PUBLIC PRIVATE PARTNERSHIP Monitoring Policy Implementation
PRESENTATION AT THE STRUCTURED MANDATORY ASSESSMENT BASED TRAINING PROGRAMME (SMAT-P) ORGANIZED BY CENTRE FOR MANAGEMENT DEVELOPMENT
Aminu Diko DIRECTOR GENERAL INFRASTRUCTURE CONCESSION REGULATORY COMMISSION August 2015
Learning Objective At the end of this presentation, participants should have: • A basic understanding of the concept of PPP, the underlying philosophy, basic principles and the phases of the PPP process • The constituents of the Nigerian PPP Framework • Issues related to the monitoring PPP Implementation and the roles of MDAs, ICRC and the PPP partners • The challenges associated with PPP procurement in the Nigerian environment and mitigating factors • Conclusion 2
Delivery Method
• Video presentation on PPP • Slide presentation using the Microsoft PowerPoint • Q&A Session • There will be a paper on Monitoring PPP Policy Implementation
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Outline
• • • • • •
Introduction Public Private Partnerships The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 4
• • • • • •
Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 5
Introduction State of Infrastructure
• Nigeria is a major oil producer and exporter • The stock of basic infrastructure remains obsolete, dilapidated and poorly maintained; • They are inadequate, unreliable; • Most urban infrastructure, all suffer from years of serious neglect and under-funding; • There is limited private sector participation
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Introduction State of Infrastructure - Roads
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Introduction State of Infrastructure - Roads
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Introduction State of Infrastructure - Power
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Introduction State of Infrastructure - Rail
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Introduction State of Infrastructure - Rail
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Introduction State of Infrastructure
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Introduction State of Infrastructure - Schools
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Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 14
How the ICRC could assist … What are PPPs
The PPP Alternative … What Public Private Partnership is not
Private
Public Procurement continuum
The PPP Alternative … Key principles from National PPP Policy
• Value for Money Cost, risks and service quality • Public interest Adequate consultation with end-users and other stakeholders • Output requirements Clear and verifiable service standards for output specifications. • Transparency Transparency and probity can reduce concerns over corruption.
• Risk allocation Risks allocated to the party best able to manage them. • Competition Ensuring and enforcing adequate competition procedures & laws. • Capacity to deliver Partners must have adequate capacity to deliver and manage the EPC & commercial processes
The PPP Alternative … Key benefits
• Transfers financing to the private sector • Accelerates infrastructure provision • Promotes faster implementation of projects • Engenders reduced whole life costs of project • Ensures better risk allocation between public and private sectors • Better & sustainable incentive for private sector performance 18
The PPP Alternative … Other benefits
• Engenders accountability in fund utilization • Improves the overall quality of service • Generates additional revenue for government • Improves overall value for money for the entire economy • Increases efficiency in the provision of services
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The PPP Alternative Arrangement
Between public & private
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Provision
Of services for public benefit by private partner
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Investments
In and/or management of public assets by private partner
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Time Period
For a specified time
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7 Essential Conditions That Define Public Private Partnerships Source: IP3
Risk Sharing
Optimally between contracting parties
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Standards
Focus on quality of service / performance
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Payments
Linked to performance
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The PPP Alternative … The PPP Process -1
1. Project identification by MDAs 2. MDA’s engages ICRC prior to commencing PPP to ensure viability and bankability of proposed projects. 3. MDA’s consult and engage with the FMoF to structure financing prior to commencing PPP projects 4. MDA engage Transaction Adviser (TA) as required under the Public Procurement Act of 2007. Prepares for Outline Business Case (OBC) ICRC reviews OBC/issues OBC Certificate of Compliance 5. MDA submits OBC to Federal Executive Council (FEC) for approval.
Project Identified
Project Prepared OBC
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The PPP Alternative … The PPP Process II
7. Upon FEC approval, MDA’s TA commence procurement of private partner. 8. Upon procurement, MDA negotiates with preferred investor and submit Full Business Case (FBC) to ICRC for FBC Certificate of Compliance. 9. MDA submit FBC to FEC for approval. 10.Upon approval, PPP contract is signed and ICRC takes custody 11.MDA and preferred PPP Project Proponent (Investor) achieve Financial Close. 12.ICRC and the MDA conduct regular joint Inspections of the Project until the end of the contract.
