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Following is the address by US Ambassador to Sri Lanka Atul Keshap at the National Conference on Public Private Partnerships
Distinguished guests, ladies and gentlemen, good morning to you all. I consider it a great pleasure and honour to speak to such a distinguished audience, at this national conference on Public-Private Partnerships (PPPs).
It has become evident that an important trend in economic and social development is taking place in countries around the world. The private sector is increasingly taking on what had previously been considered inherently governmental functions.
Recognising this change, governments around the world have developed significant partnerships with local and global private sector organisations to address issues as varied as environmental protection, infrastructure needs, small and medium enterprise development, education, technology, and youth unemployment.
This innovative public-private partnership model combines the assets and experience of strategic partners, by leveraging their capital and investments, creativity and access to markets, to solve complex problems faced by governments, businesses, and communities around the world. This model, no doubt, is contributing to long-term, economic and social growth in developing countries.
In order for it to have a large impact in the developing world, the US Government through its development arm – the United States Agency for International Development (USAID) - has helped countries to adopt this model.
To meet the huge demand for public services, including infrastructure, governments across the world are emphasising the use of PPPs to help deliver public services. These PPPs may take several forms – from simple contracts to more complex build operate-transfer agreements.
USAID is working closely with a host of government agencies in Sri Lanka to help them meet their democratic and economic reform goals. For example, we recently helped the Department of Public Finance of the Ministry of Finance to publish a report on PPPs and to develop a roadmap to assess the current legal, regulatory, and business environment around PPPs in comparison to international best practices. Taking the report and the roadmap as a base, we are helping the Government to create a PPP framework.
We are also helping them to implement some of the recommendations included in the report such as setting up a national PPP unit and a national PPP committee, the development of a national policy and strategy on PPPs, and assistance with revisions to the legal and regulatory framework.
According to ADB’s research, the Asia and Pacific region requires infrastructure investments of at least $8 trillion from 2010 until 2020. Traditional public funding sources fall far short of this investment need. Therefore, many countries are seeking to mobilise private funds, often through the use of PPPs.
The Sri Lankan Government, I am happy to say is in the forefront of establishing PPPs. As I understand, it has been implementing these partnerships since the 1990s and has forged more than 70 such partnerships with an approximate investment value of more than $ 6 billion in the electricity, telecommunications, ICT and ports sectors. Common to developing countries, PPPs developed in these sectors were implemented under the tendering laws of the specific sectors, but outside the PPP process, and each operating under a different set of guidelines.
It has also taken a major step towards establishing more PPPs in infrastructure by recently creating the Ministry of Megapolis and Western Region Development. This Ministry uses Western European and US models. Wherever government contributions are required PPPs should be considered as the first option.
A good example of this is the Phase II of the Port of Colombo’s East Container Terminal. This project combines support and investments from the Government of Sri Lanka, and the Asia Development Bank with leading operations and technology from the private sector, in order to improve the port’s efficiency and capacity and to increase its market share in the global trans-shipment market. This project will include operationalisation of the existing 400 meters of deep water berth and the full design, construction, financing, operation, and maintenance of the remaining 800 meters of berth.
This is a good example of how a partnership between public and private stakeholders can help strengthen the Colombo Port’s strategic position as a key trans-shipment hub for global and regional trade.
In Asia, PPPs are most commonly found in the energy sector, followed by the transport, and water and sewage sectors. PPPs are increasingly used in the social sector as well. In the education sector, for example, PPPs have been used for technical and vocational education training (TVET) services. Therefore, PPPs can help contribute not only to economic development, but also to social development.
Some key markets, such as India and China, have emerged as the largest PPP markets in the region. According to the World Bank’s databases, India awarded more than 600 PPP project contracts between 2000 and 2013, mostly in the transport and power sectors. In the same period, China has awarded more than 800 PPP project contracts.
However, we also have to understand that a lot of planning and preparations go into establishing PPPs. Governments with successful PPP track records can show us how projects have to be planned and prioritised, and how financing must be secure. Additional measures often have to be taken to create a better “enabling environment,” which is essential to attracting private investment. This enabling environment includes a solid legal and regulatory framework, and a dedicated PPP unit, which ensures the integrity and transparency of the procurement process.
