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Public Private Partnerships

Public Private Partnerships. What are PPPs?. Public private partnerships (PPPs) are arrangements between government and private sector entities for the purpose of providing public infrastructure, community facilities and related services. Characteristics. Sharing of: Investment risk;

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Public Private Partnerships

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  1. Public Private Partnerships ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  2. What are PPPs? Public private partnerships (PPPs) are arrangements between government and private sector entities for the purpose of providing public infrastructure, community facilities and related services. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  3. Characteristics Sharing of: • Investment risk; • Responsibility • Reward ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  4. Why? Each partner has unique characteristics that provide them with advantages in specific aspects of service of project delivery. Experience shows that the Public Sector can usually not do everything by itself to the rising level of expectations of citizens and the costs of operation. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  5. Driving forces • Rising expectations • New types of services • Higher levels of quality in services • Rising demands • Increasing numbers of people to serve • demand to keep taxes down • Rising costs • Civil service is not subject to competition • Civil service governed by special legislation ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  6. Types of PPP • Great variation between & within basic types; • May be restricted or shaped by legislation; • Contract based (commercial sector); • Common interest based (civil society); • Single partner, multiple partners ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  7. Straightforward contracts Retainer contracts Management contract Operate & maintain Design-build Turnkey operation Wrap around addition Common types • Design-Build-Lease-purchase • Temporary privatisation • Lease/Buy-develop-operate • Build-transfer-operate • Build-own-operate-transfer • Build-own-operate ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  8. Application to… • Infrastructure services • ‘Internal’ operational services • Management of vehicle fleet • IT support, including information management • Advisory services (engineering, design) • Specialised services used infrequently • Other routine services • Waste collection • Cleaning and maintenance • Park, recreational services management ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  9. Potential benefits • Cost savings • Risk sharing • Improved levels of service • Enhancement of revenues • More efficient implementation • Local economic benefits ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  10. Potential risks • Loss of control by local government • Increased costs • Political risks • Unacceptable (low) levels of accountability • Unreliable service • inability to benefit from competition • Reduced quality or efficiency of service • Bias in selection process • Labour issues. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  11. Important factors • Legal options, including tax & fees • LG’s legal department capacities • Capital budget issues • Recurrent budget issues • Personnel issues • Availability / capacity of private sector • Supervision & control capacities & mechanisms • Public perception issues ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  12. Preconceptions, right or wrong • Private sector more cost effective & efficient; • Private sector is faster; • Private sector is less public service minded; • Private sector with competition leads to lower costs to consumers; • Private sector operates for profit • All private sector operators are the same • Public sector cares more for residents • Public sector stands for quality; • Public sector should govern, not operate utilities. • Public private partnerships lead to loss of control. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  13. Other considerations • Historical development & imperatives of moving from one system to another… • Potential to develop private sector capacities • Especially in consultancy & management • Establishment of LG-owned companies • Government’s role to govern, private sector’s role to provide services ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  14. What of ‘Civic society’? • Special interest Associations; • Non-Government Organisations; • Local, national, international; • Faith-Based Organisations; • Community-Based Organisations; ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  15. Potential roles in LEM • Awareness building; • Role as watchdog organisations; • Mobilisation of civil action, volunteerism; • Alleviation of effects of poverty • Clean-up campaigns ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  16. Basic Requirements of Partnerships • Mutual trust; • Mutual respect; • Transparency in relationship; • Understanding & acceptance of respective roles & expectations in partnership; • LG to govern & maintain standards; • Private sector companies to ‘cover risk’ • Civic society to speak out & mobilise public ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  17. 1 Discussion Questions • What would be needed to transform your LGs from “implementing” to a “governing & contracting” organisation? • Think STEEPIL • Can you imagine a process of gradually out-sourcing all non-governance LG environmentally-related services from LG? ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  18. 2 • What forms of partnership might be appropriate when: • LG has small capital budget but adequate recurrent finance? • LG has difficulty attracting highly qualified engineers to its employ? • LG has almost no capital or recurrent budget? • LG has problems maintaining its vehicle pool? • There are few private companies with strong financial positions, but several with adequate skills? ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  19. 3 Which of the following types of operations could be done through partnerships? • Vehicle fleet operation and maintenance • Green area / parks management • Sports facilities operation/management • Solid waste management (divide into sub-sectors if necessary) • Buildings maintenance (even cleaning) • Engineering services Add others you can think of…. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  20. 4 Special for L Environment M Do you think environmental management services are easier or harder than others around which to build public private partnerships? Why? What are the prerequisites for, and how would a LG build partnerships with civic society organisations in the environmental sectors? What types of responsibilities would you give such partners? ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  21. Main source: Ministry of Municipal Affairs. 1999. Public Private Partnership: A guide for local government. British Columbia. Available on the Internet: http://www.cd.gov.bc.ca/lgd/policy_research/library/public_private_partnerships.pdf ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

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