Introduction to Public-Private Partnerships

PRIVATE PUBLIC PARTNERSHIPS: EFFICIENT SUSTAINABLE REPLICABLE 17TH OF APRIL 2009 CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY •LESSONS IN REPLICABILITY– PPP IN HEALTH : A CASE STUDY OUR CLIENT The Indian Market… 1.123 Billion 6.5mn 0.58 % = Tip of the Pyramid 1000K> 13.0 mn 1.16 % = Upper Middle 500K-1000K 59.2 mn Upwardly Mobile 200K-500K 5.27 % = 91.3 mn Middle Class 90K-200K 44.13 % = 495.8 mn Vulnerable <90K 48.86 % = 549.0 mn 213.3 mn BPL = 19% = Deprived BPL Source: Registrar General; NCAER; McKinsey …with different needs even within the same income segment. Building Systems that give the Poor Top Priority Low-Income Households LARGE ENTERPRISES Middle Class Wealthy Enabling the Poor at the bottom of the pyramid Is a social obligation …….and can also be a commercially viable choice! PRIVATE PUBLIC PARTNERSHIP- KEY TO SUSTAINABILITY Institutional Spectrum Government Procurement Public Private Partnership Design-Build-Operate (DBO) Design-Build-Finance-Operate (DBFO)+ Government Ownership DBFO + Private Ownership + Transfer to Govt at end of contract DBFO + Private Ownership (no transfer) Privatization 5 CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY •LESSONS IN REPLICABILITY– PPP IN HEALTH : A CASE STUDY Myths and Realities – Public Sector Mutual Mistrust Myths Private approach not fit for Poor Realities Skilled financial prudence for Effective Sustainability Institutional support for holistic technical evaluation Localized Needs and Stake holder Participation Concrete solutions – Best practices Build islands of excellence! Launch, Learn and Replicate Product selection Process – L1 Top down approach ―One shoe fits all‖ Big Bang Approach Myths and Realities – Private Sector Mutual Mistrust Myths Lack of ClarityGovernment Change?(*ROB-FBD.) Realities Stable PPP Policy Framework PPP not profitable ―A sweet heart deal‖ – opaque selection Target group unfamiliarDifficult to service Govt. difficult to work with - Bureaucratic procedures Innovative approach Key to profitability In-built transparency Innovative approach- Opportunity Common objective. Negotiated agreement CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY •LESSONS IN REPLICABILITY– PPP IN HEALTH : A CASE STUDY THE GOVERENMENT’S PERSPECTIVE  Government of India stance towards PPP - proactive  Planning Commission Documents  Guidelines for Financial Support to PPP in Infrastructure 2006 (www.infrastructure.gov.in)  Report of PPP Social Sector Sub-group, 2004  FM’s Speech -Conference of State Secretaries on Infrastructure -PPP for large investments needed in infrastructure  Rs.2.2 lakh crores—Highways by 2012  Rs.40,000 crores—Airports by 2010  Rs. 50,000 crores – Ports by 2012  Major Initiatives- Ports, Roads, Railways, Power & Civil Aviation  State Government Initiatives—  Housing Project- Kolkata West Bengal  Ports & Urban Infrastructure- Gujrat  Roads- Maharashtra, Punjab 10 DECISION CRITERIA        Lowest capital cost of project Lowest operation & maintenance costs Lowest Bid in terms of present value of user fees Lowest present value of payments from government Highest upfront fee Highest revenue share to government Shortest Concession period 11 CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY •LESSONS IN REPLICABILITY– PPP IN HEALTH : A CASE STUDY Long Gestation Periods CHALLENGES Cost recovery through User charges Arbitration/ Dispute Resolution not possible Institutional Arrangements Efficient and well developed Financial Sector Commercial viability of Public goods and Services cannot be guaranteed Change in law Stable Macro-economic Framework ―Viability Gap Funding Scheme Balancing competing interests Ministry of Finance, DEA, July 2005 Capital grant- 20% of total project cost 13 THE REGULATORY CHALLENGE BALANCING DIFFERENT INTERESTS Service Provider State maximize sale/ concession value; protect users; maximize profits Maintain privileges reduce State subsidies Current Consumers (non-poor) Excluded Households (Poor) - - reduce tariffs expand coverage Essentials of an Effective PPP Build