PPPs (Public-Private Partnerships) are effective ways of increasing the private sector’s participation in efficient public service delivery. They are long-term contracts between public and private entities to develop public assets and services. PPPs are vital for economic development and improving infrastructure.
Understanding How Public-Private Partnerships Work
There is a need to understand public-private partnerships in Pakistan, especially their importance, opportunities, risks, and regulatory frameworks. There is also a need to understand PPP policies across provinces, explore more ways to increase their attractiveness, and examine the best regional practices.
Combining Public Resources and Private Sector
Globally, inadequate infrastructure hinders growth, and PPPs can help bridge the gaps by efficiently combining public resources and the private sector. In Pakistan, PPPs have evolved significantly since the 1990s, especially in the sectors of energy and transportation, education, and healthcare.
Developing Public Assets
They involve the development of public assets and services through a transparent bidding process, which is mostly regulated at the provincial level. Their structure includes models like BOOT (Build, Operate, Own, and Transfer) or BOT (Build, Operate, Transfer) and DBO (Design, Build, Operate). Each project involves some variation in the contractual structure, subject to the specific parameters and requirements of the projects.
Challenges Faced by PPPs in Pakistan
The challenges in Pakistan pertaining to PPPs include regulatory uncertainty, lack of coordination, balanced regional growth across the country, lack of fairness in PPP bidders’ selection and award of contracts, lack of gender inclusivity projects, and limited long-term financing options. These partnerships have often faced challenges due to policy slips and financial inefficiencies.
Problems Faced by the PPP framework
Some problems facing PPPs are funding issues, the red tape of bureaucracy, and complex judicial processes where implementing remedies is not easy, as most stay orders issues are there. One thing we are lacking in is performance monitoring to ensure fairness and transparency. Most of the PPP projects are politically motivated.
Benefits
PPPs offer some benefits, like technology integration and economic diversification, but they also present risks, like high development costs and regulatory challenges. Effective PPP management requires a stable institutional environment and skilled public sector oversight. In developing countries like ours, the complex bureaucratic procedure needs to be simplified. The fiscal gap also prevails, which can be addressed by looking at some good global examples; for instance, Turkish and Malaysian models are very good and may be followed.
Malaysian and Turkish Models
The fiscal gap that prevails can be addressed by looking at good global examples; for instance, Turkish and Malaysian models are very good and may be followed. In Turkey, the privatization and PPP history dates back to the 1980s. During this time, the first
laws were enacted to promote private sector involvement in the public sector.
Turkey has a vigorous legal framework for PPPs guaranteeing transparency and accountability and this model is extensively used for infrastructure development and provision of public services. Among the entities that fund the projects are banks, international financial institutions, and private investors. The Turkish model allows long-term repayment mechanisms through user fees. The infrastructure projects include airports, highways, railways, energy, hospitals and urban development, and this infrastructure development thus ensures economic growth and job creation. The focus is on introducing innovation in technology through private sector experts.
The Turkish Model takes care of the fact that the state has to bear less fiscal burden. Healthcare PPPs are also common, including city hospitals. This model allocates risks between the public and private sectors. The tendering processes are transparent and competitive.
However, if we talk of foreign investment, it can be seen that in Malaysia, one fundamental agency (UKAS) operates under the Prime Minister’s Department and one framework. However, Pakistan has five legal frameworks and five financial models.
Case Study:
Lahore Metro Bus Service
If we take the case of the Metro bus service in Lahore, it can be seen that the feasibility of this project perhaps lacked the daily ridership estimates, which led to an increasing subsidy burden.
Issues in FGEHA G-13 Project
In the case of the FGEHA (Federal Government Employees Housing Authority) G-13 project, there were issues related to cost escalation. In 2017, a tender was floated for the construction of 2,200 apartments in categories A, B, C, and D. However, after a 7-year delay, it was left incomplete. As a result, recently, the board approved the termination of the joint venture with the private firm.
The Citizens Foundation – A Success Model
TCF is an example of a success story. When The Citizens Foundation funded and paid for the schools, attendance increased by 30%. The TCF Model not only encourages parents to send their children to school but also shows a considerable improvement in academic results.
Conflict of Interest in the P3A Case
P3A is also known as the Public Private Partnership Authority Act of 2017. At the federal level, it has been facing a conflict of interest. Its regulatory ambit is very limited. In our country, gender inclusion must be included in PPP projects. The Environment Responsibility Act is not in practice either, and it should be dealt with and ensured.
Health and Education Sectors
We have to opt for such a model in healthcare and education, where the government spends very little. Certain pitfalls need to be avoided. For example, the private party works for profit maximization, while the government works for social welfare. Another major problem is that whenever there is a component of funding, the dispute resolution mechanism is not properly at work.
Criteria
The option of going for PPP projects should be aligned with our national vision. Preferably, climate-resilient projects should be highlighted. Soft projects that are gender-based should also be preferred.
In our country, projects involving public-private partnerships are often related to infrastructure, roads, and energy. Projects related to agriculture and women’s inclusion are given less importance. They should also be emphasized. Risk allocation in public-private partnerships should be efficient.
Collaboration Between the Private and Public Sector
The success of PPP depends on fostering collaboration between the public and private sectors. It can be suggested that modern technology, climate resilience, and environmental impact assessment must be integrated into PPPs. The priority should be given to projects concerning agriculture and food security for rural development, and focus should be placed on import substitution. Most importantly, such projects should be associated with the development goals. The PPPA (The Public Private Partnership Authority) needs to focus on balanced regional growth across the country.
A public–private partnership can be successful by implementing strict laws and flexibility in the process. Financial and operational risks should be managed carefully with minimal political involvement. For effective PPP management, there must be a stable institutional environment and skilled public sector oversight. Credit finance facilities are a new norm in the world market, requiring the design of new policies. We must understand the global trend and try to shift according to it.
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Ghazala Anbreen's work spans energy, journalism, and advocacy; making her a multifaced contributor to important discussions.