World Bank highlights PPP problems

29 Sep 16

Most governments are falling short of good practice in public-private partnerships, the World Bank has found.


According to the bank, its report, published today, is the first attempt to collect and present comparable data on PPPs on a large scale.

It looked at government PPP capabilities in 82 economies, and found that most are not up to standard in at least one of the analysed areas – preparation, procurement, unsolicited proposals and contract management.

Project preparation and contract management are the most troublesome, according to the report, with every income grouping performing the worst in these areas.

Although the performance in each category varies across regions and income levels, higher-income nations tend to perform better overall, with those at the bottom of the income scale having significant room for improvement in all areas.

The report noted that OECD high-income economies and the Latin America and the Caribbean region perform at or above average.

Only 16% of the economies measured require data on PPPs to be publicly available, despite transparency being essential to monitoring and managing contracts, the report highlighted.

“There is considerable scope to improve practices around PPPs, including around disclosure of information” said Fernanda Ruiz Nunez, senior economist at the World Bank.

“The report aims to inform decision-making on the design of PPP procurement policies and regulations by comparing economies to recognised good practices that ensure transparency and fair competition.”

One area most countries were lacking in terms of preparation was in assessments, which are key to preparing a well-structured project and attracting the private sector.

While two-thirds required assessments into areas such as the project’s socioeconomic impact, affordability and risk, only one third had adopted specific methodologies for conducting these and in almost half of the countries, an assessment to measure market interest was not required at all.

The findings also revealed a mixed picture in terms of ensuring that PPPs are financially sustainable and consistent with national investment programmes, selected on the basis of their strategic importance and impact rather than expectations of savings through off-budget reporting.

While nearly three quarters of the countries require approval from the ministry of finance before launching a PPP procurement process, only 55% legally require consistency between PPPs and other public investments, and only a quarter have developed procedures for ensuring that consistency.

The bank also identified a number of other areas for improvement, including the regulation of contract disputes, the minimum time granted to potential bidders and the approach to handling sole bidders.

The report’s forward, penned by Laurence Carter, senior director of Public-Private Partnerships CCSA and Augusto Lopez Claros, director of the Global Indicators Group, highlighted the role PPPs can play in plugging the global infrastructure gap.

However it warned that PPP’s can be “complex to procure and manage”, and that government’s need the frameworks and capacity to develop, procure and manage them effectively in order to achieve “the expected value for money” to sustain investment.


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