Op-Ed: Mark Simmonds on Public-Private Partnerships in the Caribbean

By: Caribbean Journal Staff - February 13, 2014 - 2:38 pm

By Mark Simmonds, MP
Op-Ed Contributor

AS OUR governments strive to create the conditions for sustainable economic growth, identifying avenues for continued investment in public infrastructure is as crucial as it is challenging, given fiscal constraints across much of Europe and the Caribbean.

Partnerships between the public and the private sectors (PPPs) can be an important enabler of sustained investment.

They promote the provision of efficient and cost-effective public services, with modern facilities, with reduced risk and reduced upfront costs to government.

They bring the best of business to bear on public sector projects: innovation, risk management, discipline, and a culture of delivering on time, on budget and to specification. In short, they can provide value for money.

It is no wonder that they are increasingly on the agenda of governments across the Caribbean.

One estimate puts the value of potential PPP projects in the Caribbean at US$17 billion.

The United Kingdom has pioneered the global development of PPP.

Its principal model, Private Finance Initiative (PFI), recently reformed as PF2, typically sees a private sector partner design, build, finance, operate and maintain an asset to provide a public service (e.g. a school or clinic), while the government commits to pay an annual charge over the next 20-30 years.

To date, the UK has signed over 725 PFI contracts in sectors ranging from health, education, transport, waste and justice, with a combined value of £54.2bn.

Over 85 percent of the UK’s PFIs have delivered on time and on budget, compared with significantly lower figures for conventional procurement methods.

Our leadership in PFI has turned our private sector into global providers of PPP-related services – financial, legal, technical, construction, facilities management, amongst others.

We didn’t get it right from the start, but the UK now has a formula for success, backed by clear guidance and standard documentation. This makes the UK experience an attractive model to discuss in the Caribbean context.

On 19-20 February, UK policy makers will be in Kingston to share their expertise and discuss how public private partnerships (PPPs) can benefit countries across the Caribbean.

Led by Owain Ellis, Project Director at Infrastructure UK (IUK) – the multi-disciplinary team comprising of former private sector bankers, lawyers, construction managers as well as civil servants responsible for planning and delivering the UK’s infrastructure requirements — the conference will discuss how UK policy has developed the components of good project design and risk allocation. The meeting in Kingston will discuss the importance of extensive planning: inadequate project design can lead to unforeseen fiscal burdens well into the future. UK private sector representatives will set out the factors crucial to attracting private investment in public projects.

Public-Private Finance is not a silver bullet.

It will not solve all of our challenges in funding and providing services to the public, and each country’s approach will be different. PFI makes up only 11 percent of total UK public infrastructure investment- but it is a vital part of the mix.

I am delighted that the UK and the Caribbean are partnering together in this important policy area.

Mark Simmonds, MP is Minister of State in the United Kingdom’s Foreign and Commonwealth Office

Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.

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