ISLAMABAD: The independent evaluation department of the Asian Development Bank has observed in a new report that public-private partnerships (PPPs) are now more imperative to minimise the negative impacts of the coronavirus pandemic on governments’ budgets, which are already under pressure.
PPP projects, particularly in demand-sensitive sectors such as transport, will likely be adversely impacted. Careful selection and prioritisation of projects must be undertaken to maximise beneficial development outcomes and minimise placing additional strain on government finances, recommends the ‘Support to Public-Private Partnerships’ report.
Interventions in support of PPPs are affected by policy risks, political risks, and weak regulatory frameworks. If there is no political will, local capacity, or enabling environment to utilise PPPs, deals will not close. Availability of finance is not the main issue in delivering PPP infrastructure projects; managing and appropriately pricing project risk in a way that can mobilise existing private sector capital resources is a much more substantive challenge, the report says.
With increased urbanisation and an acceleration in the pace of economic change in Asia and the Pacific, a growing infrastructure deficit has emerged. This is a result of both historical under-investment and poor maintenance of existing infrastructure assets.
Inadequate and unreliable energy, transport, and water and sanitation systems have increased the costs of doing business, undermined productivity and trade, and reduced access to health and education for many of the most economically vulnerable people in the region.
The ADB needs to develop a strategic approach towards supporting PPPs, with focus on upstream engagements to address the infrastructure investment gaps in its developing members, the report says.
Published in Dawn, October 30th, 2020