Implementation of Public Private Partnership (PPP)

1. Implementation of Public Private Partnership (PPP) Subhash Bhatnagar As part of the Capacity Building Workshop under the Joint Economic Research Program (JERP)

2. In this session we will discuss the need for public-private partnership for implementing e-government on a wide scale in a country. Various forms of public-private partnership and revenue models will be discussed. Pre conditions and issues in building successful partnerships will be identified. Examples of public-private partnership from different developed and developing countries would be provided. eSeva-a case study of successful partnerships in India will be described in detail covering its birth, evolution over time, success indictors, and the factors that contributed to its success. Some areas of weakness would also be identified.

3. Presentation Structure • Making Public Private Partnership (PPP) work • How is PPP different from outsourcing • Why PPP in e-Government? • Different forms of PPP • Preconditions for PPP • Case study of eSeva in Andhra Pradesh • India’s National eGovernment Program: PPP is the key pillar

4. Complexities of e-Government Technology Management Expectation Management e-Government Resource Management Reform Management Program Management Procurement Management Knowledge Management

5. What is PPP in e-Government? “longer-term contracts between public contracting authority & private provider for delivery of specified outputs” (typically combining investment and service provision) • Citizens may be willing to pay a service fee for most services-making private participation attractive. • Transfers risk to private sector • Enhances government accountability

6. Why PPP for e-Government? • Transformation means focus on core business of Government • The task is too large and complex for Government to execute-therefore partnerships are necessary • Attract private resources. Government resources can be utilized for development infrastructure • Private sector can bring project management and technical expertise lacking in the Government • Private sector is better at interfacing with customers • Partnerships force a certain discipline in project planning and execution. • Entrepreneurship & local enterprise promotion

7. PPP for What? • Information Infrastructure • Architecture • Data centers • Gateways • Communications • G2C Service Projects • Portals • Citizen Service Projects • Integrated Service Centers • Network of Kiosks • G2B Service Projects • e-Procurement • eBiz Portal

8. Examples of PPP from Indian Projects • Property registration in Karnataka (Kaveri): 230 offices (3-03) • Property Registration in Maharashtra: 400 offices (11-98) • eSeva center in Andhra Pradesh: 250 locations in 190 towns, Used monthly by 3.5 million citizens (8-01) • e-Procurement in Andhra Pradesh (1-03) • Roll out of 100,000 CSC in rural areas • Andhra Pradesh Broad Band Rollout • SMARTGov –Paperless Secretariat in Andhra Pradesh

9. Revenue Models and Forms of PPP • Revenue sharing- e.g. shared tax revenue • Transaction fee reimbursement • Collect processing fee from customers • Value from joint creation of IPR • Cost savings shared • Joint Venture (JV )Model • Build Own Operate Model • Build Own Operate Transfer Model • ASP Model

10. PPP Revenue Sources: NeGP Example

11. A Case Study on eSeva Centers were established by AP Government in partnership with private sector to deliver on-line services, such as payments, issue of certificates, application for documents from different agencies of state, local, central government and private sector under one roof. Each center has a number of counters operated by private contract staff. Counters have computers loaded with menu driven software that can process multiple types of transactions by accessing a Central Web Server which in turn communicates with departmental servers. Departments access and update their data bases when a transaction is performed at an eSeva counter.

12. Salient features of eSeva • One-stop-shop for citizen/ business services • Open 8 am to 8 pm and 8 am to 3 pm on Holidays • Over 130 services used by 2 million users. • Any service at any centre, any counter • G2C (utility bill payment, register birth/deaths, passport), G2B (sales tax), B2C services • 35 eSeva Centres in Twin Cities and 250 eSeva Centres in Municipalities • Investment of Rs 537 million by private partner. Operating expenses of Rs 169 million/year

13. Ambience : Traditional Vs eSevaLocation : Vanasthalipuram, Hyderabad

14. eSeva: Compared to Conventional System eSeva Centers • Citizen goes to any counter in any center for any service • Many services from state, central, local govt./ private sector under one roof • Centers have seating capacity in a waiting hall and in front of the counters. There is a token system for managing queues. • Computer generated receipt is issued • Online verification of payments • Works outside office hours and on weekends and holidays too. Conventional System • Citizen goes to designated departments for different services • Stands outside counter without shelter • A manual receipt will be issued • No online verification of payments • Works only on working days in office hours.

