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

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
The 4 th factor in our options analysis is Political Risk. For the purpose of this exercise, we define
political risk as the reliability (or lack thereof) of political support for the option being
examined. In the case of Malawi, this was an important factor in scoring options that involved a
longer-term role for the Privatisation Commission in the PPP program. While such options
scored highly in the Use of Existing Resources factor (the professional resources in the PC are
considered to be quite good) the options did not fare well in the Political Risk test because: (a)
donor support for the PC is expected to end at the end of 2007; and (b) although the PC has
privatization revenues sufficient to continue in operation for as much as 1-3 years beyond
12/31/07 and has identified some transactions it considers important to complete before
ceasing operations, the political support for continued PC operations appears to be relatively
uncertain.
It is a long-standing policy of IP3 not to involve itself in political disputes that might
compromise the independence of our analysis and recommendations. Accordingly, we did
not allow the political battle over the future of the PC to influence our analysis. We waited for
an indication that both donor and Government had taken a decision as regards such continued
support (or lack thereof), and until such a decision became apparent we continued to consider a
longer-term role for the PC in the PPP program. In fact, we prepared a version of this report
that was distributed internally for discussion. The report envisioned a PC with a mandate
expanded to include PPP along with Privatization, passage of a new law (or amendment of an
existing law) covering both PPP and Privatization, and the PPP Unit being located within the
expanded PC on a long-term basis. We also prepared this version of the report and distributed
it for discussion purposes. We waited for a decision by donor and Government, regarding the
future role of the PC in the PPP program, before we released this final report.
The decision became apparent in a Retreat of decision makers that was held at the end of March
2007. Based on the session notes subsequently circulated by the Facilitator of the event, we
concluded that both donor and Government had taken the decision not to involve the PC in the
PPP program on a longer-term basis. There does appear, however, to be support from both
donor and Government to involve the PC in the PPP program on an interim basis, and we have
prepared this report accordingly.
If political support for a longer-term role for the PC were to increase, and there is some
possibility of that happening after PwC presents its final report to Cabinet, then the total scores
of longer-term PC participation options would improve. In particular, an increase of such
options’ Political Risk score from the present level of 1 (indicating high political risk) were to
increase to a neutral score of 5, then at least one of the longer-term PC participation in PPP
options would rise to the top 5 in rank. If the score for Political Risk were to become positive,
maybe 6 but certainly if 7, then at least one of the longer-term PC participation in PPP options
would attain a ranking among the top 3 and would therefore require detailed analysis and
consideration thereof.
The 5 th factor used in our multi-criteria weighted options analysis, which is international best
practice for policy and legal options analysis, is Value for Money. Once the option passes the
Affordability test, then the most important aspect of deciding whether or not government
should make the investment is the relative amount of service provision that will be made
available by the investment. The concept is similar to the private sector’s Return on Investment,
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 30