Defining an enabling environment for the delivery of urban infrastructure in Jamaica via public private partnerships

A Partnership can be defined as `a means to an end _ a collaborative relationship toward mutually agreed objectives involving shared responsibility for outcomes, distinct accountabilities, and reciprocal obligations' Picciotto, 2004 in Jobin (2008). This thesis is an attempt to contribute to the full-throated debate regarding the justification for and value received from the Jamaican Government's decision to partner with the private sector for the delivery of urban infrastructure. The paper takes a look at the changing role of the State as expressed via public-private partnerships and explores the benefits and risks that emerge from its employment. The days of unilateral approaches to urban challenges are changing and as pronounced by Sedjari (2004) "a new reality is imposing itself". This debate extends however, beyond the shores of Jamaica, is decades old and its resolution might not be short in coming. In the meantime however, there are some very real challenges facing the nation for which no potential solutions should go unexplored. Any development strategy that will place us nearer our goals should be accommodated. It is the hope that this paper will shed some light on Jamaica's readiness for a model that is being pursued by both developed and developing States and despite the mixed reviews, will probably remain on the policy agenda for some ti me to come. It has been called a procurement option, a tool, a strategy, a concept but in all instances Jamaica's flirtations with public private partnerships are still in its embryonic stage. Weighted down as she is, with a debt to GDP ratio of 108.94%, leaves very little wiggle room for a learning curve that other countries can afford. Recent PPP experiments have created a great deal of concern for issues relating primarily to budget overruns, poor transparency and perceived and actual contravention of procurement guidelines. This study therefore aims at two main objectives. The first intends to define the macro and micro environment that will enable a healthy public private partnership process and bring all stakeholders into a durable and mutually beneficial arrangement for the successful delivery of infrastructure. The second aims at ascertaining why during the life cycle of the partnerships, the risks tend to revert to the Government of Jamaica (the tax payers). This leads to the heart of the research and the main question that is driving the debate _ What are the primary impediments to the successful delivery of urban infrastructure via public private partnerships in Jamaica? In order to gain critical understanding of what needs to be present in a country that would support and foster an undertaking of this type, a theoretical framework had to be identified. This required a fulsome review of literature and the various schools of thought on the subject, starting with setting the context of the investigation and questioning its relevance to urbanisation and its link to infrastructure. An introduction to the four major stakeholders and the roles they play is explored. Focus is then placed on the arguments presented for and against the use of public private partnerships and the varying experiences behind the success and failures in both developed and developing countries. The analysis takes place within two general frameworks. The first presents the macro environment which focuses on the legal, regulatory and institutional policy backdrop which determines our readiness to attract investors both domestic and foreign. Second is the micro environment, which directs our attention to the project and the process itself. This involves determining if PPP is the best option for service delivery, if so, the choosing of the best model, assessing economic and financial viability, partner selection, contract structuring, implementation, and monitoring. To pursue the second objective, an explanatory research methodology is used, which draws on two case studies, namely, the recently completed Phase One of the Soapberry Sewage Treatment in Kingston, Jamaica and the Harnaschpolder Sewage Treatment Plant in Hague, The Netherlands. Both projects are their respective country's first attempt at public private partnerships in the waste water management sector and were executed for the similar purpose of improving the sewage effluent quality being disposed of in their coastal waters. Data was collected via interviews with the various public and private sector agents, purposively selected based on their contribution to the policy/institutional setting (macro) and planning and execution of each project (micro). First of all this study has revealed that the "dark side" of PPPs is not a unique experienced for the uninitiated public servants in Jamaica. Taxpayers in several countries, both developed and developing, experienced and inexperienced have felt the bitter brunt of a PPP gone sour in the picking up of the tab. Second it has unearthed almost an equal amount of claims and counterclaims for this seemingly unequally yoked collaboration between the public and private sector. Third, after review of the various schools of thought, I have concluded that the core principles of the partnership should be value for money, transparency and accountability. Fourth, that many failed PPP projects are evidence of fl awed use of PPP and inappropriate procedures and not necessarily a reflection of PPP itself and the benefits it can bring. Notwithstanding the difficulties in concluding this debate, understanding the tradeoff s between public and private service delivery is critical for Jamaica's policy makers and their advisors. The stakes are high _ saving taxpayers billions, protecting citizen's faith in rule of law and reducing the debt already saddled on the backs of our children. The study has demonstrated that PPPs for large urban infrastructure projects are risky because of their long planning horizons, complexity, the significant financing requirements and the multi -actor decision making that carries with it many potential conflicts of interest. What then are Jamaica's primary impediments to project success that this research has identified? Despite domestic challenges and the need for improvements largely in the area of PPP policy the macro environment of the country is not opposed to or at variance with the needs of PPP investors. From the micro perspective, Soapberry was primarily the subject of poor governance in project planning and implementation. The project has revealed a failure to apply the key value for money principles such as competitive bidding and adequate feasibility analyses. In the final analysis, it is the view of the researcher that the absence of probity, transparency and its counterpart accountability will always lead to projects that fail to deliver be it conventional procurement or public private partnerships. Projects not open to public scrutiny and accountability will always present too great a temptation for the tensions between maximizing private/political interests and the public good. It is here's that Jamaica needs are most wanting and while strengthening PPP "know-how" we must pay great attention to what I consider the weakest link in the urban infrastructure procurement chain. Keywords: Jamaica, Infrastructure, public private partnerships, value for money, risk