In the late fifties the citizens of our country enjoyed very comfortable ways of easy living. The population was below 14 million and the city of Colombo was a merry making city in Asia. We had trolley buses plying in the city of Colombo operated with electricity and with very few cars and commercial vehicles, the streets of Colombo was noise and smoke free with much higher health standards enjoyed by the residents.
The trolley buses had automatic doors for both entrance and exit. The conductor had a ticket machine and was comfortably seated inside for passengers to buy the tickets and move forward. The ticket was a glazed one with high quality printing on it indicating the fair. There were no rushes to get in, or getting down. One had to merely ring one of the bells installed inside the trolley to get down. The getting down was only from the automatically operated front door. There were single and double decker trolley buses for passenger transport especially from Borella junction to Colombo Fort.
However, these trolley buses were discontinued by the Government with the setting up of the CTB (Central Transport Board).Then came the double decker buses which used to ply between all the main streets in Colombo. The Liberty Cinema junction resembled very much like London with red colour double deckers regularly passingby.
Singapore got their independence in 1965 and their first Prime Minister Lee Kuan Yew on a visit to Sri Lanka (Ceylon at that time) echoed his dream of making Singapore another Ceylon. In the Colombo Fort area itself the visitors were able to enjoy the food, beverages and hospitality of four top restaurants, namely, Nanking Hotel, Hotel Metropole, Pagoda Restaurant and the Colombo Café which had a Juke Box even to entertain the diners. The food and beverages served were quite extraordinary. The only star class tourist hotel at that time in Fort area was the Taprobane Hotel (Now the Grand Oriental Hotel). Hotel Ceylon Intercontinental opened for business in 1973, followed by Galadari and Ramada Rennaissance in 1985 with Colombo Hilton opening in 1987. In the immediate outskirts of Fort we had the Great Colonial Hotel by the name of Galle Face Hotel which still stands tall followed by Holiday Inn and Taj Samudra adding spice to the Galle Face Green. Except Ramada Rennaisance (which later became Colombo Renaissance and Trans Asia and now the Cinnamon Lake) and Intercontinental, almost all other hotel projects were foreign investments. Sri Lanka Insurance Corporation were the developers for Ramada Renaissance.
People of Sri Lanka enjoyed a care free life style upto around 1982 before the ethnic turbulences took its toll from 1983. By that time with the support of open economy policies of the new Government in 1977 Sri Lanka developed its basic infrastructure for an economy based on market policies with liberalized trade practices. We are thankful to that Government for giving us a continued period of solid economic growth of five to six years.
We have now come out of ethnic war in the North and East which engulfed the whole country and should look for Public Private Partnerships for the economic upliftment of the country. The privatization of state owned plantation companies in late 1991 was a very good and encouraging example. State owned plantation companies belonged to the two main state entities, namely, Sri Lanka State Plantations Corporation (SLSPC) and Janatha Estates Development Board (JEDB) which were making huge losses due to multiple reasons, namely:
* Lower productivity levels and yields
* Trade Union action
* Absence of internal controls
* Poor marketing
* Lack of adequate funds for replanting
* Weak overall administration
* Very weak financial and cost controls
* Higher wages to workers and management irrespective of productivity standards and profits
After the privatizations, the new managements appointed by the new owners achieved the following goals for their respective plantation companies:
* Listing of shares in the Colombo Stock Exchange and rapid enhancing of the market price of shares
* Substantial Lease rentals to the state
* Taxes to the state
* Substantial dividends to the shareholders
* Substantial new capital was raised by way of Primary and rights issues in the Colombo bourse
* Ploughing back billions of rupees for replanting and to purchase fixed assets for the companies
* Substantial forex earnings
* Value addition to respective industries
* Promotion of Sri Lankan brand names for the produce
* Promotion of tourism with tourist visits to tea estates to witness various production processes and also to buy premium high quality tea
All above benefits were achieved by the 30 plus companies due to timely privatizations. It is indeed a success story and a “win win” situation for the state, the workers, investors, management and the public at large due to saving of losses by the Treasury. I read an article in an English Daily a few years back where a female tea plucker received a monthly pay packet of over Rs. 55,000 inclusive of incentives. This is a remarkable achievement in the quest for “Empowering of Women” in Sri Lanka. The motto was higher earnings for higher productivity. By now, the investors of plantation companies would have achieved both operating gains and holding gains through the Colombo Bourse. Some tea brands like “Watawala” are household names among the local consumers in addition to the penetration of export markets.
