Officials in the Planning Commission and Infrastructure Project Development Facility (IPDF) of the ministry of finance privately concede that move for PPP has so far not made any headway. Nothing could be decided about partly funding infrastructure projects in 2008-09 by the private sector.
The fiscal constraints had persuaded the economics ministry to minimise the traditional role of the governments in financing the PSDPs by having an effective PPP framework from the fiscal year 2008-09.
A concerned official of the Planning Commission regretted that not much had been done to make the idea of PPP a success though the government had no capacity to finance more than 50 per cent of the medium-term infrastructure programme. “The much-needed legal and regulatory framework for public-private partnership could not be put in place to ensure certain funding by the private sector during the next financial year as was earlier planned”, the official said requesting anonymity.
He said the policy framework for PPP was approved by the Economic Coordination Committee (ECC) of the cabinet on November 30, 2007. But no legal and regulatory framework could be developed even after seven months.
However, he said the idea was not abandoned and some projects were expected to be financed by the private sector. He did not have details about such projects and said the job was expected to be done during the first quarter of 2008-09.
Former finance minister Dr Salman Shah said it was initially decided that under PPP, Rs100 billion will be invested by the private sector. “But the IPDF did not receive any leadership support from the ministry of finance due to which all planning to lure development funds from the private sector had gone down the drain”, Dr Shah alleged.
He said the IPDF needed a push to deliver and that without having support from the top, no objective could be achieved in terms of attracting private investment for development purposes.
However, analysts maintain that it was the failure of the IPDF which did not conceive viable development projects which could have been completed with the support of private sector. “Why the so-called legal and regulatory framework could not be completed even after many months”, he asked adding that the IPDF officials should have been taken to task.
The Chief Executive of IPDF, Mr Ijaz Ahmad, despite many attempts, was not available to offer any comments.
An official of the ministry of finance familiar with the issue, when approached, said many people in the IPDF were inducted on high salaries on safarish by the previous government. He said the IPDF had assured the government that it would set up separate companies to raise funds for each mega water projects.
Unfortunately, nothing concrete was done with the result the government had to reluctantly allocate some funds in the new PSDP for water projects including Bhasha Diamir dam.
In reply to a question, former finance minister Dr Shah said: “During our time we were negotiating with international donors to partly fund our mega water projects but I do not know what is happening right now about it”.
Initially, it was proposed to ultimately target financing 50 per cent of the PSDP by the private sector. The World Bank and the Asian Development Bank (ADB) had also reportedly agreed to offer essential support aimed at improving and expanding infrastructure services for the PPP.
The Independent Power Producers (IPPs) were already involved in power projects and now the private sector should provide its support to jumpstart PPP in other sectors. Issues concerning risk investment were still to be sorted out to help undertake model projects.
Former vice-president of Pakistan Federation of Commerce and Industry (FPCCI) Sohail Altaf when asked for his comments said the idea of public-private sector was never pursued seriously. “The private sector was never seriously consulted over PPP by the right quarters”, he said adding that when the private sector was not sure about the return on its investment why it should extend any helping hand to the government.
He said there was a need for the finalisation of legal framework and modalities under which both the public and private sectors could undertake their joint ventures.
Interestingly, the officials of the Planning Commission had been saying that they were finalising draft law, regulatory framework and the capacity building to effectively start PPP preferably from the next financial year.
Under the regulatory framework, the job of the government will be restricted to ensure service delivery for BOT and BOO projects as it is done in most of the countries.
They were also saying till early this year that in the new PSDP, public and private sector projects including those of the infrastructure would be well defined and that the private sector would be given guarantee on their investment in the projects through a law.