ISMED Annual Conference Defining a Way Forward for Infrastructure Investment in the Middle East and North Africa 1 Andrew Fitzpatrick, Programme Coordinator, ISMED Support Programme Paris, 4 December 2014
Jul 20, 2015
ISMED Annual Conference Defining a Way Forward for Infrastructure Investment in the Middle East
and North Africa
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Andrew Fitzpatrick, Programme Coordinator, ISMED Support Programme
Paris, 4 December 2014
Session Three:
Making PPPs happen in the MENA region
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Agenda for the Session:
• Review of the PPP Handbook: Public Private Partnerships in the Middle East and North
Africa: A Handbook for Policy Makers. (Draft)
• Discussion of country-focused work: • Egypt: Promoting Nile River Transport • Jordan: Optimising the Incentives Framework for Renewable Power Infrastructure
(DRAFT) • Morocco: A Benchmark Study on Logistics Zones Development
• ISMED Working Group Task Force on Public-Private Partnerships
Session Three:
PPP Handbook: Objectives
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The PPP Handbook:
• Public Private Partnerships in the Middle East and North Africa: A Handbook for Policy
Makers. (Draft)
• Major ISMED output, region-wide relevancy.
• Intended to be practical and hands-on guide to assist policy makers in moving projects forward.
• Define and describe barriers and obstacles to successful PPP projects in the MENA region and provide policy recommendations to address them.
• Not only a policy and framework level, but also at a more transactional, contractual level.
• Focus on Jordan, Egypt, Tunisia and Morocco, Deauville Partnership countries, and on Transportation/Logistics and Renewable Energy.
Session Three:
PPP Handbook: Methodology
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What did we do to develop the Handbook:
• ISMED country projects have helped to inform the Handbook.
• Broad consultations with IFIs.
• OECD expertise and guidance.
• The Risk Matrix.
Session Three:
PPP Handbook: Methodology
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The Risk Matrix:
• Identified infrastructure projects in each of the four countries in the last decade that
involved private sector participation.
• The main risks and obstacles encountered were identified.
• Seventeen types of risks and barrier identified.
• Grouped into four categories: • Political risks • Financial risks • Legal and institutional risks, and • Operational risks
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Political 19%
Financial 19%
Operational 19%
Legal & Institutional 43%
Barriers to PPP investment by frequency of occurrence* (Egypt, Jordan, Morocco, Tunisia)
* Source: OECD (forthcoming), Public-Private Partnerships in the Middle East and North Africa. ISMED Support Programme.
Session Three:
PPP Handbook: Methodology, The Risk Matrix
Session Three:
PPP Handbook: Key Findings
Capacity and High-level Political Buy-in
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Capacity is Key:
• The capacity of governments and government officials is a recurring issue.
• Goes beyond the ability to execute and manage the PPP arrangement.
• All levels must understand what PPPs are, and what they are not.
• Consultations indicate that there has not been a successful PPP project in the region in the
absence of high-level political support.
Session Three:
PPP Handbook: Key Findings
Capacity and High-level Political Buy-in
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Building Capacity:
• This highlights the need for PPP central units.
• Need sufficient resources and be sufficiently empowered to make decisions.
• Satellite PPP units at the line ministry or agency.
• The line ministry or agency must be able to live with and manage the contract for up to 30
years.
Session Three:
PPP Handbook: Key Findings
The Importance of Legal Frameworks
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Legal Frameworks:
• The PPP legal regime is vital.
• Long and complex agreements, can be many years to recoup investment.
• Investors require transparency and predictability.
• Every project should be a component of an overall strategy.
• Intergovernmental coordination, a whole of government approach.
Session Three:
PPP Handbook: Key Findings
The Importance of Legal Frameworks
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Strengthening Legal Frameworks:
• A comprehensive PPP law addressing all aspects of PPP procurement
• Transparent and predictable bidding processes
• Enhance legal security, guarantees against expropriation • Dispute resolution provisions, both contractual and treaty based.
• Develop overall strategies that include all areas of government.
Session Three:
PPP Handbook: Key Findings
Project Selection and De-risking
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It’s all about preparation:
• Governments may not dedicate sufficient resources to project selection and preparation
• Location choices sometimes made on political basis
• Inappropriate risk allocations
Session Three:
PPP Handbook: Key Findings
Project Selection and De-risking
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Do the Homework:
• Feasibility should be determined before potential investors are involved.
• Location is key in transport concession-based projects • Take care of what you can.
• Know what risks the private sector can realistically face
Session Three:
PPP Handbook: Key Findings
Energy Subsidies
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Energy Subsidies can Inhibit Transport and Renewable Energy Projects:
• Energy subsidies prevalent in the region distort the economics of both transport and
renewable energy
Integrated Strategies • Again, this illustrates the importance of integrated whole of government approach
• Certain transport and renewable energy projects may not be feasible in the absence of
subsidy reform.
Session Three:
PPP Handbook: Next Steps
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Finalising and Implementing the Handbook:
• The Handbook is a draft, and we look forward to comments and feedback to help us
improve and finalise • IMF Centre Kuwait training and Tunisia training
Mr Andrew FITZPATRICK Global Relations Secretariat, OECD
www.oecd.org/investment/psd/ismed.htm
With the financial assistance of the European Commission
Key Contacts