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Group A – Mix of English speaking participants PPP WHAT is it? WHEN do we need it? WHY do we need it? CACG A private company with a public mandate Operates on a long term concession to manage irrigation professionally Accounting principles, flexibility to operate

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Group A – Mix of English speaking participants

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Group A – Mix of English speaking participants

PPP

WHAT is it?

WHEN do we need it?

WHY do we need it?

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


CACG

  • A private company with a public mandate

  • Operates on a long term concession to manage irrigation professionally

  • Accounting principles, flexibility to operate

  • Accountable to a board

  • Government oversight and regulation through the terms of the contract

  • Make decisions in consultation with the board

  • Profit? –not to make losses…

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


Murray Irrigation Company

  • Farmer owned private company

  • Working on professional lines

  • Accountable to a board elected by farmers

  • Government oversight

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


The Main Principles:

  • BOT – BTO (anglo-sacson law vs. latin law).

  • Assets remain a public property.

    • The one who manages the assets has an accounting arrangements.

    • The concessionaire should show the value of the assets on their books.

    • The day the contract ends, the assets revert back to the government.

  • In a public assets, the value is not depreciated – as investments are made constantly plouging in profits and subsidies.

  • Essence of business of a private enterprise with a social mission

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


The need to look beyond!

  • Need for focusing on the irrigation sector

  • Irrigation consumes 80% of the water – need for improving efficiency to make water available for increasing demands

  • Business as usual will not work!

  • Diverse situations among and within countries (India, Pakistan, Mexico)

  • Need to explore new options

    • Professionalizing agencies, entering into new partnerships, empowering user organizations, new contractual arrangements

    • Building capacities to explore options

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


On Public-Private Partnerships

  • The term “Private” highly emotive

  • PPP is -- complex issue --- needs insights on how to go about it

  • Site, country specific solutions, and there are no blueprints

  • Need for focusing attention on the irrigation sector

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


Where do we go…

  • Public Objective of Equity managed professionally.

  • How to do the change needs to be examined in specific situations

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


What is INPIM’s role

Create awareness and build capacities.

Disseminate information

Best practices

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


We will put up all the presentations and materials on the INPIM Website

http://www.inpim.org

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


What is PPP?

CACG – Private company performing public mandate, Government is the major shareholder

Separate different functions – cost them, account for them

Staff – not civil servants, hire and fire policy in place

Freedom to choose salaries and make decisions

Culture – not profit driven, but avoid losses

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • Who is investing in the company? Government has a vested interest and right?

  • Is this is an equivalent of a parastatal in other countries?

  • The objective of the CACG to have a significant role in rural development

  • Even if the shadow of the state is always present, the actual decision maker is the board of directors

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • Process of decentralization – transfer of assets – development of the water sector through professional agencies, main objective of the professionals is to give salaries??

  • Water is a public good and a private company should provide it in a professional and efficient manner

  • BOT – BTO (anglo-sacson law vs. latin law). Assets remain a public property. The one who manages the assets has an accounting arrangements. The concessionaire should show the value of the assets on their books. The day the contract ends, the assets revert back to the government. In a public assets, the value is not depreciated – as investments are maid constantly from subsidies. Essence of business of a private enterprise with a social mission

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • Operational surplus – income above and over salaries, energy cost, etc. – is invested back into the renewal and maintenance, as opposed to traditional private company, where the profit is paid to shareholders in the form of dividend

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • When farmers participate is it PPP?

  • Does it have to be a company to be called a PPP?

  • What is the role of the Government in PPP?

  • What is the motivation for the company to provide services?

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • PIM between state and farmer for better equity of water distribution. Privatization has been dominating the discussion – not the intent of INPIM. Need to keep the concept simple. The case might not be applicable for most of the countries present here.

  • Professionals built the system – engineer oriented. Later infusion of other disciplines not worked successfully. Farmers left out paved the way for PIM. Farmers are being made central to governance issues. Where is the professionalization required? No need

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • PIM

  • Public (equity)----------PPP (Professionalism with 3rd Party)-------- private (efficiency)

  • Goods and services

  • Assets

  • Who will operate

  • Who will finance

    Shifts take a long time

    Externalities – public financing constraints

    Seeking private financing sources

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


Conclusion

  • Publicly owned, operated according to the business law

  • Many hybrids

  • Private companies almost always are brought for efficiency gains

  • To reduce political interference – ring-fencing through a mixed representation of public and private in the board of directors

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • Public objective of equity and development objectives

  • Private objective of cost-effectiveness

  • Are the farmers actually interested in the management??? In reality they are more interested in getting/having the service whenever they need it (on time and quantities required), regardless who provides is – public or private sectors?

  • Farmer empowerment

  • Outsourcing – in

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


  • Governance – direct and indirect

  • Operation and maintenance

Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005


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