The Saga continued with the continuation of the privatization process through Air Lanka, Lanka Milk Foods, Gas Company, Insurance Corporation, Distilleries Corporation, Ceylon Hotels Corporation, Sri Lanka Telecom and a few others. However, Insurance Corporation and the Gas Company were taken back by the State since they were making very substantial profits even at the time of divesting of shares. Air Lanka was taken back after the Management Agreement ended with the operator. The taking backs were agreed mutually and fair values were paid by the State to the owners in taking back.
The PPP initiatives need be pursued at Provincial levels to accelerate Rural Economic Growth, Rural Poverty Alleviation, Mitigation of Crime Rates and Higher Tax Collection.
Bulk of the taxes of this country is paid by the Western Province consisting of the districts of Colombo, Gampaha and Kalutara. This scenario is not healthy as the other eight Provinces are not contributing much to the economic development of Sri Lanka. Therefore, these eight Provinces should be subjected to a detailed analysis to spur the economic growth rates through PPP projects as there is plenty of unutilized land in these areas. The residents of these eight Provinces come to the Western Province in search of careers and employment overpopulating the Western Province and eventually polluting the Western Province in all angles. Since independence, none of the elected governments made a committed and serious attempt to develop these eight Provinces which even led to ethnic tensions and social unrest. Furthermore, empowerment of women and the youth were much neglected subjects. At present, there are very limited earning avenues for the residents of these eight Provinces and the per capita savings rates are at lower levels. As a result, the residents of these provinces looked to greener horizons abroad, especially in the Middle East. In addition, some people embark on unsafe boat journeys to reach Europe, Australia and other countries. However, the elected Governments may welcome these moves as the state coffers are annually filled up by foreign remittances from Sri Lankan workers, employed abroad. In the process, they face many difficulties in their day to day employment activities. At present, Sri Lanka earns around 7 billion US dollars annually from this source, meeting a great portion of the annual trade loss of the country.
One can understand the plight of the residents of these eight Provinces who are also subjected to regular adverse weather patterns and natural calamities. The newly elected 8,000 members at the recently held Local Government Elections in February 2018 can contribute to the development of their areas by making a concerted effort in identifying the priority projects for their areas and seek funding from the state and through PPP initiatives. The PPP initiatives can make a sizable contribution to ensure social and ethnic integration to meet the aspirations of the international community and the donor countries. This will also improve the human rights record in the eyes of the UN.
The state cannot meet the recurring losses of a large number of state instituitions every year due to debt servicing requirements. The tax payers of this country will be further burdened with direct taxes and the general public are also meeting a sizable burden for indirect taxes. Cost of living rises annually due to after effects of continued losses of state enterprises met by the state coffers. This process cannot go on for a long time as public unrest will surface at an alarming pace and our business community will shift their bases to other countries with lower taxes and progressive trade practices and law.
The general public, the politicians, corporate sector and the donor community of Sri Lanka voice their concerns in the implementation of PPP initiatives due to the absence of transparency in the processes from the beginning of PPP projects and the projects come in for constructive criticism from all quarters.
Given below is a useful guide to improve the transparency aspect in PPP Projects:
* Establishment of an exclusive website for PPP Projects in Sri Lanka
* Updating of the website on a fortnight basis with details of current & upcoming PPP projects
* Details of line ministries floating PPP tenders be included in the website and the requirements for simplified pre- qualifications
* Simplified tender application forms
* Strict adherence to closing dates, tender opening and tender awarding dates
* Avoidance of “unsolicited proposals” at all times.
* Appointment of unbiased and experienced members for Financial, Legal and Technical Evaluation committees
* Organisation of bidders’ conferences by Line Ministries
* Establishment of a data room containing all relevant information, documents and core project details open to all bidders. These should contain legal requirements as well.
* Information on contact details such as telephone numbers, fax numbers, email numbers and official addresses with names of contact personnel
The above will instill confidence into all prospective bidders and will draw a large number of bidders from both within and outside Sri Lanka as they will have confidence in all processes of PPP tenders.
Now let us look into the essential contents of a PPP contract. Some of them are listed below:
* Technical parameters
* Rights and obligations of all parties
* Risk-benefit allocations
* Project implementation time table and deadlines
* Liquidated damages payable by both parties for not meeting deadlines
* User fees
* Dealing with “force majeure “ events
* Rights for substitution
* Monitoring and supervision programmes
* Dispute resolution and termination
Line Ministries are required to attend to the following on a priority basis in a transparent manner with the sole objective of ensuring the successful implementation of PPP projects coming under their purview.