Promoting PPPs is one of US Government’s key agendas, and we have solid experience in helping stakeholders plan, build and support sustainable PPP programs across the world.
In Sri Lanka, the US Government has supported the Government of Sri Lanka to improve the enabling environment through expert-led training programs and by introducing new technologies such as the electronic-government procurement (e-GP) which will not only be more efficient, cost-effective and convenient, but will also make government processes more transparent and accountable.
PPPs may be used to procure a national electronic-government procurement system that will make government processes more transparent and accountable, which will further strengthen governance. PPPs often require modernisation and the use of new technologies which are capital intensive and expensive. Therefore having the private sector perform e-government or ICT services on behalf of the government will be a potential “win-win” solution.
Today’s national conference, supported by USAID in collaboration with the Department of Public Finance of Ministry of Finance, creates a forum for government officials to discuss the best strategies and techniques for establishing PPPs according to international standards and best practices, including those related to transparency, accountability, public financial management, civic participation and access to information.
The US Government is happy to assist the Government and people of Sri Lanka to adapt and institutionalise the PPP model. As we have done during the last sixty years, we will continue to provide development and humanitarian assistance to improve your lives and futures. To date, the US Government has provided more than $2 billion to Sri Lanka, for projects in such diverse fields, as agriculture, environment and natural resources, health, education, business and trade, good governance, and humanitarian assistance.
By providing training and capacity building in the areas of public private partnerships and electronic government procurement we will be helping to create a stronger PPP enabling environment which will encourage future private sector involvement in PPPs.
In closing, I would like to thank the organisers for their work in arranging this conference and the participants for taking time out of their busy schedules to be a part of it. This is a wonderful opportunity to share the latest knowledge, experience and best practices.
I hope that you find this conference both enlightening and useful. I look forward to meeting many of you and engaging in further discussions that will help us all to continue to promote PPPs in Sri Lanka.
Thank you very much.
The proposed Public Private Partnership (PPP) mechanism will attract more foreign investors especially to the infrastructure development sector, thereby easing the Government’s current budget constraints, said Minister of Finance Ravi Karunanayake.
The correct approach on variety of PPP modules will bring enormous foreign investment and benefits to the country without having the burden of paying back, the Minister said, addressing a seminar organised by USAID in Colombo on 26 September.
Sri Lanka did not attract investors for PPP in the past due to lack of policy framework, strategies and awareness of potential of the mechanism. Therefore it ended up with accepting unsolicited proposals by giving Treasury Guarantee for loans repayment of many economically and technically non-feasible projects, he said.
This compelled the country to bear an exorbitant expenditure as these high cost projects were not selected on a competitive basis, Minister Karunanayake said.
The Minister further said that the change that occurred in the country after 8 January 2015 has been one major reason to attract more foreign investors to the country. The current administration of good governance has added several other political changes as well to create conducive environment for foreign investors to open up their venture in the country.
Minister Karunanayake further stated: “PPP is quicker, transparent and will use new technology in its processing, thereby avoiding other unnecessary delays. Earlier, the tender procedure which was archaic, corrupt and inefficient took months and years to complete projects. Even after taking such a long time, some of them were unsolicited and were offered to certain selected companies. Therefore, to remedy such unacceptable system, the new Government is working in favour of PPP and, is determined to facilitate the new system to enable investors to engage in their venture hassle free.”
“It is known to all that the current Government has been left with a debt burden of 9900 trillion and most of the money obtained under these debts has been used on non-economic projects. Therefore, PPP is very important at this juncture as the Government has to maintain its limited capital, leaving all huge infrastructure projects such as road, housing, renewable energy, water and water resources on PPP projects,” Karunanayake said.
US Ambassador Atul Keshap, USAID Acting Director Thomas Bayea, and Ministers and Deputy Ministers Dr. Harsha de Silva, Eran Wickramaratne, Rauff Hakeem and Daya Gamage participated at the event.
Pix by Lasantha Kumara
