Getting PPPs to work

Finance Minister Ravi Karunanayake last week sought global support for public-private partnerships (PPPS) commending organisations such as the World Bank for their support but also acknowledging that the Government would have to roll out setting a National PPP Policy, preparing a National PPP Act, National PPP Regulations, National PPP Guidelines and a National PPP Unit, under an overarching PPP strategy. 

The Government has a pipeline of PPPs, which it is hoping to roll out next year with a wide range of state enterprises earmarked for what is essentially privatisation. Some of these State Owned Enterprises (SOEs) are already being looked over by international companies resulting in workers becoming insecure about proposals and deeply concerned about their jobs.  

As the Government sees its plans taking shape it is imperative that the policy framework is transparent and well-vetted by the public as it would have greater chance of success and acceptance by people, particularly those who are employed at the organisations earmarked for privatisation.  

In theory PPPs make great sense. Today, PPPs are considered “creative alliances” formed between a Government entity and private developers to achieve a common purpose. But what Government ministers must remember is that this partnership is a process not a product. Successful navigation through the process results in net benefits for all parties and without buy-in from employees a successful PPP is impossible. 

The Sri Lankan Government has managed successful PPPs such as Sri Lanka Telecom (SLT), when each member of the staff was sent letters clearly explaining the point of the foreign investment and what the company as well as the staff gain from the change. Repeated rounds of meetings made workers a key part of the transfer process to ensure that the PPP could be sustained, a worthy example for policymakers to remember as they mull dozens of new projects.

  

The vision for the program should be the result of a consensus-building process that identifies the opportunities, objectives and ultimate goals for the community. The local government must consider and establish its long-range public interest goals and resolve any conflicts that it might have for the specific project in question. It is essential that the overall development strategy is described both verbally and graphically to ensure that both the public and private partner understand the program.

It is also important to manage expectations. During this stage of the process, establish a schedule that clarifies the expectations of the public decision-makers. It is a good idea to craft a public awareness program to inform stakeholders of the goals of the development strategy and the specific projects that are identified.

Given Sri Lanka’s chequered privatisation history, where a slew of State companies such as the Ceylon Steel Corporation, Pugoda and Thulhiriya textile mills, Kanthale and Sevanagala sugar plantations, Valachcheni paper mill and Kankansanthurai cement factory went bankrupt shortly after privatisation, the Government would have to work extra hard to ensure public support. 

Public enterprises are viewed by many people as being indirectly assets of the people with few understanding their losses actually cause deeper hardship for the public. In addition, the nexus between public jobs and votes is a deep one that should not be underestimated by any Government.