* Identification of PPP projects at rural and urban levels
* Documentation of same with project proposals
* Appointment of a Cabinet Appointed Negotiating Committee (CANC)
* Preparation of a PPP Risk Identification Matrix
* Preparation of a feasibility report including legal, technical, environmental and financial feasibilities.
* Technical feasibility should include an environment assessment based on prevailing and proposed Sri Lankan Environment Laws and social impact assessments to avoid future public and Political Implications
* A Market Assessment to assess the needs for the project and the benefits to the people in project - Area and the General Public at large
* Avoidance of conflicting situations for our neighbouring countries such as “trade wars” and “ regional security conflicts”
* Ensuring the achievement of “Value For Money” concept for the projects at all times
* Affordability of the project in line with budgetary allocations of Line Ministries
* PPP design should be in line with the economic policy of the country and should ensure self management and regular supervision as a matter of routine
Going deeper into the PPP initiatives of Sri Lanka, we do not have updated PPP guidelines yet. Most other Asian countries are far ahead of Sri Lanka. Recently, USAID funded Short Term Assistance to improve Public Financial Management Reforms (STAIR) project assisted Department of Public Finance to prepare draft PPP Guidelines. If it is approved by the cabinet it will revise and replace the guidelines of Government tender procedure Part II which is on Private Infrastructure Projects, (BOO/BOT/BOOT PROJECTS - January 1998).
The particular guidelines are applicable for soliciting, evaluation and procuring all projects to be developed on public private partnership basis. It also includes a separate PPP Manual for the benefit of the users, which elaborates detailed processes, procedures, templates and sample case studies. The Manual and PPP Guidelines include a clear transparent mechanism to take forward the unsolicited proposals on more globally accepted norms and standards. The guidelines also include some sections on proposal evaluation and some guiding steps for contract negotiations and risk allocation of PPP proposals. The policies and principles embodied in the Guidelines maybe applied with suitable modifications for the Provincial Councils and Local Authorities for the implementation of projects on PPP BASIS.
The draft PPP guidelines include the roles and responsibilities of Line Ministries and Contracting Authorities, Project Committee (PC), Cabinet Approved Negotiating Committee (CANC), Ministry of Finance and General Treasury, Attorney General’s Department (AGD), Cabinet of Ministers and CCEM Special Committee. It also includes the facilitation role of National Agency for PPP (NAPPP).
The draft PPP Guidelines provide a clear guidance on selection and identification of PPP projects, PPP Project Feasibility Analysis and Preparation, Competitive Bidding and Procurement of PPPs, Unsolicited proposals for PPPs on application of the Swiss challenge Procedure, Preliminary Evaluation of PPP proposals, PPP commercial and Financial Closure and PPP Contract Management and Performance Monitoring.
PPP initiatives will benefit the SME sector immensely as the sector is focused mainly on rural development, empowerment of women, augmentation of rural savings, lowering of unemployment and crime rates, increase in literacy rates and most importantly on higher rural economic growth rates to ensure higher GDP rates for the country over the years.
Some of the priority sectors for PPP projects include Garbage and Waste Disposal, Safe Drinking Water, Rural Power Generation, Public Transport, Rural Industries and Leisure. The regular adverse impacts on agriculture and other crops could be easily managed with well implemented PPP projects.
So let us not waste any further time as a Government alone cannot develop a country. The Private Sector should join hands with the Government especially to ensure economic growth in all nine Provinces as our population keeps growing at all times. Planning methodology is needed for Human Resource Development at all social levels. Senior citizens of this country deserve priority in the selection and implementation of PPP projects as they are conversant in all forward marching progressive ideas.
Foreign Governments have been assisting the PPP promotion during the last few years and should continue to do so until Sri Lanka achieves success and tangible results in their PPP drive. A residential mission to oversee the PPP programmes will be most welcomed by all citizens of this country who wish to see higher standards of living, lower taxes, social integration and safe living in the country.
I wish to sum up by quoting that the PPP Is not a monster but a mode of solid Good Governance.
The writer is a PPP Analyst possessing a large data and fact base covering a large number of very essential PPP Projects and a Senior Finance Professional for nearly four decades and could be reached via csassociatescolombo@gmail.com
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