PublicPrivate Partnership Bangladesh Perspective

1
Public-Private PartnershipBangladesh Perspective

• Presented By
• Mohammad Zakir Hossain
• Deputy Comptroller and Auditor General
• Office of the Comptroller and Auditor General
• of Bangladesh

2
Public-Private Partnership (PPP)

• PPP is a contractual agreement formed between a
  public agency and private sector entity
• PPP allows greater private sector participation
  in the delivery of services
• PPP allows the public agencies to tap private
  sector technical, management and financial
  resources to achieve certain public agency
  objectives such as
• greater cost and schedule certainty,
• supplementing in-house staff,
• innovative technology applications,
• specialized expertise or access to private
  capital.

3
Reasons for Public-Private Partnership

• Accelerating the implementation of high priority
  projects by packaging and procuring services in
  new ways
• Turning to the private sector to provide
  specialized management capacity for large and
  complex programs
• Enabling the delivery of new technology developed
  by private entities
• Drawing on private sector expertise in accessing
  and organizing the widest range of private sector
  financial resources
• Encouraging private entrepreneurial development,
  ownership, and operation of related assets
• Allowing for the reduction in the size of the
  public agency and the substitution of private
  sector resources and personnel.

4
Key Benefits of Public-Private Partnership

• PPP provides benefits by allocating the
  responsibilities to the party either public or
  private that is best positioned to control the
  activity that will produce the desired result
• The primary benefits of using PPP to deliver
  services include
• Expedited completion compared to conventional
  delivery methods
• Cost savings
• Improved quality and system performance from the
  use of innovative materials and management
  techniques
• Substitution of private resources and personnel
  for constrained public resources and
• Access to new sources of private capital.

5
How are risks and rewards allocated in
public-private partnership

• Risks are allocated to the party that is the best
  equipped to manage them
• PPP contracts often include incentives that
  reward private partners for mitigating risk
  factors

6
Promoting Public-Private Partnership in
Bangladesh

• Fast changing policy situation with globalization
  and deregulation recognizes increasingly
  important role of private sector in Bangladesh
• Bangladesh has a very rich experience on PPP,
  especially in respect of the scope and diversity
  of Non-Government Organization (NGO) activities
  in social services

7
Sectors of PPP in Bangladesh

• Health Sector
• Education Sector
• Infrastructure Development
• Tourism Sector
• ICT Sector
• Industries

8
Premises of PPP in Health and Education Sector

• PPP in health and education sectors are based
  upon three premises
• Health and education are critical areas of
  activity for national development
• The public good character of health and
  education and the scale of effort required to
  meet societys needs in these two areas call for
  close cooperation of all stakeholders in both
  public and private sectors
• The current status and future prospects of PPP
  are contingent upon country specific
  circumstances.

9
The Spectrum of Relationship in PPP

• Parallel activities Public and private
  activities are carried out without any contact
  with each other or acknowledgement of the
  existence of each other
• Competitive activities The activities in the
  public and private sectors are carried out with
  same or similar objectives, targeting common
  clientele and competing with each other, which
  may mean either wasteful duplication of
  activities or enlargement of choices for the
  beneficiaries.

10
The Spectrum of Relationship in PPP(Contd.)

• Complementary activities Activities or services
  from the public and the private sectors
  complement each other in terms of nature and
  content of services or geographical and
  population coverage, either by design or
  incidentally
• Contractual services The government contracts
  private sector for providing specified services
  for agreed fees, with the contractor being
  accountable to the government authority.

11
The Spectrum of Relationship in PPP(Contd.)

• Cooperation and collaboration Public and private
  actors work together on the basis of shared
  objectives, strategies and agreed criteria
  regarding assessing process and outcome the
  partners also cooperate in developing common
  objectives and strategies and criteria for
  assessment of activities.

