P.P.P Initiative

THE PPP CONCEPT

A Public-Private Partnership is a new approach used by the Government to deliver services to the population. The objective is to achieve more and better services, at a lower cost for society.

It can be defined as a contractual arrangement whereby a private party performs part of a Government organisation's service delivery or administrative functions, and assumes the associated risks. In return the private party receives a fee according to predefined performance criteria, which may be:

• Entirely from service tariffs or user charges
• Entirely from a Ministry's budget or other budget
• A combination of both

The essential aspects of a PPP arrangement, as distinct from the direct delivery of a public service by a Ministry are:

• A focus on the services to be provided, not the assets to be employed
• A shift of the risks and responsibilities to a private provider for the activities associated with the provision of services

PPP can have a number of benefits, which include:

• Operational gains: ensuring that one delivers better or more services for the same price (efficiency gains), or making savings to release money for investment elsewhere.Operational gains can be achieved by focusing on outputs rather than processes, by generating economies from integrated design, building, financing and operating phases.
• Strategic clarity: partnership contracts enhance accountability by clarifying responsibilities and focusing on the key deliverables of a service. The managerial efficiency of a Ministry can benefit significantly as existing financial, human and management resources can be refocused on strategic functions.

FORMS OF PPP

A PPP project can take 2 forms: a contract to supply services to the public sector or to sell services or assets to the public sector, or a Joint Venture. The various contractual forms are illustrated below:

• Service Contract: the Government bids out the right to deliver a specific service and sometimes provides the assets needed. Such contracts are of a shorter duration than concession contracts. E.g security services
• Management Contract: the assets of the institution continues to be public, but operational management becomes private. E.g management of hospital.
• Leasing: under this contract, the private sector finances and builds a new facility which is then leased to the public sector. The public partner makes scheduled lease payments to the private sector and thus acquires equity in the facility. At the end of the lease period, the public agency owns the facility. Under the lease arrangement, either the public agency or the private operator may operate the facility during the term of the lease. E.g equipment
• BOT/BOO: the private sector contract builds a facility in accordance with a design prepared by the public sector. In the case of the BOT, the private sector finances the construction of the facility but the facility is owned by the public sector, while in the case of the BOO legal ownership rests with the contractor until the end of the contract term. E.g of a BOT project is the construction of roads.

One end of the spectrum would be a mere outsourcing of some routine operations such as maintenance of building or provision of office accommodation. The other end would be large infrastructure projects like the Light Railway Transit System, which the private sector undertakes to finance, design, construct, maintain and operate, and takes a considerable proportion of the risk.

GOVERNMENT STRATEGY

The government has designed a strategy to develop PPP in Mauritius, as follows:

• Design and implementation of a legal and policy framework. The objective is to design a policy and legal environment which will enable PPP projects. A PPP Policy Statement was prepared in May 2003. A new PPP legislation was enacted in March 2005.
• Selection of PPP projects. The Government has started the process of identifying projects which can potentially be financed under the PPP scheme. This is being carried out by conducting feasibility studies.
• Capacity Building for the Public and Private Sector: The PPP Unit has organized PPP events which are generic while implementing Ministries will plan and implement capacity building in their respective sectors.

ORGANIZATIONS IN PLACE

The PPP-Unit presently comprises 3 members of the Ministry of Finance and Economic Development (MOFED) as follows:

1. Mr. D. Khoodeeram, Economist
2. Ms. S. Appadoo, Economist

A Task Force, chaired by the Director-General of the Economic Development Department of MOFED was set up jointly with the Private Sector. The Task Force advised Government on the legal and policy environments of PPP in Mauritius.

Membership of the Task Force was as follows:

Public Sector			Private Sector
	Ministry of Finance and Economic Development			Joint Economic Council
	Ministry of Public Infrastructure			Building and Civil Engineering Contractors Association
	Ministry of Public Utilities			Institution of Engineers
	Board of Investment			Mauritius Bankers Association
	Business Parks of Mauritius			Pricewaterhouse Coopers (local representative of member of the IFSL PPP Working Group)
	State Law Office			KPMG (local representative of member of IFSL PPP working group)