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

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Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi Final Report The results above indicate that Option 5 is significantly more attractive than the other options. A detailed discussion of Option 5 is presented later in this section. In reading these options analysis results, one should keep in mind that a PPP Act might be needed as a mechanism for showing the populace that Government is serious about PPP. Such an Act might not be necessary for technical reasons relating to the legal framework, e.g. to fill gaps in the existing framework or to enable activities not yet clearly authorized, but might be necessary as a mechanism for giving weight to the PPP Policy initiative. This issue will be explored further when we provide a detailed analysis of the three top ranked options, later in this section. Do Not Enact a New PPP Act (5 Options) Option 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 Factor Score Weight Rank Score Weight Rank Score Weight Rank Score Weight Rank Score Weight Rank 1 8 7 56 8 7 56 3 7 21 5 7 35 5 7 35 2 3 6 18 6 6 36 8 6 48 8 6 48 6 6 36 3 6 5 30 6 5 30 7 5 35 2 5 10 2 5 10 4 7 4 28 6 4 24 1 4 4 8 4 32 5 4 20 5 3 3 9 1 3 3 3 3 9 7 3 21 6 3 18 6 7 2 14 1 2 2 7 2 14 8 2 16 6 2 12 7 5 1 5 1 1 1 6 1 6 7 1 7 5 1 5 Total 160 152 137 169 136 The results above indicate that Option 4 is the preferred option. There is some concern that the score for Options 1 and 4 are relatively close, and that means the reader should carefully examine the individual components of those scores to ensure that there has not been any distortion in the analysis. In considering this matter, we applied a subjective analysis that supported the technical options analysis result, as follows: there has been a continuing theme on the part of donor and Government that some kind of a clear signal needs to be sent that PPP is an important policy objective. In addition, the economy of Malawi has a long history of government control, and that makes it more difficult for a new PPP orientation to take hold unless there is a clear policy and legal “push” for the new PPP program. Without at least pushing forward the new PPP Policy by enacting new PPP regulations (the scenario under Option 4) and just leaving the market to pursue PPP by simply removing present impediments to it in the legal framework (the scenario under Option 1), we believe the PPP program would stall. On this basis, our subjective evaluation supported the selection of Option 4 per the options analysis results above. Detailed Analysis of Best Three Options THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 32
Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi Final Report In Category I, the highest-scoring option was the one below: Option / Number Pros Cons International Models No legislation (1) Issue Standards and Guidelines instead of PPP regulations or Act. The PPP Unit does only dissemination of information, setting of standards/procedures and PPP standard or model documents for transactions, provides one stop access for private sector, and builds capacity in line ministries and local governments. PC staff selected by Gov’t and donor could move to the PPP Unit. PPP is already underway in many sectors, and capacity of line ministries and local government to contract with the private sector is already in place, so no need to press for new legislation at the national level. Just issue an operations guideline manual for the national and regional PPP stakeholders to provide guidelines and standards. Limits the MOF’s role to information dissemination, capacity building, guidance regarding how to apply the principles of affordability, risk allocation, and value for money. Authority for an investment decision has to be vested in separate MOF framework and/or separate legal body with mandate for viability gap funding. India: Ministry of Finance sets Operation Guidelines Manuals for a National PPP Node & PPP Nodes. Malaysia: PPP Unit in the Min of Economic Planning, reports to Prime Minister. USA: Long-standing decentralized PPP at all levels of government. The attractive feature of this option is that there is no need to enact any legislation at all, no laws, no regulations, and no decrees. The PPP Unit is established in the Ministry of Finance, because that is where decisions such as Affordability, Risk Allocation, and Value for Money are made at the national level. It prepares and distributes information on the PPP program and how to do PPP projects. It provides capacity building for the various spheres of government involved with PPP project identification, assessment, structuring, and contracting. This kind of PPP Unit is a coordinating body, not a decision making body. A Unit of this sort is appropriate for a country in which either: (a) the political culture will not accept what they would perceive as just another layer of bureaucracy, and would resist any attempt by the Unit to impose any decision-making authority over projects being developed by other government agencies; or (b) the business orientation of the economy is so well developed that PPP has already become routine, government and business are already accustomed to doing joint ventures with one another, and a wide variety of generally accepted PPP practices has evolved, with which stakeholders in the PPP process are already comfortable and need no further guidance, regulation, or motivation. In the case of India, the political culture was not expected to be tolerant of a PPP Unit that exercised decision-making authority over line ministries and local government units developing PPP projects. There is also a vibrant economy, with a multitude of business activities involving joint working with government bodies already having been in place for many years. The legal environment presents little challenges to PPP activity. Maybe one of the more important factors was the GOI’s decision to place decision-making for government investment into a different body than the PPP Unit. They term investing of the type normally involved in a PPP THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 33
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