What are Public Private Partnerships?

Public Private Partnership means an arrangement between a government / statutory entity / government owned entity on one side and a private sector entity on the other, for the provision of public assets and/or public services, through investments being made and/or management being undertaken by the private sector entity, for a specified period of time, where there is well defined allocation of risk between the private sector and the public entity and the private entity receives performance linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the public entity or its representative. Let us break it down and elaborate. a) Public Services are those services that the State is obligated to provide to its citizens or where the State has traditionally provided the services to its citizens. b) Public Asset is that asset the use of which is inseparably linked to the delivery of a Public Service, or, those assets that utilize or integrate sovereign assets to deliver Public Services. Ownership by Government need not necessarily imply that it is a PPP. c) Investments being made by and/or management undertaken by the private sector entity: The arrangement could provide for financial investment and/or non-financial investment by the private sector; the intent of the arrangement is to harness the private sector efficiency in the delivery of quality services to the users. d) Operations or management for a specified period: The arrangement cannot be in perpetuity. After a pre-determined time period, the arrangement with the private sector entity comes to a closure. e) Risk sharing with the private sector: Mere outsourcing contracts are not PPPs. f) Performance linked payments: The central focus is on performance and not merely provision of facility or service.

g) Conformance to performance standards: The focus is on a strong element of service delivery aspect and compliance to pre-determined and measurable standards to be specified by the Sponsoring Authority.

What is the IMAGE of Bangladesh from Abroad?

To understand the image of our country we have to view it from the eye of an outsider. So to take a very simple approach we just typed in Bangladesh in Google and clicked images. This may sound like a very poor idea but the results do not show anything far from what we actually face. These images were taken from the very first pages of the search results:

POLITICAL UNREST

NATURAL DISASTER

STRUGGLING NUMBER OF POPULATION

POOR INFRUSTRUCTURE

FLOOD AND POVERTY

Apart from these Google results there are 1. 2. 3. 4.

CLIMATE CHANGE

Corruption Power Insufficiency Untrained and ill-educated labor force High cost of ICT (Information and communications technology)

If we want our economy to grow and we want to attract foreign investors to make investments here we need to start working on this situation. Our government and NGOs are working on these issues since the inception of our nation. Numerous projects have been taken previously by our government and they did not do any good. Main reason of their failure was the inefficient management. Budget was also an issue. Some successful venture of PPP can improve the scenario.

REASON FOR PUBLIC PRIVATE PARTNERSHIP IN BANGLADESH

We must know the reason why private and public sector should work together in the first place. Previously many project by the govt. failed to improve our condition and we also had to analyze whether private sector involvement would have been made any changes to the result. The reason why Private and Public sector should work together can be briefly said like following:

 Accelerating the implementation of high priority projects by packaging and procuring services in new ways; Turning to the private sector to provide specialized management capacity for large and complex programs; Enabling the delivery of new technology developed by private entities; Drawing on private sector expertise in accessing and organizing the widest range of private sector financial resources; Encouraging private entrepreneurial development, ownership, and operation of related assets; Allowing for the reduction in the size of the public agency and the substitution of private sector resources and personnel.

IMPROVING IMAGE: 3 STAGES

To contribute to the improvement of the image of our country, Public and Private sector should work together in 3 stages. 1. Meeting the basic needs 2. Development of the infrastructure 3. Growth of the potential sectors

MEETING THE BASIC NEEDS: Health and Education. These are the two sector PPPs will
focus. PPP in health and education sectors are based upon three premises: Health and education are critical areas of activity for national development The public good character of health and education and the scale of effort required to meet societys needs in these two areas call for close cooperation of all stakeholders in both public and private sectors The current status and future prospects of PPP are dependent upon country specific circumstances.

DEVELOPMENT OF THE INFRASTRUCTURE: Roads, highways, bridges, solar energy,

flyovers these are some of the sector where PPP projects can be undertaken. Bangladesh inherited underdeveloped and unevenly distributed infrastructure and transportation

networks. Poor and inefficient infrastructure undermined the economic development in the country, and only recently has the government been able to address the problem systematically and channel investments towards expanding its highways, railroads, seaports, and airports. Infrastructure development is one of the top priorities of a country's economic progress. Planned and well-connected infrastructure services attract foreign direct investments and boost local investments. To meet the present and future demand for infrastructure development, developing and least developed countries like Bangladesh always face scarcity of their own resources. Therefore, to accelerate infrastructure development, the Government must encourage private sector participation in infrastructure projects.

GROWTH OF THE POTENTIAL SECTOR: Entrepreneurial development, ICT, tourism

these should have the most focus while public and private sector work together. Private sector should reap the most benefit in this stage. The need for private sector businesses to generate a return means that they are forced to look for ways to enhance the service they offer their customers, and to adapt to their changing requirements and expectations. Unless they do, customers will go elsewhere. Such incentives tend to be less clear for public sector providers, so they can tend to respond more slowly to customer demands. New and innovative approaches: similarly, the search for new opportunities to develop profitable business provides the private sector with an incentive to innovate and try out new ideas - this in turn can lead to better value services, delivered more flexibly and to a higher standard. Business and management expertise: the private sector is normally far more skilled in running business activities and some elements of service delivery, including managing complex investment projects to time and budget and assessing the commercial opportunities of potential new business ventures.

