Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
The PPP Unit must report to the Ministry of Finance because the rationale of both Privatization
and PPP is to reduce the financial burdens of service delivery (in the case of privatization) or to
maximize the “value for money” of public investment (in the case of PPP). One would not want
a PPP Unit involved in such high value, and politically sensitive, activities to be tied strictly to
any particular ministry, hence the need for it to have access to the OPC in order to create a
system of checks and balances.
This arrangement also helps to dispel any misperceptions that the PPP Unit is simply an arm of
the Ministry of Finance, which could create resentment among some of the other line ministries.
At an operational level, any decision by the Minister of Finance can be appealed by application
for review by the OPC. Note also the horizontal lines in the diagram provided below, from the
PPP Unit to the Ministry of Economic Planning & Development (MoEPD), and to the Ministry
of Trade & Private Sector Development (MoTPSD).
The PPP Unit has “budget accountability” to MoEPD because the Unit is not allowed to
support any projects that have not received MoEPD approval through the inclusion of the
project in the Public Sector Investment Program (PSID). The PPP Unit has “program
accountability” to MoTPSD because the PPP activities that it undertakes must be consistent
with, and supportive of, the policies and objectives of the Private Sector Development Program
funded by the World Bank and implemented via the MoTPSD. At an operational level, this will
mean that when the PPP Unit evaluates and structures Privatization and PPP transactions,
which s a conceptual possibility, it must take into account the transactions’ anticipated impact
on Private Sector Development.
The PDF is a facility that will be grant funded and contract with private sector (local whenever
possible) consulting firms to prepare pre-feasibility and feasibility studies for PPP projects. Prefeasibility
studies will be necessary in order to publish Requests for Expressions of Interest, and
feasibility studies will be necessary in order to publish Requests for Proposals. These studies
will not serve as substitutes for investor due diligence or comprehensive studies required to
secure project finance.
The PDF should be financially independent because it has its own budget, independent of the
PPP Unit, funded primarily by donor grants. This will attract donors that are interested in
funding specific sectors or policy objectives without limiting the goals of the PDF or PPP Unit.
Thus, its governing board will include donor nominees. The relationship with donors provides
some political independence as well as gives donors a “seat at the table” in targeting key
objectives such as improved water supply access, or reduce new cases of HIV/AID’ s through
investments in health, or improve access to ICT services, etc Access to PDF funds by line
agencies will be only through the PPP Unit, which evaluates proposed PPP projects and selects
the ones that it considers appropriate for PDF assistance and for line agencies willing to follow
the rules and procedures of the PPP program and the PDF operational guidelines.
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 11