Promoting Global PPP Excellence through the UNECE PPP Centre of Excellence

1. Promoting Global PPP Excellence through the UNECE PPP Centre of Excellence Dr. Geoffrey Hamilton Chief, Cooperation and Partnerships SectionUnited Nations Economic Commission for Europe Saudi Water and Power Forum Jeddah, Kingdom of Saudi Arabia Wednesday, 6th October 2010

2. PPP in the water & waste-water sectors Why a UNECE PPP Initiative? Overview of the UNECE PPP Centre of Excellence Evolution of the UNECE PPP Initiative Conclusions Overview of this presentation

3. Water Infrastructure is a global concern Global access to water (without infrastructure) Global access to water (with infrastructure) Source: http://www.bbc.co.uk/news/science-environment-11435522

4. …continued The developed countries and BRIC group (Brazil, Russia, India, China) rely heavily upon water infrastructure to meet the water demands of their populations. In developing countries (particularly within Africa), there is very poor water infrastructure and high levels of population water stress. Climate change will affect the amount of water that comes into these water infrastructure systems, providing even more stress onto this infrastructure. The developed & BRIC countries alone will require USD $800bn per year by 2015 to cover their investments in water infrastructure – a target that is likely to go unmet.    

5. PPPs in the water & waste-water sectors PPPs provide a means of ‘filling the infrastructure gap’ and financing the delivery of these critical water infrastructure programs, both in developed and developing countries. PPPs also provide a means of using the innovation of the private sector, to help integrate both natural and infrastructure-based solutions to water management. Waste-water is a rapidly and globally expanding area of infrastructure development, that enables the sustainable re-use of scarce water resources for non-potable purposes in industry, agriculture, and greening. Demand for waste-water infrastructure projects has remained unaffected by the global financial crisis and subsequent ‘austerity measures’, particularly in the UK and Europe – where EU legislation requires sustainable waste-water management    

6. Why a UNECE PPP Initiative?  Public-Private Partnerships (PPP) are a critical global issue in the delivery and financing of public assets and services. PPPs have the ability to affect the quality of life of billions of people. The global PPP market is estimated at USD 50 trillion for 2010-30: • Governments use PPPs for different reasons, depending upon their national needs – from attracting foreign private-sector investment to stimulate infrastructure development, to driving increased value-for-money and better outcomes in public service delivery. • PPP projects are now occurring in an increasingly wide range of sectors. Existing models for delivering PPP projects are increasingly perceived as too risky by governments, investors and contractors: • existing PPP delivery models assume environmental, political, policy, social, and technological stability over a 10-30 year project lifecycle • the public sector often lacks appropriate PPP policies and capabilities • PPP projects are now required to deliver sustainability and community outcomes  

7. …continued  PPPs in the water sector have faced many problems due to a global lack of PPP competences and knowledge within the public sector. Often, those governments with the greatest need of PPP for economic investment typically lack these essential PPP competences and knowledge-base. PPPs within the water sector have suffered from a lack of reliable performance data to help benchmark what constitutes acceptable commercial performance. A centralised, reliable global database of performance delivery in the water sector will support the use of PPPs in this area.  

8. Overview of the UNECE PPP Initiative  The purpose of the UNECE PPP Initiative is to assist governments in the establishment and ongoing development of their internal PPP capabilities and national PPP markets. The UNECE PPP Initiative will establish the UNECE PPP Centre of Excellence, to: • develop and implement a set of international best-practice guidelines in PPP capacity-building and PPP project delivery (the “UNECE PPP Toolkit”), and • establish and coordinate a number of UNECE PPP Specialist Centres, each with a global sector-specific focus upon a different PPP sector. The UNECE PPP Centre of Excellence will develop new lower-risk models for PPP delivery and finance, with the objective of: • increasing the number of PPP projects globally • increasing the overall magnitude of global PPP investment.  

9. Strategic approach for the UNECE PPP Initiative The United Nations Economic Commission for Europe (UNECE) will lead the establishment of the UNECE PPP Centre of Excellence and UNECE PPP Toolkit, on behalf of all five United Nations Regional Economic Commissions, and in cooperation with partners such as the World Bank, EBRD etc. The UNECE PPP Centre of Excellence will incorporate and adopt the following principles and methodologies in building PPP capacity within member countries: • Neutrality and impartiality: the Centre will operate under the principles and in accordance with the rules of the United Nations. • Adopting a twin tracked approach: the Centre’s activities will focus both at the decision-takers level and at the level of those charged with implementation of PPPs. • Learning by doing: the Centre will adopt an approach to capacity building that links formal training with actual project delivery - “learning by doing”. • No ‘one size fits all’: governments will be offered advice on the best path to take; it will be up to the governments to choose the best path for its needs. • Mutual learning: although the focus will be upon countries getting started, even those with fully operational programmes will benefit from the work of the PPP Centre. PPP is an area in which all countries, irrespective of the maturity of their PPP programme, can further develop. The objective of the UNECE PPP Centre of Excellence is to develop valid and reliable PPP guidelines that are: • internationally accepted and implemented • causal in developing effective PPP capabilities and markets within member countries • innovative solutions to reducing the risk of PPP delivery and financing • supportive of sustainability and community-based outcomes