on Commonality of Objective Leveraging off Mutual Skills & Resources Filling Mutual Capability Gaps Building Trust Sustainable provision of Quality and Efficient Service Delivery HISTORICAL PARALLELS: •Communication Revolution Through Telephony •NHAI Road Policy-Building Infrastructure- Enhancing Access and Connectivity ELEMENTS OF SUCCESS         Stable policy framework for PPP Governments change Assurance of Transparency  Investor’s need Stakeholder Involvement and Consultation Mutual Trust  for (and through) Success Well-articulated and Comprehensive Agreement Flexibility & Responsiveness in Decision-Making Periodic Monitoring  for Efficiency Quality & Standards of Services  for Sustainability 16 THE PPP MODEL Common Objective Public Sector Private Sector OUTCOME EFFICIENT & QUALITY DELIVERY OF PUBLIC SERVICES **Financing Care through Health Insurance for the Poor •Social skills •Financial Resources •Efficiencies •Technical skills •Risk Management Sustainable & Efficient Service Delivery System Leveraging mutual strengths PARTIAL RISK GUARANTEES MITIGATE CONCERNS RELATED TO GOVERNMENT PERFORMANCE A Partial Risk Guarantee (PRG) covers lenders in case the Government does not meet its commitments Loans Project Company Government Undertakings Commercial Lenders Guarantee Indemnity Agreement Government World Bank CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY •LESSONS IN REPLICABILITY– PPP IN HEALTH : A CASE STUDY LEARNING FROM PPP SUCCESSES & FAILURES  Success Stories:  DELHI-GURGAON EXPRESSWAY  NATIONAL HIGHWAY AGENCY - ROAD FINANCING THROUGH BOTS,  NOIDA TOLL BRIDGE EAST COAST ROAD- REHABILITATIONTAMILNADU  TAMILNADU URBAN DEVELOPMENT FUND  TIRRUPUR WATER SUPPLY PROJECT  MAHARASHTRA C- SAS EXPERIENCE**  PPP HEALTH MODELS**  Cautionary Lessons:     ENRON DABHOL-- POWER POLITICS BANGALORE MYSORE INFRASTRUCTURE CORRIDOR AIRPORT PRIVATISATION PPP IN HEALTH CARE** CASE STUDY I: THE MAHARASHTRA EXPERIENCE PPP-STAMPS ®ISTRATION DUTY  PROCESSES:        Tender process by Govt. of Maharashtra to appoint panel of Turnkey Solution Providers Panel of 15 agencies finalised as TSP’s including TCS,IBM,MBT,C-DAC,NIC etc. Preparation of detailed project proposal by the Dept. Pre-feasibility report & Cost estimation by the TSP’s Selection of the TSP- c-DAC- for the Stamps & Registration Dept Vendor Management software &Detailed System Study by the TSP Pilot deployment & fine tuning Operationalization  OUTCOMES:  All offices-Sub-Registrar/Joint District Registrar/DIG of Registration- computerised Enhanced Efficiency and Transparency  1.5 million documents registered annually.  Revenue collection enhanced ~4500 crore  Revenue Sharing Model  Stakeholders Buy-in Govt/TSP/BOT Vendors  User Friendly with Evidence of stamp duty payment  Client Satisfaction.  Security based on the strength of central system & Unique ID for each transaction  Integration with the central system Reduces element of Fraud C-SAS Architecture ACC --> Authorised Collection Centre SR--> Sub Registrar Office Purchaser ACC TransactionAmount Govt.Treasury State Level Depository Firewall Firewall Unique IDGeneration ACC Database WebServer SR Internet Dial-up Modem Dial-up Modem SR Computerised Stamp Duty Administration System ACC Citizen Data entry. Connect to central server Generation of Unique No. Payment Imprint of No. & 2 D Bar code Registration Unique ID& Proof CONTENTS •WHY PPP? –INVERTING THE PYRAMID – REACHING OUT • PRACTITIONER PERSPECTIVES -MYTHS AND REALITIES •THE GOVERNMENT STANCE •OVER COMING CHALLENGES-BUILDING A SUSTAINABLE MODEL •LEARNING FROM SUCCESSES & FAILURES-c-SAS: A CASE STUDY • LESSONS IN REPLICABILITY – PPP IN HEALTH : A CASE STUDY CASE STUDY II- PPP IN HEALTH PARTNERSHIP PROFILE  Profile of Private Partners: From individual physicians to a large corporate hospital  Partnership Models: From contracting to voucher scheme  Complexity: From simple diet to complex community - based health insurance  Value: From Rs. 27 to > Coverage of Hospitalization  Nature of Services: From emergency transport to tele-Cardiology  Location: From remote hills / islands