Public-Private Partnerships

Public-private partnerships, P3s in the US or PPPs for the rest of the world, have been the exploratory mode of choice for governments seeking to make progress on their infrastructure development plans by augmenting public monies with those from the private sector.

Many governments initially consider PPPs driven by a need for augmenting scarce capital funding. What they may not realize is that PPP can deliver so much more. The modality gives governments the opportunity to deliver quality service performance to the public, consistently over time, backed by the carrots and sticks of a enforceable contract. It can serve as a means to introduce much-needed transparency and objectivity into environments that suffered from the ills of opacity. It can allow strained government human resources to become more efficient, to become more optimally deployed, shifting to an oversight and management role rather than struggling to keep up.

HGA has worked with dozens of national governments and array of state/provincial and municipal entities to help develop their PPP programs, often from the ground up. This work ranges from initial strategizing on PPP policy to developing laws and PPP institutions, creating project screening and preparatory facilities, and, ultimately, helping apply these policies and tools on individual PPP projects. Below are some case studies on various types of PPP programs HGA has supported.

Public-Private Partnership Authority - Bangladesh

PPP Center, National Economic Development Authority (NEDA), and Department of Finance (DOF) - Philippines

National PPP power generation program, Myanmar

The Government of Bangladesh decided to pursue a comprehensive PPP program, under the auspices of the Prime Minister's Office, to breathe new life into the national infrastructure development program and to make more robust and transparent the process for individual projects. Mr. Hauber worked with the nascent PPP unit and the Ministry of Finance to develop the national PPP law, the program's operating principles, and the establishment of the PPP Authority, the legally mandated institution to manage it. The Government has allocated dedicated funding for PPPs to support them throughout the formation and implementation process.

PPP Technical Assistance Fund - a revolving fund to cover the costs of professional project preparation, documentation and tendering, all under the Authority's management.
Viability Gap Fund - a one way fund to help support and realize projects with high economic benefit and in the national interest, but that are fiscally challenged.
Bangladesh Infrastructure Finance Fund - a source of long-term capital, acting as a project finance funding partner, to help projects reach financial close and provide a fixed income return to the investor base of the fund.

The work helped to identify pilot projects and supported screening them and coaching their sponsoring ministries on the fundamentals that would make them into robust PPPs.

The Republic of the Philippines has developed perhaps the most sophisticated and robust PPP program in emerging Asia. From a standing start in 2012, by 2016 the Philippine PPP Center had screened and prepared over 60 national projects, tendered 20 of them, awarded 12, and closed 2. This is a major achievement. The Center employs over 100 staff.

At the same time, the sheer volume and value of projects, and their attendant level of contractual commitment, attracted critical attention of the Department of Finance. Worried about exposure to contingent liabilities if a PPP contract should default, the DoF wanted to assure appropriately qualified projects were being selected and that those projects were properly prepared. Once closed, they wanted to monitor the individual, sector and aggregate PPP contract exposure and provide some sort of self-insurance and/or risk mitigation mechanism to look at expected payouts in the event of a default.

Mr Hauber of HGA managed the project to develop those evaluation and monitoring principles and implement them at NEDA upfront for project screening, within the PPP Center for project preparation and at DOF in monitoring and provisioning.

Myanmar (Burma) had been cut off from the rest of the world for decades in the wake of punitive sanctions against the junta. When a democratic government was installed in 2012, the doors opened again. What was found inside were nearly 50 years of deferred or omitted infrastructure and public service investments and a need to quickly address these deficiencies in light of a booming economy. The government was inundated by unsolicited proposals for power generation in all forms, sizes and locations, leaving them in a position of not being able to objectively decipher good from bad, unrealistic or expensive.

Mr. Hauber, under the auspices of the Asian Development Bank, acted as an internal advisor to the government to help put structure around their nascent private investment program in power generation. He lead deal diagnostics and risk assessments, helping develop a plan which allowed the government to shift to an international competitive bidding model. Mr. Hauber led the development of a template power purchase agreement that reflected the government's risk thresholds, operational preferences and priorities while still creating an attractive, international-standard agreement.

This work formed the basis for the 2017 financial closure of the first competitively bid project in the country since market opening, the 220 MW, $300 million Myingyan combined cycle power project, sponsored by Sembcorp of Singapore.

Sample PPP Work

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