Preparation of Potential PPP projects” for 10 PPP candidate projects was also prepared and can be found here. These assessments recommended actions for undertaking the next steps for the detailed analysis, risk-structuring, review, and possible tendering of each PPP candidate project. The PPP unit is currently working on how to set up a panel of PPP transaction advisors to advice on the project pipeline identified.