Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Monday, December 18, 2017 08:53:29 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Beware of public private partnerships

By
02nd-Dec-2017       
Comments
Share your thought
Post a comment »
Read all () »

Jomo Kwame Sundaram  :
Public-private partnerships (PPPs) are essentially long-term contracts, underwritten by government guarantees, with which the private sector builds (and sometimes runs) major infrastructure projects or services traditionally provided by the state, such as hospitals, schools, roads, railways, water, sanitation and energy.
PPPs are promoted by many OECD governments, and some multilateral development banks - especially the World Bank - as the solution to the shortfall in financing needed to achieve development including the Sustainable Development Goals (SDGs).
Since the late 1990s, many countries have embraced PPPs for areas ranging from healthcare and education to transport and infrastructure with problematic consequences. They were less common in developing countries, but that is changing rapidly, with many countries in Asia, Latin America and Africa now passing enabling legislation and initiating PPP projects.
Nevertheless, experiences with PPPs have been largely, although not exclusively negative, and very few PPPs have delivered results in the public interest. However, the recent period has seen tremendous enthusiasm for PPPs.
Undoubtedly, there has been some success with infrastructure PPPs, but these appear to have been due to the financing arrangements. Generally, PPPs for social services, e.g., for hospitals and schools, have much poorer records compared to some infrastructure projects.
One can have good financing arrangements, e.g., due to low interest rates, for a bad PPP project. All over the world, private finance still accounts for a small share of infrastructure financing. However, concessional financing arrangements cannot save a poor project although they may reduce its financial burden.
PPPs often involve public financing for developing countries to 'sweeten' the bid from an influential private company from the country concerned. 'Blended finance', export financing, and new aid arrangements have become means for governments to support their corporations' bids for PPP contracts abroad, especially in developing countries. Such business support arrangements are increasingly passed off and counted as overseas development assistance (ODA).
PPPs often increase fees or charges for users of services. PPP contracts often undermine consumer, citizen and human rights, and the state's obligation to regulate in the public interest. PPPs can limit government capacity to enact new policies - e.g., strengthened environmental or social regulations - that might affect certain projects.
PPPs are now an increasingly popular way to finance 'mega-infrastructure projects', but dams, highways, large-scale plantations, pipelines, and energy or transport infrastructure can ruin habitats, displace communities and devastate natural resources. PPPs have also led to forced displacement, repression and other abuses of local communities and indigenous peoples.
There are also growing numbers of 'dirty' energy PPPs, exacerbating environmental destruction, undermining progressive environmental conservation efforts and worsening climate change. Typically, social and environmental legislation is weakened to create attractive business environments for PPPs.
In many cases, PPPs are the most expensive financing option, and hardly cost-effective compared to good government procurement. They cost governments - and citizens - significantly more in the long run than if the projects had been directly financed with government borrowing.
It is important to establish the circumstances required to make efficiency gains, and to recognize the longer term fiscal implications due to PPP-related 'contingent liabilities'. Shifting public debt to government guaranteed debt does not really reduce government debt liabilities, but obscures accountability as it is taken 'off-budget' and no longer subject to parliamentary, let alone public scrutiny.
Hence, PPPs are attractive because they can be hidden 'off balance sheet' so they do not show up in budget and government debt figures, giving the illusion of 'free money'. Hence, despite claims to the contrary, PPPs are often riskier for governments than for the private companies involved, as the government may be required to step in to assume costs if things go wrong.
Undoubtedly, PPP contracts are typically complex. Negotiations are subject to commercial confidentiality, making it hard for parliamentarians, let alone civil society, to scrutinize them. This lack of transparency significantly increases the likelihood of corruption and undermines democratic accountability.
PPPs also undermine democracy and national sovereignty as contracts tend to be opaque and subject to unaccountable international adjudication due to investor-state dispute settlement (ISDS) commitments rather than national or international courts. Under World Bank-proposed PPP contracts, national governments can even be liable for losses due to strikes by workers.
Thus, PPPs tend to exacerbate inequality by enriching the wealthy who invest in and profit from PPP projects, thus accumulating even more wealth at the expense of others, especially the poor and the vulnerable. The more governments pay to private firms, the less they can spend on essential social services, such as universal social protection and healthcare. Hence, PPP experiences suggest not only higher financial costs, but also modest efficiency gains.
One alternative, of course, is government or public procurement. Generally, PPPs are much more expensive than government procurement despite government subsidized credit. With a competent government doing good work, government procurement can be efficient and low cost.
Yet, international trade and investment agreements are eroding the rights of governments to pursue such alternatives in the national interest. With a competent government and an incorruptible civil service or competent accountable consultants doing good work, efficient government procurement has generally proved far more cost-effective than PPP alternatives. It is therefore important to establish under what circumstances one can achieve gains and when these are unlikely.

