Public, private, partnership Still Infant

The Public Private Partnership model (PPP) model, recognized the world over as an effective management solution for social development, has just started its baby-crawl in Nepal . The Public Private Partnership for Urban Environment (PPPUE) is the sole official organisation engaged in tiresome research activities to discover areas where this model can be feasible. Though this organisation has bumped onto potential PPP projects in ten partner municipalities, development efforts have been almost halted as the government seems too occupied in the never-ending political imbroglio.

Visible Efforts

The government has recognised PPP as an effective vehicle for development and poverty alleviation and it was included in the 10th Five Year Plan in 2003. Till then, small efforts had been taken by the civil society, government and the private sector, which were made possible with consistent support coming from United Nations Development Program (UNDP). The result was setting up some institutions including Public Private Partnerships for Urban Environment (PPPUE), which endeavoured, among other things, to: (a) maintain the social engagement of the population in the local governance; (b) facilitate private sector involvement in the delivery of urban services to the poor and; (c) meet the essential needs of the country's poor, marginalised and vulnerable groups.
GTZ/Urban Development through Local Efforts (UDLE) is another donor funded institution that has had an extended presence in the urban sector. As infrastructure funding support for municipalities, the Town Development Fund (TDF) supported by German development bank KFW, has been shoving millions into infrastructure development projects and the municipalities themselves have arranged some foreign loans. Some of these facilities are now being managed more effectively and efficiently by private operators under PPP arrangements, the examples being Lumbini Bus Terminal in Butwal and public toilets in Hetauda. PPPUE operates in ten partner municipalities at present.
The driving concepts of PPP have been successfully integrated into the national development agenda. The government, in its 34-point policies and programs for the FY 2006/07 has committed to adopt the principles of partnership and collaboration between the government, the citizens, and the private and non-government sectors in the implementation of development programs. The budget speech for the current fiscal year has also mentioned PPP as one of the main principles. Central stakeholders like FNCCI and Municipal Association of Nepal have also been entrusted to undertake the PPP projects on their own. But these policies have been proved just as lip services from the government as it is busy more in breaking the political juggernaut than in implementing of development plans and polices.
Regarding the tangible projects undertaken to date, it may be noted that overall the projects under PPP are small in size and the involvement of the private sector in those projects is only in operation stage. In other words, they are short-term projects without major investment from private sector. So far, PPPUE has been successful in spreading ideas, creating conducive environment and backing commitments in addition to bringing to operation 17 public-private partnership projects. By supporting pro-poor PPPs in providing urban services and infrastructure development, PPPUE aims to contribute to the Millennium Development Goals (MDGs) with its eco-friendly projects. It further strives to generate employment opportunities for its target groups. The project also strives to ensure improved access to safe drinking water and sanitation through PPP lessons and knowledge, which can further help to promote good governance, sustainable development and poverty reduction. However, all the operational PPP projects are in municipalities only and part of the reasons, as offered, are the volatile security situation in the villages and the lack of political representatives in local government bodies

Persistent Problems

Much of the problems associated with initiating PPP projects lay in the lack of knowledge and expertise among the private sector players. Though PPPUE has been organising workshops, seminars and meetings to impart required knowledge on PPP, the outcome has been far from satisfactory, which can be attributed to government apathy and private sector hesitation to consider big investments.
Although there was a thrust for devolution of power from the central government to the district level bodies within the framework of "decentralisation", the concept has remained dormant since 2001, though some initiatives were taken to transfer many sectoral programs and activities to the district level. The effective implementation of the Local Self Governance Act of 1999 is yet to be realised. The Ministry of Physical Planning and Works (MPPPW) and the Ministry of Local Development (MLD) are responsible for urban sector development but the lack of coordination between these ministries and district level line agencies has been posing hurdles in this.
However, while analysing the lack of implementation of PPP, it has also to be acknowledged that during the period since 2001, the state of local governance remained poor due to the absence of political bodies. The armed conflict took its heavy toll on resource mobilisation and participatory planning by the municipalities was just limited to their day-to-day administrative affairs. Many municipalities could not prepare plans to meet their development needs and the situation got worse due to the shortfall in the transfer of resources to municipalities, which stood at just 0.12 percent in 2006/07. A considerable portion of the resources has been diverted to meet the security expenditures in the last five years. Again, this is only half of the problem. The past experiences also suggest that municipal bodies lack knowledge, capacity and institutional support to undertake a proactive role.
This also reveals lack of PPP project financing expertise and experience within the commercial banking sector of the country. Banks are generally reluctant to finance big projects since the pay back period is longer and the risk factor is significant. The case of Melamchi can be taken as an example in this connection, which is still in its construction stage for years now. However, the reason behind PPP not proving so feasible can be blamed to political muddling as private sector players look reluctant to invest in big ventures in the current turbulent times.

Possible Solutions

Looking at the experience so far in PPP, there is an urgent need for the government to come up with a new set of policies and guidelines for PPP undertakings. Those involved in PPP exercise feel that the existing policies are very fragile. "We need to have a comprehensive government guideline on how to get ahead. If you want to do it through partnership, what kind of partnership will you need and how can you go for it? Development is a product of the government and it needs to sell the idea to the public," said a senior manager of a private sector organisation who has been active in this field.
For the effective implementation of PPP, the governmental structure needs to go through a complete makeover. And for that, PPP cell must be placed within the Ministry of Finance, just like in Singapore , New Zealand , Canada , Ireland and other countries. In these nations, PPP blossoms under the direct supervision of the finance ministry.