to urban slums CBHI & PPP schemes for the unorganised sector Community-based health insurance schemes State government schemes  ~ 8-10 million people covered     Punjab Haryana Rajasthan  Jammu Kashmir  Himachal Pradesh  Arunachal Pradesh Uttranchal  Sikkim Delhi  Meghalaya Assam Jibon Jyoti scheme launched in July 2005 aims to cover entire population of 30,000,000    A Utta  B s i r  J h s  Nagaland  Gujarat MadhyaPra  Pradesh h a  Manipur a des m a r West BengalMizoram h  Tripura r  Orissa k  Maharashtra  Chhattisgarh  hAndhra Pradesh a  Goa n Karnataka  Karnataka d Yashasvani  Assam  Andhra Andhra Pradesh aims  PradeshArogyaSri -state to cover 86% population    Kerala Tamil NaduA & N Islands   Kerala Kerala Katumb-shree launched in 2006 with ICICILombard for BPLs Lakshadweep Overview of the Case Studies..1-4 Case/ State SMS Hospital Jaipur, Rajasthan Arpana Swasthya Kendra, Delhi Uttaranchal Mobile Hospital and Research Centre, Bhimtal Services Radiological (CT/MRI) Diagnostics/ Drugs & Medical Supplies store Management of Maternity health center under RCH Clinical diagnostic services through health camps, lab tests; Hilly people Super-specialty clinical and surgical services; Hospital Management Benefits to the Poor Patients Free for all BPL Patients Free drugs (20% patients). Free Lab Tests, ANCs, select surgeries, community health services, sanitation, IEC Free to all BPL cardholders. Rajiv Gandhi Hospital, Raichur Karnataka 40% beds are for BPL patients; Free OPD services to poor. Overview of the Case Studies…..5-8 Case/ State Karuna Trust, Karnataka Services Management of PHCs and sub-centers; 24-hrs clinical services Benefits to the Poor Patients All patients given free servicesdiagnosis, consultation, treatment and drugs. Karnataka Integrated Telemedicine & Telehealth Yeshasvini Health Insurance Scheme Karnataka Rogi Kalyan Samiti, JP Hospital, Bhopal, Madhya Pradesh Tele-diagnosis and consultation in cardiac care and specialist care Hospitalization and care for more than 1600 surgeries Free diagnosis, medicines and treatment for the BPL patients Only for the members of farmers’ cooperatives and their dependents Hospital autonomy- for Free to BPL patients, others pay decentralized management nominal user charges Overview of the Case Studies…..9-12 Case/ State Emergency Ambulance, Theni, Tamil Nadu AP Urban Slum Health Project, Adilabad, Andhra Services 24-hrs ambulance for emergency deliveries & obstetrics care Maternity and child health services; Institutional deliveries Benefits to the Poor Patients 10% of the patients provided free transport. Services exclusively for slum population. All services free Arogya Raksha Scheme, Andhra Pradesh RNTCP, Mahavir Trust Hospital, Hyderabad, Andhra Low cost health insurance, for limited hospitalization Surveillance, treatment of TB patients& drug delivery under DOTS Only for the BPL patients who undergo sterilization in a government hospital Free for all patients Overview of the Case Studies…..13-16 Case/ State Bhagajatin Hospital, Kolkata West Bengal Mobile (Boat) Health Service in Sunderbans, WB Shamlaji Hospital, Sabarkantha, Gujarat Chiranjeevi Yojana, Gujarat Services Outsourcing of Laundry, Kitchen, Cleaning Diagnostics; Consultationhealth clinics; Drugs; Health promotion Management of a government built CHC; 24hrs services Institutional deliveries through private obstetricians and gynecologists Benefits to the Poor Patients Food (diet) is free for BPL inpatients All services are supposed to be free; Beneficiary population is assumed to be BPL Except surgeries all services are free for poor patients Scheme is primarily for women from poor families, with prior ANCs from a govt. hospital WHY HEALTH INSURANCE? Financial Exposure End of life care Expenses Medical expenses for Chronic conditions Catastrophic Expenses Consumer Financial Exposures Unaffordable Risks Expenses for routine medical expenses, preventive care Income Risk Key Actors REGULATOR Payor Private Facilitator s Low income households Provider Donor Agencies Payer Public WE WELCOME YOUR VIEWS----- RAJNI SEKHRI SIBAL