(Jomo Kwame Sundaram is United Nations Assistant-Secretary-General for Economic Development).

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Myanmar`s criminal generals should be brought to book


ACCORDING to the medical charity MSF sources, at least some 6,700 Rohingyas got killed in the very first month of the Myanmar army's crackdown on the ethnic minority in Rakhine State. But it appears Myanmar government is trying to deceive the world by  avoiding to take back Rohingya refugees. It ...

Football »

Roma's Federico Fazio (hidden) celebrates with teammates after scoring the decisive goal during an Italian Serie A soccer match between AS Roma and Cagliari, at the Olympic stadium in Rome on Saturday.


Entertainment »

Athiya Shetty turns fashion designer


Ever since her debut, the 25-year-old actress has been in news for her chic sartorial choices. A source reveals, “According to the label, Athiya is known for her fashion sensibilities. She is a hit when it comes to red carpet appearances and nails the high street fashion.” “So, after meetings ...

Entertainment »

Virat-Anushka holidaying in heaven


The power couple, Virat Kohli and Anushka Sharma, who recently set some major wedding goals with their Italian destination ceremony, is now giving fans a glimpse into their post-married life. The ethereal couple tied the knot at a picturesque location in Italy on December 11. The 29-year-old newlywed, who is ...

International »

Trump allies say Mueller unlawfully obtained thousands of emails


Reuters, Washington :An organization established for US President Donald Trump's transition to the White House a year ago said on Saturday that the special counsel investigating allegations of Russian meddling in the 2016 election had obtained tens of thousands of emails unlawfully.Kory Langhofer, counsel to the transition team known as ...

City »

Ganoforum President Dr Kamal Hossain speaking at a discussion on 'Independence: Expectation, Achievement and Role' organised by 'Jatiya Oikya Prokriya' at the Jatiya Press Club on Friday.


.

International »

Trump promises `giant tax cut` as `Christmas gift` to Americans


PTI, Washington :US President Donald Trump today said the Congress has reached an agreement on tax legislation that will deliver more jobs, higher wages, and "massive tax relief" for American families and domestic companies.Trump recognised the tax reform as a campaign promise during his run-up to the 2016 presidential election, ...

Editorial »

Muslim leaders must continue to act together not to be ignored


WE welcome the OIC's (Organisation of Islamic Cooperation) decision declaring East Jerusalem as capital of Palestine at a summit at Istanbul on Wednesday as the most appropriate and timely action to denounce US President Donald Trump's unilateral declaration that Jerusalem is the capital of the state of Israel. Their call ...

Football »

Players of A Level team, the champions of the Inter-Class Victory Day Football Competition of Manarat Dhaka International School & College with the teachers of Manarat Dhaka International School & College pose for a photo session at Manarat College field on Thursday.


Entertainment »

Meryl Streep is the most Golden Globe-nominated actor


Meryl Streep has begun her Hollywood award season dominance by bagging her 31st Golden Globe nomination, which is a record in the 75-year history of the award show. Streep won the nomination in the best actress, drama category for her portrayal of the Washington Post publisher Kay Graham in Steven ...

Entertainment »

Porimoni, Zayed Khan`s Antorjwala releases today


Entertainment Report :Today across the country in 175 cinema halls Malek Afsari directed and Porimoni-Zayed Khan acted much awaited movie Antorjwala is set to be released. On the occasion its releasing Pori and Zayed will enjoy the movie along with director Malek Afsari in Dhaka’s Modhumita, Shyamoli and Sony halls.While ...

City »

Speaker Dr Shirin Sharmin Chowdhury handing over ICT Award to Director General of Health Department Prof Dr Abul Kalam Azad for his contribution in using digital technology in health services at Bangabandhu International Conference Center in the city on Tuesday.


Weekend Plus »

Quick recipes for the burger-lover in you


Weekend Plus Desk :If you are a burger lover or want to fix a burger quickly for uninvited guests, here are a few recipes which can save the day. Recipes by Chef Gaurav Chadha, in-house chef, Dr Oetker India Pvt Ltd:* Chicken and egg burger: Heat oil in a kadhai ...

Editorial »

Attack on New York City is disgusting


AN attempted terrorist attack in a New York City bus terminal by a US national of Bangladesh origin has caused widespread surprise and condemnation here and also in the Bangladesh community in the USA. The person Akayed Ullah at his 27 is a taxi driver in New York City and ...

International »

US embassy unlikely to move to Jerusalem before 2020: Tillerson


Xinhua, Washington :U.S. Secretary of State Rex Tillerson said Tuesday the U.S. embassy in Israel was unlikely to be moved to Jerusalem before 2020, national media outlets reported."It's not going to be anything that happens right away," U.S. news daily the New York Times quoted Tillerson's speech at the State ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news