15. . . . . . . . . . . . . eSeva NETWORK 3rd Tier Departmental Servers (Govt. Department) Leased Line Sn S1 ISDN Central Site Firewall INTERNET Leased Line Router Pool ISDN LAN-1 2nd Tier LAN 3 LAN 2 Web Apln Servers NMS Web Server DB Servers DOT Exchange Leased Line Leased Line 1st Tier ( ICSC Locations ) ISDN ISDN ICSC location- 18 ICSC location-1 Card printer Router Router Counter Terminals With Printers Counter Terminals With Printers …. …. Kiosk Kiosk

16. eSeva Evolution • Adding services to grow transaction volume-Government departments, private service providers • Adding service centers to enhance convenience and increase volumes • eSeva counters in Banks-assisted by operator • AP online kiosks-assisted by operator • Access portal directly via Internet • Cutting costs- contract staff at centers paid by the Banks in return for business • Expanding into district towns and rural areas • Enhancing revenues through advertisement • Increasing use of private contract staff

17. Indicators of Success • Limited formal evaluation by an independent agency • IIMA study- annual travel cost savıng of 6.0 mıl dollars. Avoıd wage loss of 13.0 mıl dollars. Saves 11.5 mıl hrs • Growing transaction volume – Currently 3.1 million per month • Requests for opening centers in specific areas by legislators and associations • Recognition and awards • 97% citizen’s prefer eSeva over departmental counters. • Private sector (banks) keen to partner in providing additional channels

18. Indicators of SuccessBased on a Survey of 250 Clients • Savings in travel costs • Rs 7.40 saved per trip. Number of trips saved=0.28; Wage loss prevented=15.63; Waiting time saved 18.50 minutes • Improvement in perceived service quality 0.76 n a 5 point scale • Error rate reduced by 1.58% • Improvement in quality of governance on a 5 point scale is 1.01 • 96.84% preferred eSeva over departmental counters • Rating on a composite score on a 5 point scale based on 18 attributes of service delivery: Department counters 3.39 and eSeva 4.66 an improvement of 1.27

19. Economic Viability of Project • Investment in hardware, data communication, interiors and software: Rs 600 million • Yearly operating expense: Rs. 169 million • Revenue from transaction fee Rs. 203 million Viability for Private Partner in Hyderabad • 70 million transactions cumulatively generating revenue of Rs 250 million • Investment Rs. 80 million and operating expenses of Rs. 30 million per year • Pay back period 5 years

20. eSeva Coordination - CSF Coordination with Govt. Service Providers: Fixation of Transaction fee IT Department Strategic Directions: New Channels of Delivery Role of eSeva Directorate Partnership Arrangements Bidding for Least Cost Processing per transaction Supervision of centers Marketing & Awareness: New Citizens Financial settlement of payment received: Service providers, Partners, eSeva New Business Development: New Service Provider, Expanding Basket of Services Design and Monitoring of Service level Agreement with Private partners

21. Business Model of eSeva • 5-year BOOT Model • Government’s role • Site preparation • Cost of counter operators (outsourced) • Coordination • Partner’s role • Software development & maintenance • Hardware, networking, security • Consumables, power • Partner paid @ Rs 3.95 per transaction-based on competitive bidding

22. Issues That Need to be Resolved • Government needs to play its coordinating role to improve • Bunching of traffic in few time slots and few dates results in long wait times. Staggering of distribution of bills can help. • Quality of managers in the centers varies a lot. Supervision of distant centers is difficult • Facilities at the centers are better than in departments, but can be improved significantly • Determining a formula for shared revenues - one break point for volume. Estimating volume growth is tricky. • Sharing of revenue from many possible sources • Charge to the client (utility,service provider) • Charge citizens • Generate from advertisements-building,transaction slips • Design of Service Level Contract (obligations on all partners) and ability to enforce • In eSeva responsibility for marketing, awareness ill defined • Maintenance of equipment in the centers needs monitoring • Capacity of servers and network band width not keeping pace with growth in volume-slow response.

23. Issues in PPP • Congruence of Objectives. Fair returns for all parties. Private sector exists to make profits. • Key word is Partnership-not a buyer seller relationship. Mutual trust as future can not be accurately predicted. Need for adjustments. • Clash of Cultures. Government is inflexible and private sector is short term results. Both sides need to adjust • Guarding against lack of competition-private monopoly replacing a Government monopoly • Design of Service Level agreements and MIS for enforcing the SLAs • Cost of faılure ıs hıgh. Needs a fresh start Proper costıng of rısk

24. Conditions precedent for PPP • Political will • Environment of trust • High level champions on both sides • Transparency in Procurement • Entrepreneurship within bureaucracy • Need for standards and tiered architecture to accommodate many partners • Enabling legal framework to enforce contracts • Citizen trust in private sector-security, privacy