LAHORE: The Punjab government is expected to shortly table a bill before the provincial assembly for creating an independent authority to develop and execute “bankable” physical infrastructure and social services projects with the help of the private sector.
“The law has already been approved by the (provincial) cabinet and will soon be tabled in the assembly for approval,” Imran Sikandar, the provincial planning and development department secretary, told Dawn.
Once approved from the assembly, the Punjab Public-Private Partnership Act 2019 will replace the previous legislation on the subject and create a public-private partnership policy board headed by the chief executive of the province and a partnership authority, a statutory body, along with its executive committee to foster private investment in physical infrastructure and social services projects.
The provincial government plans to explore the public-private partnership mode as a preferred financing tool for attracting private capital investment in development projects to bridge the widening gap of physical infrastructure in the province and deliver social sector services to the maximum number of people because of the limited financial resources available to it as well as weak institutional capacity to handle such schemes efficiently and cost effectively.
Bill to be tabled in assembly to create independent body
According to the budget documents, the province is required to spend at least 6.45 per cent of the gross domestic product annually on development of infrastructure and extend social services to people against actual public sector investment of 2.26pc. The authorities plan to fill the existing investment gap by attracting private capital in profitable schemes to be developed by the proposed authority through creation of an incentives structure.
The financial constraints faced by the government amid the economic crisis facing the country had forced the Pakistan Tehreek-i-Insaf government to massively slash provincial public development spending to Rs238 billion during the last fiscal from Rs635bn a year earlier. This year, the province has proposed development investment of Rs350bn.
Punjab Finance Minister Hashim Jawan Bakht has repeatedly stated that the provincial authorities plan to increase the size of the public-private partnership financing to 10pc of the provincial Annual Development Programme by 2023 because the magnitude of infrastructure and social sector delivery outstrips the fiscal and investment capacity of the government. The government is expecting private sector financing of Rs42bn for at least seven road projects, including the Rawalpindi Ring Road, during the present financial year, according to the secretary.
Punjab has been trying to woo private investment in physical infrastructure projects for over a decade without much success owing to risk aversion and weak institutional capacity of provincial departments to identify, develop and sell the projects to the private sector. Only few projects have so far been implemented under the public-private mode.
The authorities, however, are hopeful that the new legal and institutional framework – which will extend the scope of public-private partnership to the provision of social services to the public – being structured under the new legislation will successfully draw private sector interest and capital going forward.
The provincial government is being assisted financially and technically by the Asian Development Bank and the UK’s Department for International Development in developing and implementing the new framework.
Published in Dawn, August 14th, 2019