Regional: Strengthening Fiscal Governance and Sustainability in Public-Private Partnerships
In line with the Asian Development Bank (ADB) Strategy 2030 operational priority of strengthening governance and institutional capacity, this knowledge and support technical assistance (TA) responds to developing member country (DMC) requests to strengthen public sector capacity to catalyse infrastructure investmentsincluding through publicprivate partnerships (PPPs)in fiscally responsive, development-relevant ways._The TA complements ADB's private sector operations by supporting operations departments to create improved conditions to engage the private sector. Aligned with ADB's PPP Operational Plan 20122020, the TA will support DMCs in improving institutional and regulatory structures to manage PPP appraisal, vet and manage risk, and carry out monitoring and evaluation of PPPs.
Rahemtulla, Hanif A.
Sustainable Development and Climate Change Department
Request for information
- Public sector management
|Project Name||Strengthening Fiscal Governance and Sustainability in Public-Private Partnerships|
|Country / Economy||Regional
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
|Sector / Subsector||
Finance / Infrastructure finance and investment funds
Public sector management / Public expenditure and fiscal management
|Gender Equity and Mainstreaming||Some gender elements|
|Description||In line with the Asian Development Bank (ADB) Strategy 2030 operational priority of strengthening governance and institutional capacity, this knowledge and support technical assistance (TA) responds to developing member country (DMC) requests to strengthen public sector capacity to catalyse infrastructure investmentsincluding through publicprivate partnerships (PPPs)in fiscally responsive, development-relevant ways._The TA complements ADB's private sector operations by supporting operations departments to create improved conditions to engage the private sector. Aligned with ADB's PPP Operational Plan 20122020, the TA will support DMCs in improving institutional and regulatory structures to manage PPP appraisal, vet and manage risk, and carry out monitoring and evaluation of PPPs. The TA will (i) strengthen the traction of PPP development efforts; (ii) promote fiscally sound public financial management (PFM) frameworks for PPPs; and (iii) improve government capacity to design, implement, and manage PPPs (drawing on lessons from international experience)._The TA is included in the 2019 results-based work plan of ADB's Sustainable Development and Climate Change Department.|
|Project Rationale and Linkage to Country/Regional Strategy||
High quality, fiscally sustainable infrastructure is a key driver of economic growth and poverty alleviation. The Asia and Pacific region suffers from significant infrastructure deficits, particularly in terms of quality, quantity, and accessibility. These deficits are particularly severe in energy, transport, and water and sanitation._Persistent infrastructure gaps have direct implications for human development and constrain growth for many countries. Improving infrastructure is an explicit goal of the 2030 sustainable development agenda. Substantial investment from public or private sources is required to address these infrastructure gaps._ADB DMCs will need to invest $26 trillion between 2016 and 2030, or $1.7 trillion per year, if the region is to maintain its growth momentum._Because the private sector is better equipped to manage key PPP-related risks, the public sector is increasingly turning to the private sector to explore the feasibility of PPPs as a means of developing and managing critical infrastructure.
While private sector participation in the development and operation of public service assets is becoming an increasingly viable infrastructure development strategy, in developed jurisdictions, DMCs in particular should be cautious about approaching it as a panacea. PPPs can be financially advantageous compared with traditional public procurement if the cost of transferring risks to the private sector is lower than the private sector's cost of finance._Pricing of risk and competitive tension become the critical determinants of relative efficiency in these partnerships, which can explain the difficulties and costly mistakes that most countries experience with PPPs, at least initially._International experience has identified many reasons why PPPs might not bring desired benefits. Such reasons include strategically wrong assumptions about future income streams and inaccurate estimates of risk transfers from the public to the private sector._Given the complexity of PPPs, DMCs need to build robust policy, regulatory, and financial frameworks and strengthen PFM and government institutional capacity._Prudent approaches to developing PPPs and sustained efforts to create dedicated expertise on PPPs in public institutions, supported by ADB TA, can be crucial to helping DMCs extract positive development impacts from PPPs.
Four factors can help DMCs have more success with PPPs. First, PPP development can only deliver its promise of value-for-money if it is integrated within effective public investment management frameworks. The positive impacts of infrastructure cannot be guaranteed by a 'business-as-usual_ approach that simply targets the quantity of infrastructure projects. Improved public investment planning and management are critical to enhancing the efficiency of public infrastructure investment, including through PPPs.
Second, stronger public investment management will result in more predictable, credible, efficient, and productive infrastructure investments that avoid the main sources of chronic renegotiation cycles: unsolicited proposals and opportunistic bidding (optimism bias). Strengthening institutions could close-up two-thirds of the public investment efficiency gap._Most countries must still benefit from building stricter oversight of PPPs and better integration of national strategic planning with fiscal budgeting and PPP planning. Only with a systematic approach can a country's pipeline of PPPs add value-for-money and produce the targeted fiscal advantages. Caution is advised to guard against advice that promotes PPPs as a fiscal magic bullet or a 'lifter_ of fiscal constraints. DMCs should look to avoid the frequent and costly mistakes of the first movers in the PPP space, and ADB needs to be at the forefront of this broad transfer of knowledge and reform effort. This will require a regional approach to ensuring effective sharing of experiences and lessons learned.