12
Who are the Partners

• Public Sector Partners
• National government
• District administration
• Municipal authorities
• Local government bodies
• Para-statal corporations
• State universities and research organizations

13
Who are the Partners (Contd.)

• Private Sector Partners
• Commercial for-profit enterprises
• Development-focused voluntary non-governmental
  organizations (NGOs)
• Cooperative societies
• Community-based organizations
• Religious organizations
• Professional organizations
• Trade unions
• Research and academic institutions
• Households

14
Judging Effective Partnership

• The principles of non-rivalry and
  non-exclusion of public goods logically point
  to the criteria of universality and equity in
  judging the value of partnership
• Given the competing demands on scarce resources
  in developing countries, efficiency in terms of
  optimal benefits from a given cost must be an
  important criterion
• Accountability to various stakeholders regarding
  objectives, process and outcome in basic social
  services also is a key consideration
• In other words,
• universality
• equity
• efficiency and
• accountability
• of basic services are the four sets of criteria
  for judging the design and the results of
  partnership

15
Criteria for Judging Effective PPP (Contd.)

• Universality
• refers to access for all who are eligible to a
  type of service for example, universal primary
  education for all children in the primary-school
  age group
• Equity
• is an elaboration of the universality criterion
  in terms of ensuring acceptable quality of
  service for all sharing of costs equitably when
  a cost is necessary to be imposed and special
  attention to groups disadvantaged due to
  historical, economic or cultural reasons
• Efficiency
• has two aspects. Internal efficiency in terms of
  operations and management of an activity to
  achieve maximum output for the least cost and
  external efficiency in terms of achieving best
  results in terms of objectives of the activity
  for the least cost
• Accountability
• refers to holding the providers of services
  answerable to the beneficiaries and other
  stakeholders regarding both process and outcome
  of a program. Openness and transparency in
  management and a participatory approach in
  planning, making key decisions, and evaluation
  are necessary conditions for accountability

16
Key Features or Findings of Case Studies of
Non-Government Involvement in Bangladesh
17
In the Health Sector of Bangladesh the following
key features of the partnership identified

• In the total national effort to provide for
  health services, the government is a minor actor
  in terms of the total health expenditures and
  peoples utilization of services, contrary to
  general impressions
• It is evident that non-governmental organizations
  active in health and family planning have been
  engaged in
• a major collaborative relationship with the
  public sector services or
• have run their own complementary programs.

18
Key features of partnership (Contd.)

• In case of public sector health care and family
  planning services
• their quality does not generally meet a minimum
  acceptable standard
• they have widespread reputation of mismanagement,
  corruption, inefficiency, and of being devoid of
  a friendly service-provider attitude
• the public facilities are utilized considerably
  below their expected capacity.

19
Key features of partnership (Contd.)

• Preventive and basic curative care provided by
  NGOs are generally regarded as
• more effective
• more client-friendly and
• utilized more frequently than public facilities
• The private sector service providers in health
  account for three-quarters of all health sector
  expenditures

20
Key features of partnership (Contd.)

• There is no substitute for a strong public sector
  role in setting policies and priorities for the
  nation
• Effective protection of public interest demands
  that the large and important role of NGOs,
  households and the other actors are recognized
• that they are taken into account in maintaining
  an overview of the sector by the government and
  in guiding policies and priorities and
• that the policy and regulatory environment is
  created for all actors to play their
  collaborative, complementary, parallel or
  competitive role

21
Public-Private Partnership and SAI Bangladesh

• The audit mandate of the SAI Bangladesh with
  regard to audit of PPP is clear. All PPP, where
  the government has a majority interest are within
  the purview of audit of SAI Bangladesh
• The formidable task in this audit is the
  minimization of risks, which is achieved through
  comprehensive audit plan
• The SAI is very careful in assessing the
  capacities of the private sectors in delivering
  the public goods through partnership
• A public-private partnership within the SAI
  itself in terms of cooperation with the
  professional accounting bodies and hiring of
  private sector experts is also being contemplated
  in this type of audit