SO, WHO ARE THE PARTNERS?

Let us look at the partners of PPP. Mainly National Govt. and Commercial for Profit enterprise has to play the major role for Bangladesh.

Public Sector Partners

District administration National government Municipal authorities Local government bodies Para-statal corporations State universities and research organizations

Private Sector Partners

Cooperative societies Development-focused voluntary nongovernmental organizations (NGOs) Commercial for-profit enterprises Community-based organizations Religious organizations Professional organizations Trade unions Research and academic institutions Households

PPP PROCESS: STRATEGIC APPROACH

To make the decisions needed to plan, develop, and execute successful PPPs, the process can be broadly divided into four phases. identification stage, development stage, procurement stage, Contract management and monitoring stage.

Phase 1: PPP identification

Covers activities such as strategic planning, project pre-feasibility analysis, Value for Money analysis, PPP suitability checks, and internal clearances to proceed with PPP development. Strategic Planning: To make efficient use of existing assets and harness new investments for greater efficiency, the Government shall set out, over a period, a long term vision and plan document for each sector which defines the role of public and private participation. Pre-feasibility analysis: Pre-feasibility analysis would be undertaken by the project proponents to assess broad viability of every project envisioned to be procured on a PPP mode. Identification of the key risk factors for the project shall also be undertaken to establish the likely cost and revenue streams of the projects. Value for Money: Value for Money analysis shall be undertaken to support key decisions. At the outset, VfM analysis shall be undertaken to establish whether to develop a project as a PPP project. Subsequently, the VfM analysis should be undertaken to affirm whether to award a PPP contract on the basis of the bids received. VfM analysis should be conducted for every project in order to ascertain whether the Project being procured as a PPP is in a way offers good Value for Money to the public sector. Conformance with State and Sector Legislation: Before structuring a PPP project, an assessment would be carried out to ascertain whether private participation in the delivery of a public service is permissible under the extant legislations. If the same is not allowed but it is deemed prudent to adopt a PPP framework, suitable modifications/amendments would be made to the legislations.

Phase 2: Development stage

Development Stage covers project preparation (including technical feasibility and financial viability analysis), project structuring, preparation of contractual documents and obtaining of project clearances and approval. Economic analysis would form a key input for decisions regarding the (public) need for a project, and would encompass, in addition to the cash flows and items that have financial impact, other external costs and benefits to the stakeholders, regardless of whether they have any financial impact. Financial analysis would assess whether the project generates sufficient revenues for the capital providers to generate an acceptable rate of return. Affordability analysis, with respect to both the implementing agency and the likely users would be a critical determinant in addition to the VfM analysis, on whether to take up the project on the PPP mode. It is also an effective tool to establish the reasonableness of assumptions underlying the financial analysis. Bankability assessment would also be carried out to assess the debt service capabilities of the proposed project structure. Existing loans, guarantees, other statutory and contractual liabilities and contingent liabilities affect the fiscal resources of the project proponents and would be considered while structuring PPP contracts.

Phase 3: Procurement stage

Procurement stage would cover procurement and project award. Transparent, accountable, non-discriminatory, competitive and timely procurement processes would be followed so as to encourage maximum participation by private sector and to imbibe public confidence in the procedure. The PPP rules notified by the Government would define the norms and procedures for procuring PPP projects.

Phase 4: Contract management and monitoring stage

PPP contract management and monitoring stage, covers project implementation and monitoring over the life of the PPP project. Contract management is not a passive box ticking/reporting exercise: it is an active process that involves a wide range of skills. Projects are not static, conditions change and the capability of the public authority at the interface with the private sector party is therefore crucial. The contract manager needs to be empowered to take action responsively and effectively only escalating up the chain issues that cannot be managed at the project interface. This calls for effective and efficient governance processes and people with the right mix of skills (or at time access to skills) including project management, commercial expertise and negotiation skills.

CONLCLUTION
Enabling the concept of PPP in Bangladesh has become a necessity because of the constant failure of the Government. Our image does not show the whole picture. We have to promote our bright sides too. We have to invite our foreign friends here. We have to invite both the tourists and the businessmen. We are known as a very friendly population to foreigners. Our hospitality is famous. The problem lies among us. We must bond the efficiency and profit motive driven innovation of the private sector with the wide range of works to be done for the public welfare. In summary therefore: PPPs enable the Government to tap into the disciplines, incentives, skills and expertise which private sector firms have developed in the course of their normal everyday business. And so release the full potential of the people, knowledge and assets in the public sector. Therefore, enabling the Government to deliver its objectives better and to focus on those activities, fundamental to the role of Government, which are best performed by the public sector procuring services, enforcing standards and protecting the public interest.