Complicated legislation

The government if Punjab has shot itself in the foot by promulgating the Public Private Partnership (PPP) Ordinance 2019 and repealing PPP Act 2014.The new PPP Ordinance 2019 is a compendium of flaws and contradictions reflecting the professional competence of the authors, especially the Planning and Development Board which is the custodian of provincial development.Already in a fragile economic situation with an extreme financial crunch, the Punjab government has literally closed the most promising avenue of development and along with it killed any hope of attracting private investment for essential infrastructure and improving service delivery.The new ordinance is infested with systemic complications and functional overlaps. An all-powerful Punjab PPP Authority has been set up, which will assume the role of P&D, Line Departments, PPP Cell, Finance Department and other stakeholders in the new PPP framework.The newly constituted PPP policy and monitoring board and the executive committee of the authority have numerous operational anomalies. The authority has been made responsible for conceiving, developing, financing, executing and post execution contract management of PPP projects with redundant expertise of all departments. Notwithstanding conflict of interest principles, the authority will not only develop PPP proposals but will also evaluate them.In addition to its primary mandate, the authority will develop financial markets, float bonds, sukooks, T-bills, securities, raise finance from pension funds and will also establish infrastructure finance companies thus assuming substantive role of finance department. It will also enhance the capacity of capital and financial markets as well as the engineering and construction industry. Be that as it may, this arrangement would simply not work for being too ambitious and impractical.The new PPP Policy and Monitoring Board comprising 19 members, which has replaced the PPP steering committee has been established as the apex forum for PPP projects; yet projects will also need approval of the government (cabinet) where financial commitments or liabilities go beyond one fiscal year. Interestingly this condition will almost always be invoked and literally all projects will need to go to the cabinet for approval.We know the process of cabinet approval; first the approval of the chief minister is required to include an agenda item for consideration of the cabinet, then it is placed before the relevant cabinet committee and then placed before the cabinet. The process easily takes 6-8 weeks if not more. In the new paradigm, a PPP project will need a nod from: 1) the concerned department; 2) the PPP authority; 3) the PPP cell; 4) the Risk Management Unit; 5) the Policy and Monitoring Board; and 6) the provincial cabinet.It is difficult to understand the circumstances which convinced the governor to take immediate action by promulgating the PPP Ordinance 2019 for amending an existing law without allowing full debate in the legislature, and due stakeholder consultation. Surely the government couldn’t expect any private party to enter into a PPP agreement with the new authority whose life expectancy hangs in the balance every three months unless the ordinance is endorsed by parliament.The world has moved to third-generation, people-first PPPs which are designed to not only maximize value for money for public investments but also value for the economy and value for the people by aligning them with sustainable development goals. We, on the other hand, are consumed in trying to find the most difficult and inappropriate solutions for simple problems.Faced with a lack of ‘departmental will’ in executing PPPs (owing to no rent-seeking opportunities), the government instead of developing incentive and accountability structures, chose to revamp the whole system in indecent haste with no serious thought or stakeholder consultation. Sadly, the poor people of Punjab will pay the cost of such economic extravagance through their nose.The writer is an international development consultant.

from The News International - Opinion https://ift.tt/2UxtWW3