Third, fiscal risk management systems in DMCs that enter the PPP space must be established from ground-zero. For instance, regarding viability gap funding (VGF), many jurisdictions have either weak regulatory frameworks or limited experience in assessing the level of VGF required to ensure bankability. PPPs imply fiscal commitments (contractualized or not) that must be carefully weighed (from both a project proposal perspective and a consolidated fiscal risk management angle) prior to commencing negotiations on PPPs._
Finally, unstable local-currency markets in DMCs heighten fiscal risks and make it more difficult to attract private sector participation in infrastructure investments, especially from foreign investors. DMCs need to become more aware of fiscal- and financial-related preconditions needed for sustainable infrastructure development.
ADB experience. During 20092018, ADB approved 792 projects and TA interventions with PPP-related components (totaling $51.0 billion, including 435 TA grants totaling $660.0 million)._In line with ADB's PPP Operational Plan 20122020, this TA will support ADB operations departments in advocating for a fiscally responsible approach to PPPs within DMCs (Pillar 1), and in nurturing the institutional and policy environment required to make PPPs an effective procurement modality (Pillar 2). The TA will also complement work under Pillar 3, coordinated by ADB's Office of PublicPrivate Partnership, on structuring PPP transactions to enable a flow of well-prepared and well-structured projects capable of drawing external finance.
Fiscal sustainability of PPP investments in infrastructure projects promoted in DMCs (ADB Strategy 2030)
|Description of Outcome||
Capacity to integrate fiscally sustainable PPPs improved in selected DMCs
|Progress Toward Outcome|
|Description of Project Outputs||
Policy, legal, regulatory, and institutional frameworks for PPP development and management strengthened in DMCs
PFM and fiscal risk management for legacy and new PPPs strengthened in DMCs
Policy experience on creating fiscally sustainable PPPs disseminated to DMCs
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Consulting Services||ADB will engage the consultants and carry out procurement following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions.|
|Procurement||ADB will engage the consultants and carry out procurement following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions.|
|Responsible ADB Officer||Rahemtulla, Hanif A.|
|Responsible ADB Department||Sustainable Development and Climate Change Department|
|Responsible ADB Division||SDTC-GOV|
Asian Development Bank
|Concept Clearance||09 Jul 2019|
|Fact Finding||25 Jan 2019 to 25 Jan 2019|
|Approval||27 Aug 2019|
|Last Review Mission||-|
|Last PDS Update||27 Aug 2019|
|Approval||Signing Date||Effectivity Date||Closing|
|27 Aug 2019||-||27 Aug 2019||31 Dec 2022||-||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|500,000.00||500,000.00||0.00||0.00||0.00||0.00||1,000,000.00||03 Oct 2022||722,081.14|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
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|Title||Document Type||Document Date|
|Strengthening Fiscal Governance and Sustainability in Public-Private Partnerships: Technical Assistance Report||Technical Assistance Reports||Aug 2019|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
|Title||Document Type||Document Date|
|A Governance Approach for Managing Public–Private Partnership Renegotiation||Papers and Briefs||Nov 2022|
|Value for Money in Public–Private Partnerships: An Infrastructure Governance Approach||Reports||Mar 2022|
|Supporting Quality Infrastructure in Developing Asia||Reports||Jul 2021|
|Restoring Confidence in Public–Private Partnerships: Reforming Risk Allocation and Creating More Collaborative PPPs||Papers and Briefs||Oct 2020|
The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
|Tender Title||Type||Status||Posting Date||Deadline|
|Communication Specialist||Individual - Consulting||Closed||12 Jul 2022||23 Jul 2022|
|Media Specialist||Individual - Consulting||Closed||12 Jul 2022||23 Jul 2022|
|Governance Perspective on PPP Unsolicited Proposals||Individual - Consulting||Closed||25 May 2022||31 May 2022|
|Manuscript Editor||Individual - Consulting||Closed||16 Jul 2021||22 Jul 2021|
|Manuscript Editor||Individual - Consulting||Closed||23 Jun 2021||29 Jun 2021|
|International Training Firm (Public-Private Partnership Certification)||Firm - Consulting||Closed||08 Apr 2021||22 Apr 2021|
|National Research Analyst 2 (Financial Feasibility - Armenia)||Individual - Consulting||Closed||18 Aug 2020||27 Aug 2020|
|National Research Analyst 1 (Financial Feasibility - Armenia)||Individual - Consulting||Closed||18 Aug 2020||27 Aug 2020|
|Guidance Note on PPP Risk Allocation Reform in the New Normal||Individual - Consulting||Closed||23 Jun 2020||29 Jun 2020|
|International PPP Policy Expert||Individual - Consulting||Closed||08 May 2020||14 May 2020|
|National Public Financial Management Expert||Individual - Consulting||Closed||08 May 2020||21 May 2020|
|PPP Capacity Development and Learning Specialist||Individual - Consulting||Closed||01 May 2020||07 May 2020|
|National PPP (Legal and Procurement) Expert||Individual - Consulting||Closed||30 Apr 2020||06 May 2020|
|National Project Investment Analysis Economist||Individual - Consulting||Closed||30 Apr 2020||06 May 2020|
|National PPP (Project Finance) Expert||Individual - Consulting||Closed||30 Apr 2020||06 May 2020|
|International Public-Private Partnership Finance Specialist||Individual - Consulting||Closed||23 Apr 2020||02 May 2020|
|National Public-Private Partnership Finance Specialist||Individual - Consulting||Closed||23 Apr 2020||02 May 2020|
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