FBC
Investor Procured Project Implemented
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• • • • • •
Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 23
Infrastructure Financing Framework
Human Capital Development
Coherent Planning Framework
Institutional Framework & Capacity
Legal and Regulatory Framework
Policy; Objectives; Roadmap
The Nigerian PPP Framework
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The Nigerian PPP Framework •Leadership
Support for PPP, Reform in critical sectors, Transformation Agenda
•Institutional Framework and Capacity ICRC Board (2013), PPP Units in MDAs
•Policy Objectives; Roadmap N4P, NV20:2020, NIIMP
•Human Capital Development
Support from World Bank, AfDB, NIAF
•Coherent Planning Framework
MDAs-NPC-MoF-Budget Office-ICRC, PPP Project Lifecycle, NIIMP
•Pipeline of well structured Projects for Investment
Infrastructure fund, Pension Fund, NSWF, VGF, FIL, Bond Market
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Legal and Regulatory Framework ICRC Act 2005 and Regulations
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The Nigerian PPP Framework … Legal Framework
• The Infrastructure Concession Regulatory Commission (Establishment, etc.) Act, 2005; • The Privatization and Commercialization Act 1999; • The Fiscal Responsibility Act 2007; • The Public Procurement Act 2007 • Other sector specific legislation,
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The Nigerian PPP Framework … Financial Framework
• Financial support for MDAs to enter into PPP, (VGF, etc.) • Medium/Long-Term infrastructure investment strategy • Monitoring of contingent liabilities (FMoF), • Establishment of a tariff and charges regime such as the Tolling policy, etc. and • Availability of long term finance for infrastructure development. (SWF, PENCOM) 27
The Nigerian PPP Framework … Institutional Framework
• Capacity to initiate, prepare, procure and implement PPP projects, • Appropriate regulations, guidelines and procedure. • Assignment of roles and responsibilities between the MDAs, ICRC, FMoF, DMO, BPP, BPE and Office of the AGF for proper project implementation and monitoring.
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The Nigerian PPP Framework … Functions of the ICRC
The Infrastructure Concession Regulatory Commission (ICRC) was established to: • Regulate Public Private Partnership (PPP) procurement by: a. b.
Guiding MDAs in structuring PPP transactions for both green field and brown field infrastructure – Pre Contract regulation Taking custody of all executed agreements and ensuring compliance with the terms and conditions of such contracts -Post Contract Regulation
• Issuing regulations and guidelines to ensure an attractive enabling environment • Collaborate with state governments to develop a sustainable national framework 29
The Nigerian PPP Framework The ICRC does not: • Initiate PPP procurement of projects • Develop Infrastructure Projects • Determine PPP Project output specifications • Approve PPP projects; or • Enforce court judgments over PPP transactions
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Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 31
Monitoring PPP Implementation • Project Identification Phase 1
• Project Selection • Assessment of PPP option.
