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Public-private partnerships take root in Sindh, Punjab

Updated February 05, 2018

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THE success of initial public-private partnership (PPP) projects in Sindh and Punjab served to remove apprehensions regarding the concept in Pakistan. They paved way for expanding the scope and the coverage of such collaborations in the country to deliver sustainable development efficiently.

The benefits of projects (such as Thar coal mining and power project, Hyderabad-Mirpurkhas dual carriageway, and the southern loop of Ring Road and a railway crossing flyover in Lahore, etc) demonstratively accrued beyond the direct users of these facilities.

They helped sideline the venom-spitting elements on both sides of the public-private divide and strengthened the futuristic current. The clarity on striking the right balance between risk and reward sharing, it appeared, was yet to be achieved in the relevant circles.

“PPPs are all about striking equilibrium between public and private, risk and reward, cost and benefit, particularly in resource-scarce countries with big chunks of population excluded from the economic mainstream,” commented an expert.

A PPP is an arrangement between the government and a private business for the provision of public assets or services through investment and/or management by the private sector for a specified period of time. It entails clearly defined allocation of risk between partners and payments to the private sector linked to pre-determined benchmarked measureable performance standards.

Provincial governments are looking forward to working with private companies under the PPP mode to effectively respond to development needs

Background research found all provincial governments in Pakistan were looking forward to partnering with the private sector under the PPP mode to effectively respond to development needs.

“The red tape has not morphed into red carpet for the private sector, but the bureaucratic mindset to monopolise public service delivery is changing. On the other side, the reluctant private sector has also been discovering the value of government collaboration in megaprojects for both profit and prestige,” commented a senior team member of the public-private partnership cell in Sindh.

The well-equipped cell has been functional in the finance department for a decade now, though the Sindh PPP Act was enacted in 2010.

Punjab created its PPP unit in the planning and development department, which supervises the policy and the projects with PPP modes in 18 line ministries, under the Punjab PPP Act of 2014. Following the lead, the Khyber Pakhtunkhwa PPP Act was enacted in 2014 and the unit was established, but it was facing capacity challenges.

In Balochistan, work in this regard was still in progress. Essa Tahir, an official involved in the exercise in the province, told Dawn from Quetta that the planning department would table the proposed PPP bill in the next provincial cabinet meeting.

“The complex nature of the PPP arrangements necessitated specialised skill set (financial, technical and legal) to handle and implement public interest projects in physical and social infrastructure. Development partners like the Asian Development Bank and the World Bank have agreed to assist us in this regard for the next two years”, Azhar Khan, KP’s PPP coordinator, told Dawn over the phone from Peshawar.

Agha Waqar Javed, head of Punjab’s PPP cell, said projects have already been awarded in housing, infrastructure, transport, health, food and forestry sectors. “We are now structuring more sustainable and bankable transactions in livestock, tourism and recreational sector as well,” he said in an emailed response.

“I am confident that the coming years will witness a huge surge in public private partnerships, especially against the backdrop of successful and beneficial outcomes for both public and private sectors,” he said.

Talking to Dawn at the PPP cell’s office in Karachi, Sindh’s team narrated the adventurous journey and the milestones achieved. They said they were proud to have taken the lead, and mentioned some projects (like the Thar coal) that predated the enactment of the public-private partnership act in the province.

The cell attributed the success to the team of technical, financial and legal experts hired on merit. They said that except for the transport sector, the experiment succeeded in all other sectors including road infrastructure, power, health and education.

At a recent meeting, the Public Private Partnership Policy Board approved a proposal to create a PPP project support facility to independently manage a viability gap fund of Rs550 million. Presiding over the meeting, Chief Minister Murad Ali Shah summarised Sindh’s position in the following words: “The public-private partnership has assumed an important role in the development of Sindh and we are going to expand its scope for better services to our people”.

It has been learnt that Sindh was actively considering several new projects under the PPP mode, including in the areas of motor vehicle inspection, solar dates dehydration, tourism, and modern markets of vegetable, meat and fish.

In an exclusive conversation some time back, Shamsuddin Ahmed Shaikh, CEO of Sindh Engro Coal Mining Company and Engro Powergen Thar, was all praise for the provincial government that he said delivered diligently on its part of the deal. “There were reservations in my parent company regarding the project, primarily rooted in the perception of the Sindh government in business circles. But the performance, participation and responsiveness of the provincial government was pleasantly surprising,” he said.

The response from members of business bodies and chambers was muted. Ghazanfar Bilour, president of the Federation of Pakistan Chambers of Commerce and Industry, was not available for comments. Zubair Tufail, a former president of the federation, did not sound enthusiastic. He said he was not up to date to articulate the position of the business community on the issue.

Attempts to contact Pakistan Business Council CEO Ehsan Malik were unsuccessful. Razzak Dawood, the first chairman of the council, promised to comment but he could not respond until this report was filed.

Published in Dawn, The Business and Finance Weekly, February 5th, 2018