10. UNECE PPP Centre of Excellence

11. …continued  UNECE PPP Centre of Excellence (Geneva): • A formal United Nations body with headquarters located in Geneva, Switzerland. • Interfaces between the UNECE PPP initiative and other UN Regional Economic Commissions. • Is the controlling body for the activities of the UNECE PPP Operational Centre, and for the overall UNECE PPP initiative. UNECE PPP Operational Centre: • Directly supports the UNECE PPP Centre of Excellence in assisting governments to develop their PPP capabilities and markets. • Globally coordinates the activities of all UNECE PPP Specialist Centers. • Provides a centralised database of global PPP best-practices and PPP institutions, investors and contractors. • Responsible for leading the development of the UNECE’s flagship ‘PPP Toolkit’ for public-sector PPP capability development. UNECE PPP Specialist Centres: • Identify international best-practice in PPP delivery within their focus sector. • Promote and coordinate research, training, and knowledge-sharing in PPP best-practice within their focus sector. • Responsible for leading the development of Best-Practice Guides within their focus sector. • Global membership from PPP agencies, contractors, advisors and research bodies operating within their focus sector.  

12. UNECE PPP Toolkit The UNECE PPP Toolkit is an integrated system of documents, designed to help governments develop their national PPP capabilities and markets…

13. …continued UNECE PPP Toolkit • UN Guidebook on Good Governance in PPPs • identifies the full range of PPP strategies • defines the role of public governance in PPPs • defines principles of PPP good governance

14. …continued UNECE PPP Toolkit • PPP Readiness Self-Assessment Tool • Provides countries with a comprehensive and easy-to-use tool to assess the national readiness to deliver PPP projects, as measured against the key areas of risk to PPP project delivery: • Public Governance • Policy • Capability-Building • Legal Framework • Whole-of-Lifecycle Project Delivery • Project Management • Sustainability • Finance

15. …continued UNECE PPP Toolkit • ‘How-To’ Manual for PPP capability development • Provides detailed and chronological instructions on how to develop, operate, and continuously improve an effective and sustainable PPP capability within government. • Areas of focus include: • policy and application • finance and risk allocation • developing an effective PPP programme • PPP whole-of-life project delivery • pro-forma documentation and processes

16. …continued UNECE PPP Toolkit ‘Train-the-Trainer’ guides for PPP competences Provides countries with comprehensive training packages in the key PPP functional capability areas of PPP policy, finance, procurement, risk, contracts, and negotiation. These guides are designed to be quickly adapted, implemented, and taught by a country’s local institutions. Each guide will include full trainer directions, course notes, exercises, worked answers, case studies, and referenced papers.

17. …continued UNECE PPP Toolkit • ‘Best-Practice’ Guides for PPP project delivery • Provides countries with a global overview of the best practices, lessons learned, and key developments and innovations within a range of PPP sectors. • Includes two parts: • an executive guide to PPP in the sector, with detailed global market and trend analysis • a practitioners guide to PPP in the sector, with detailed case studies • Each Best-Practice Guide will be developed by a UNECE PPP Specialist Centre, which will coordinate sector-specific input and case studies from a broad range of governments, specialists, and contractors.

18. UNECE Build-Operate-Transfer (BOT) Group first created in 1997. UNECE PPP Alliance takes over from the BOT Group in response to growing interest. UNECE PPP Team of Specialists in 2007 becomes the first inter-governmental body with a mandate to develop the PPP capabilities of governments, and under a 3 year tripartite agreement between UNECE, UNECA and UNESCAP assists PPP capacity-building activities in Europe, Asia and Africa. UNCTAD Secretary-General in 2008 calls for a United Nations initiative to help governments address the global ‘infrastructure-gap’. In 2009, the UNECE, UNECA and UNESCAP approve the UNECE proposal for the establishment of an international PPP centre of excellence. Subsequent scoping consultation with the private-sector on the potential activities of this centre. In December 2009, the UNECE PPP Team of Specialists agrees to take all necessary steps and raise the resources for establishing the UNECE PPP Centre of Excellence. 2010, several governments inform the UNECE of their intention host various components parts of the UECE PPP Centre of Excellence. Evolution of the UNECE PPP Initiative       

19. PPP improve the quality of life for citizens globally, throuby enabling improved access to and quality of public utilities and services. PPPs can also provide significantly improved efficiency and efficacy in the government delivery of public utilities and services. In the water and waste-water sectors, PPPs can contribute to the sustainable management of water infrastructures and supplies. However, the realisation of these benefits requires (a) the identification of best-practices in PPP delivery; and (b) the deveopment of the PPP capabilities within the public-sector. The UNECE PPP Initiative will globally address these challenges, to strengthen governments’ capacities in delivering more effective public utilities and services. Conclusion      Dr Geoffrey Hamilton: geoffrey.hamilton@unece.org