Small-scale public-private partnership | Political Economy

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S Pakistan combes its growing infrastructure and public service delivery sects, policy makers and development practitioners are turning to a highly pressure and highly promising device: small -scale public private partnerships (SSPPP). Unlike CPEC mega projects or motorways cutting in the media -receiving media, SSPPPs affect the community level. A common SSPPPP can facilitate a village water filtration, a peripheral urban community, solar grid, rural health facility or garbage management system in a small city.

SSPPPs have immense potential. They also face many challenges. The recent World Association of Public Private Partnership Leaderships for SSPPPS shows that although SSPPPs represent a practical way to provide local development goals, their successful implementation is not always a smooth matter.

Cost for effect

An important challenge for the success of the SSPPP is its basic power linked. Its small scale. In Pakistan, where the bureaucracy is thin of dense and capacity, development projects for the manufacture of PPP on a small scale need extensive studies on technical, financial, legal, environmental and social aspects. Given their small scale, the relatively burden of cost is much higher.

A rural water supply scheme worth Rs 50 million can be subject to similar legal scrutiny, feasibility studies and environmental approval as a motorway. This is a huge defect, with small human resources and financial skills. Low skills are mostly transformed into major projects, which believe that there is more political mileage and more financial profit.

Legal and entrepreneurial weakness

The current legal framework has been developed primarily to enable major projects. Punjab and Sindh have somewhat sophisticated PPP, but their mandate and SOPs rarely take into account the specific nature of SSPPPs. The capacity is even more limited at the local government level, where SSPPPs are the most applicable.

Along with PPP expertise in a small town municipal corporation, private investors may lack the basic or financial advice at home to prepare contracts to protect the community’s interest by attracting private investors. The lack of simple templates, sample contracts or standard guidelines for small projects begin from the beginning with the lack of standard guidelines. In many cases, they stall before being taken off.

Limited private sector interest

Pakistan is dominated by family parties and contractors in the private sector who are looking for high -value public projects. Both of them have to find small PPP free. Why should a medium -sized company be bidded in a 100 million city bus terminal when such efforts can be made?

Small and medium -sized businesses (SMEs) may be known for the natural allies for SSPPPs. However, they also face a limited access to affordable project finance, lack of skills to navigate complex purchases and the absence of special privileges. In a package, individual SSPS bidders may fail to attract vendors, without group opportunities to group similar small projects.

Financial obstacles

The place for development finance is notorious. Generally, sub -national governments have a very limited ability to meet the financial risks contained in PPP. This is particularly difficult for SSPPPs, because their small scale shows that they cannot always collect enough user fees to maintain the user’s self -retain.

Small and medium -sized businesses can be a natural ally for small -scale public private partnerships. However, they also face challenges such as limited access to cheap project finance, lack of skills to navigate complex purchases and absence of special privileges.

Consider a small scale garbage storage PPP in a teshael, where the user’s fee can only finance a portion of operating costs. The local government needs to eliminate this gap. If the local authority’s financial base is thin – like most municipal authorities – the default and delay of payment is inevitable.

This ruins investors’ confidence and increases financial costs. Pakistani banks also hesitate to lend for extended periods for such infrastructure projects, especially for such infrastructure projects.

The impression of the community

LOCAL, locally stakeholder acceptance is essential for the success of SSPS. However, in most Pakistan, “privatization” is often associated with high prices, jobs waste and elite. Small -scale PPP projects such as water supply or waste management in which the community is included can be rejected unless it is properly explained.

Fearing the electoral reaction, the local government may be reluctant to approve or implement the rehabilitation policies. In this way, without effective communication and communication of the community, such projects can be halted due to local conflicts or false information.

The difference of capacity

Due to the absence of well -established PP cells, the local government cannot plan, tender and implement the SSPPP. Municipalities often lack technical skills to develop bankable contracts, allocate risk, resolve disputes and monitor performance.

WAPPP leaders highlight the importance of institutional capacity and training for local government officials, which is largely absent in Pakistan. As a result, many SSPPP results are likely to end.

To overcome the obstacles

Despite these challenges, the capacity of SSPPPs cannot be ignored. Policy makers need to think about ways to make these local partnerships successful. The following can help break the deadlock.

Adopt the legal framework: Providing a small scale PPP must be set up in the national and provincial PPP legislation, in which local authorities are working as a contracting authorities with proper financial control.