• Project Preparation Phase 2
• Set up Project Teams, Governance Structure and secure Advisers • Develop Detailed PPP Arrangement
• Procurement of Partners
Phase 3
• Prequalify, Shortlist, Invite for Bids & Interact with Bidders • Evaluate, Select and Financial Close
• Project Implementation Phase 4
• Contract Management • Ex-poste Evaluation
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Monitoring PPP Implementation … Project Identification
Activity
Expected Milestone
Monitoring & Execution Responsibility
Project Selection
• Project selected • Carry out investment assessment • Output specification
MDA ICRC (regulatory guidance)
Assessment of PPP • Preferred PPP Option Option
MDA ICRC (regulatory guidance)
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Monitoring PPP Implementation … Project Preparation
Activity
Expected Milestone
Responsibility
Getting Organized
• Set-up project team and governance structure • Project management team (dayto-day activities) • Define project governance structure • Engage team of transaction advisers • Identify the transaction advisers skills, expertise and experience requirements • Select through competitive bid transaction advisers that possesses the skills, expertise and
• MDA • Project Mgt. Team • Transaction Advisers (TA) • ICRC (regulatory guidance)
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Monitoring PPP Implementation … Project Preparation
Activity
Expected Milestone
Responsibility
Before Tendering (going to market)
• Prepare detail business case • Carry out detailed assessment of project risk • Prepare detailed design of PPP arrangement • Outline commercial terms of PPP arrangement • Build a detail risk register (risk matrix) • Undertake detail commercial and financial analyses (financial modeling)
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MDA Project Mgt. Team TA Finance Ministry (contingency liability assessment), if any • ICRC (regulatory guidance)
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Monitoring PPP Implementation … Project Procurement
Activity Bidding Process
Expected Milestone • Issue public procurement notice • Invite interested parties to for prequalification • Shortlist bidders & publish prequalification report • Send out Request for Proposal • Interaction with bidders & hold bidders conference • Organize data room and physical inspection • Respond to bidders’ request for clarification • Evaluate tender and PPP contracts award
Responsibility • MDA • Project Mgt. Team • TA • Prospective Investor
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Monitoring PPP Implementation … Project Procurement
Activity Expected Milestone PPP Contract & • Finalize PPP contract Financial Close • Negotiate the PPP contract with preferred bidder • Implement the non-material changes and sign the PPP contract • Conclude financing arrangement • Conclude the financing and ancillary agreements • Reach financial close • Sign all PPP related agreements and meet all the conditions to the effectiveness of the agreements
Responsibility • MDA • Project Mgt. Team • TA • Finance Ministry (contingent liability assessment), if any • Preferred Investor • Financial Lenders • Others service providers
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Monitoring PPP Implementation … Project Implementation
Activity Bidding Process
Expected Milestone • Monitor and manage project delivery and service outputs • Monitor PPP project operational and financial performance • Manage changes permitted in the PPP contract/changes not provided • Implement routine changes provided for in the PPP contract • Implement protocols related to contingence plans • Dispute resolution • Monitor residual value of PPP assets at contract close
Responsibility • MDA • Special Purpose Vehicle (SPV) • Project Mgt. Team • ICRC (postcontract regulation) • Sector regulator(s)
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Monitoring PPP Implementation
https://www.google.com.ng/search?q=compliance+monitoring&biw
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Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 40
Key Challenges • Weak regulatory and enforcement powers of ICRC; • Inadequate financial modelling to enable proper affordability and value for money assessments; • Technical capacity gaps; • Lack of institutional framework for PPP project preparation; • Inconsistency in the PPP Project Pipelines; • Legacy concessions. 41
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Introduction Public Private Partnership The Nigerian PPP Framework Monitoring PPP Implementation Challenges Conclusion 42
Conclusion • Parties intending to enter into PPP arrangements must adhere strictly to the laid-down PPP guidelines and regulation published by ICRC and other relevant sector laws and regulations. • Clear project output specifications and timelines acceptable to all parties • Effective pre-contract and post-contract monitoring mechanism must be put in place to address known and unknown project challenges. • Effective dispute resolutions mechanism must be put in place and mutually agreed by project parties. • There is urgent to further strengthen the capacity of MDAs to prepare and develop bankable PPP projects that would 43 attract the appetite of investors and lenders of capital
Conclusion • Public policy-all the action taken by governments to address particular public issues of benefit its citizens. • Bureaucracies exist to implement government policies • Governments in Nigeria currently finance, build, operator & maintain infrastructure from budgetary allocation • Sorry state of infrastructure is the result • PPPs provide an alternative funding method • Monitoring implementation by MDAs key to success 44
INFRASTRUCTURE CONCESSION REGULATORY COMMISSION Plot 1270 Ayangba Street, Near FCDA Headquarters, Area 11, Garki, Abuja – Federal Capital City. Phone: +234 9-4604900, E-mail:
[email protected] Website: www.icrc.gov.ng
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