June 7-8, 2007 PPPI Days—The Public Private Partnerships in Infrastructure (PPPI) Program of the World Bank Institute (WBI) organized the 2nd gathering of PPP agencies from around the world. Building on the success of last year’s first annual event—PPPI Days 2006—the scope of the PPP global network was further broadened with the addition of new countries and the active participation of private sector representatives. This year’s PPPI Days gathered 70 delegates from 38 countries worldwide compared with the 23 countries that participated last year.
The diversity of the structural organization, functions, governance and policy making among various 
PPP units, in both developing and developed countries, creates a unique knowledge-sharing opportunity, that PPPI Days has filled. As Mr. Paul Noumba Um, Program Leader of the PPPI Program at the World Bank Institute assured, “WBI is committed to respond to the global demand for knowledge sharing between PPP units on an annual basis.”
During her opening remarks, the World Bank's Vice President for Africa, Ms. Obiageli Katrya Ezekwesili, framed the challenges that PPP units in developing countries are facing. As Ms. Ezekwesili pointed out, “Current investments in infrastructure are estimated between 3 percent to 4 percent of the GDP as against the required 7 percent needed to attain the MDGs. In Sub-Saharan Africa, these investment needs are estimated around 40 billion US dollars per year representing a daily investment effort of 12 US cents per person per day in a region where around 50 percent of the population lives with less than US$2per person per day.” PPPI Days therefore comes at a crucial time of increasing global awareness and interest in bridging the infrastructure gap in developing countries, and in particular in Sub-Saharan Africa. Ms. Ezekwesili urged participants to seek 
answers to the following urgent concerns:
- How do we communicate the difference between privatization and PPP models in infrastructure to ensure political buy-in in many countries?
- To what extent does the existence of a favorable policy framework, strong regulatory framework, and an improved business environment aimed at reducing the cost of doing business present challenges to the successful implementation of PPP models for infrastructure?
- How can we reconcile policies that allow for tariffs at cost recovery level to increase access to social infrastructure services especially within the context of the MDGs?
- Given its significant cost implications, can PPP models in infrastructure be successfully adapted for regional infrastructure projects?
Mr. Taziona Chaponda, Head of the South African PPP Unit explained, “When Treasury regulations governing PPP came into effect in late 1999, the market was relatively small and the technical skills required to put together PPP deals were scarce…eight years later the PPP unit successfully built confidence in the market and the main focus is how to step up the annual deal flow.” In Australia, on the other hand, despite the fact that the PPP program is one of the oldest in the world, the capacity of the public sector is still a concern. As Mr. Richard Foster, Acting Head at the Department of Treasury and Finance of Partnership Victoria mentioned, “Even in a country such as Australia with very good access to international advisors, it is essential to build capacity with the government itself and attract people with the right skills and knowledge to manage PPP projects.”
Reviewing Implementation, Institutional, and Financing Issues
In order to facilitate more substantial and concrete discussions, PPPI Days 2007 was divided into the following sessions: Government’s Vision on PPP, Project Development, Financial Challenges and Innovation, Ex-post Management of PPP Contracts, Case Study sessions, Exit Issues, and PPPs in Social Infrastructure.
Government’s Vision on PPP: It is important for a government to clearly understand its own vision in order to lead various government bodies, especially when most of the public sector is reluctant to leave their comfort zone of public procurement. A clear vision, will allow governments to fully explore policy options to foster PPP development. This was clearly summarized by the speaker, Mr. Francois Bergere, Secretary General of the PPP unit in France, “The overall compelling case for PPP: economic, political and legal factors converge to focus on PPPs as a key tool in implementing much needed infrastructure projects.”
Project Development: In most countries, project development is associated with tremendous costs that pose a burden on the budget of public institutions. This has led to the establishment of appropriate budgetary facilities with a specific role to finance transaction advisory and other services of PPP projects. During this session, the concept of PPP project governance was highlighted by the speaker, Mr. Filip Drapak, Chairman of PPP Centrum, Czech Republic. He emphasized the importance of institutionalizing a project board that would oversee the rules of the game, and be part of the project, evaluation, and negotiation teams.
Financial Challenges and Innovation: Financing of large infrastructure projects is very challenging. Mr. Conor Kelly, Managing Director, DEPFA Bank, suggested that commercial international banks, and multilateral financial institution participation “should not be a panacea for all public sectors’ infrastructure needs because there a tried and tested alternative to traditional procurement methods that enable to public sector to tap the innovation, efficiencies and capital of the private sector.” This session also underscored that new project sponsors are likely to be complex consortiums, in association with emerging local investors.
Ex-post Management of PPP Contracts: Effective and timely monitoring of contracts is undermined by the lack of accounting and reporting guidelines. These guidelines should be the tools governing the management activities that will be undertaken during each stage of the project, and also provide a vehicle for addressing issues that cannot be dealt with adequately in the contract. Mr. Taziona Chaponda, Head of South Africa's National Treasury, emphasized the importance of a contract management plan to enhance the capacity of governments to effectively enforce the contract. He concluded by saying that, “In order for PPPs to fully add value to the delivery of public services, realizing "Value for Money” in such deals depends crucially on ex-post management of implementation.”
Case Study Sessions:
Queen Alia International Airport, Jordan: Mr. Moazzam Mekan, Principal Investment Officer, Advisory Services IFC, discussed the main factors of success of the Queen Alia International Airport project. He also stressed the need for the Jordanian government to establish a sound contract management team.
ProInversion’s Journey towards PPP in Peru: Mr. Rene Cornejo, head of ProInversion, in Peru, explained the transition from privatization to a public-private partnerships unit in Peru.
Exit Issues: Exit Issues are risks that arise from changes in equity investor ownership, which are likely to occur over the life of a project. Mr. Richard Foster, Acting Head of Partnerships Victoria, Australia, said, “Although the government in Australia does not obstruct changes in ownership, this creates risks for the government.” To minimize risks, he suggested that governments must conduct appropriate due diligence for changes in ownership, and adequately appraise potential related risks.
PPP in Social Infrastructure: The use of PPPs in social infrastructure is still evolving in contrast to the use of PPP in economic infrastructure. However, the direction of their evolution is not yet clear. There has been much controversy regarding the use and the scope of PPPs in socially sensitive sectors, such as education and health. While the value added in the provision of infrastructure is recognized, there is considerable reluctance in the private provision of health and education services. In this session, speakers discussed pros and cons for PPPs in social infrastructure, as well as factors of success, risks and challenges.
PPPI Days 2007 ended with a wrap-up session during which delegates initiated the next steps forward and reflected on the lessons that they have learned. As Mr. Jay Hyung Kim, Managing Director of the Korean PPP unit, summed up, “PPPI Days has been not only an excellent opportunity to interact with more advanced PPP units but also to be introduced to WBI’s extensive range of valuable resources including the Global PPPI web portal: http://www.globalpppi.org."
Contributed by Patchareporn Talvanna and Periklis Saragiotis of the World Bank Institute's PPPI Program.
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