One way of highlighting the importance and relevance of public-private partnerships (PPPs) is to imagine scenarios. Here are 10 what ifs and what if nots.
So, what if…
- There is no PPP. Then the government will implement, fund, construct, design and operate projects on its own. While government agencies can collaborate with each other, the benefits of having the private sector as partner will be absent. The private sector, under this scenario, would not have the contractual opportunity to introduce its technology, apply its management systems and utilize its resources.
- There is no single PPP law. Actually, this is the case. We have PPP laws and regulations, national and local, and special guidelines issued by government agencies pertaining to different PPP modalities and arrangements. This promotes decentralization among agencies at the same level (vertical) and at lower levels (horizontal). However, several policies could lead to confusion.
- The government has all the money. Even if it has the funds, the government may need a partner for its projects. There are other value drivers for engaging the private sector, i.e., need to spread or share risk with, capacity to innovate and ability to accelerate service delivery.
- There is no competitive process. This could render the whole selection process, even the PPP contract, illegal. Competition, either through bidding or challenge, is an indispensable ingredient to the integrity of the process and accountability of the parties.
- There are no interested PSPs. Obviously, there will be no PPP for that project. This may happen if the private sector proponent (PSP) sees the project as not feasible, has other priorities, has no track record or financial resources and feels that partnering with the government is too risky, among other reasons.
- There are no lawyers and consultants. Maybe, there will no PPPs (wink!). Legal, technical and financial expertise, from both sides, is required. The preparation of contracts, studies and terms of reference necessitate their engagement.
- The general public is not aware of PPP. Yes, they are not. Popular awareness must be programmed, as this could lead to broad support. Ignorance of this strategy, non-consultation with stakeholders and non-familiarity with projects and their benefits at all levels of society may lead to opposition and high incidence of protester’s risk.
- The government changes its mind after award. This is the greatest fear of the private sector-successor risk. Changes in interpretations, policies and laws, and unilateral amendments and cancellation of PPP contracts may discourage private sector participation and jack up the number of suits against the act (i.e., contract) and the actors.
- There is corruption. This evil in PPPs could lead to rescission of contracts and criminal and civil liability of responsible officers, both in the public and private sectors, and disinterest from would-be investors.
- Unsolicited proposals are not permitted. Fortunately, this is allowed under PPP laws, ordinances, regulations and guidelines, as this procedure requires competition and transparency. The government cannot and should not claim that it has the monopoly over good ideas. Under this approach, the PSP, not the government, is the originator of the concept and prepares the study.
Understanding these 10 what ifs, hopefully, will lead all to trust and take a chance with government. Let us not be fence-sitters.