PAKISTAN’S Infrastructure Projects Conference 2005 scheduled for 13-14 September 2005 at Islamabad is expected to provide participants with an overview of infrastructure policies, projects and opportunities for the private investors. A wide range of issues are on the agenda such as, financing options and alternatives, framework for risk mitigation and sharing, update on new regulations on legal protection and incentives, strategic partnerships, creative approaches to bidding of infrastructure projects, negotiating project contracts, practical strategies for resolving disputes, round table discussion on contractual issues and pre-qualification.
Provision has been made for one-to-one meetings and dialogues between various parties, to learn first hand about opportunities associated with investment in infrastructure projects, particularly power infrastructure, gas pipeline- scope for private-sector participation, telecommunication, water supply and sanitation, road projects etc.
The conferences certainly help, especially with focus and extensive deliberations on specific issues. But we should also assess if we are ready for fully benefiting from such conferences. There are important matters closely allied to infrastructure development, which might be attended to concurrently, if not prior to the holding of more such conferences. Some of these issues are briefly touched here.
We need to understand clearly that the infrastructure projects are means to an end— facilitating easy, safe and cheap transport for men or material or providing cheaper motive power for facilitating manufacture of goods and/or provision of services.
In the social sectors, the end associated with an infrastructure project could be bringing, at least cost, an improvement in the quality of life of the people. The ends provide the litmus test on correct prioritizing of infrastructure project.
The infrastructure projects would cost less if planned properly in a transparent and participative manner by all major stakeholders. Capital cost and schedule for implementation have to be determined realistically. Capital costs can be financed in different manners and from various sources. Some sources cost more than the others and thus increase the overall capital or operating costs.
Moreover, the quality of project would have a bearing on the span Of life, its quality of service and maintenance cost. Therefore, value-for-money must be ensured in every project.
The project design and size impact the capital costs / benefits to the end-users. These projects have to be finalized after weighing relevant factors including future requirements. The infrastructure project can be built with extensive use of heavy machinery, mostly imported, or built with extensive use of local manual labour which is abundantly available at cheap rates. The mix of mechanization and manual labour will be different in different projects and in each case might be decided in the light of national policies and priorities.
Masures for improvements, in a systematic way, in the handling of different infrastructure projects at different stages of development and implementation are badly needed. Guidelines, procedures, trained and dedicated experts are the pre-requisite for successful planning and financing of such projects.
The weaknesses in the system at different stages of project formulation, approval, procurement, implementation and operation, if not corrected on timely basis by the government, will be exploited by the counterparties to their advantages. In simple terms, our people will be forced to pay more for each unit of benefit.
The SBP has issued guidelines to the banks and DFIs for the financing of infrastructure projects. But the banks and DFIs have limited capabilities and resources for handling such projects. They even need training of competent people.
There is no specialized institution for the promotion, development or financing of infrastructure projects barring reports regarding the establishment of an infrastructure bank or a municipal bank. The country needs its own internationally recognised institution, with huge capital base. The World Bank, IFC, ADB, USAID and IDB may be associated as co-sponsors. Others can join later. Only then, we may realistically expect executing infrastructure projects at minimal cost and time.
The country is presently flush with liquidity and perhaps could possibly be used for financing of infrastructure projects. The SBP might be required to come out with proper schemes.
Infrastructure projects are presently planned, appraised, approved and executed at different levels of the government. Smaller projects are processed at local level by the local government authorities or the city district governments. Medium projects are undertaken by the provincial governments and the large projects are processed and funded at the federal level. The Working Parties and the Planning Commission are involved at different stages of approval and execution.
There are sometimes newspaper reports about poor quality of workmanship, long delays, huge cost over-runs, waste and pilferage including allegation of fraud in the acquisition of land for infrastructure project. In some cases, money spent is as good as total waste. This has to change radically. The whole process starting from project concept to execution has to be revamped and modernized.
Occasionally, different reports are prepared for the government on certain issues with economic ramifications or for modifying existing policies or devising new policies. As a rule, members of such committees or task forces might include people from business, industry and academia. The TORs of such committees might be released for public information along with the names of the members. The reports, two months after submission, might be released to the public. This would bring transparency and participation in the formulation of policies.
This should apply to policies on power generation, road development, fixation of toll on roads and bridges, port development and the rest of the infrastructure projects. Tolls or utility tariffs must be determined in a fair and transparent manner.
Regional projects such as gas / oil pipelines, power transmission lines, motorways / highways, ports, etc are already under consideration. These are highly capital intensive. Moreover, besides techno-economic issues, these projects have geo-political and international legal ramifications. These projects need more careful handling, particularly at negotiations. Pakistan so far has not much exposure in such projects or their funding and implementation. The country has to develop and train suitable people for handling such projects.
People appointed without merit on planning, appraising, financing and executing of infrastructure projects would certainly fumble at different stages of the projects. As a result, there might be incremental cost by way of time and money, which shall have to be borne by the country. People appointed on merit are our only hope.
Public-private participations (PPPs) are considered a better way for raising financial resources for medium and large infrastructure projects and for their execution/operation. For this, laws and regulations need to be enacted facilitating formation and operation of PPPs for infrastructure development, financing and execution. All PPPs deals might be made in a proper and transparent manner for mutual benefits.
