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Mr. Alan LO Consultant, Efficiency Unit (on behalf of Mr. Wilson Siu, RVD)

PPP Duty Visit to Canada Experience Sharing Seminar 31 July 2006 Experience sharing with government officials and private sector practitioners. Mr. Alan LO Consultant, Efficiency Unit (on behalf of Mr. Wilson Siu, RVD). E xperience sharing with. Officials of Partnerships British Columbia.

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Mr. Alan LO Consultant, Efficiency Unit (on behalf of Mr. Wilson Siu, RVD)

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  1. PPP Duty Visit to CanadaExperience Sharing Seminar31 July 2006Experience sharing with government officials and private sector practitioners Mr. Alan LO Consultant, Efficiency Unit (on behalf of Mr. Wilson Siu, RVD)

  2. Experience sharing with.. Officials of Partnerships British Columbia Officials of federal government PPP private practitioners Private consultants

  3. Why adopt PPPs in Canada? • Canada’s national objectives – prosperity and quality of life • These objectives require quality infrastructure • Infrastructure deficit / Government investment since 1994 – escalating debt loads and constraints on public sector revenue • Government facing increasing demands for provision of infrastructure in a cost-effective manner • Given to the financial constraints, PPP is one of the best solution

  4. Why adopt PPPs in Canada? • As procurer rather than provider • Government can focus more effectively on its mandate to govern and manage the provision of service and facilities • Wide range of business opportunities to be opened up for private sectors • Timely delivery • Appropriate sharing of risks between public and private sectors • Private sector have greater incentive to innovate to reduce cost • Attract international investment

  5. Definition of PPP • A legal agreement between an order of government and private sector entities through a concession agreement • for the purpose of providing public infrastructure, community facilities, and related services • The relationship builds on the expertise of each partner and involves the appropriate allocation of resources, risks, and rewards to best meet clearly defined needs

  6. Typical PPP arrangement in Canada PUBLIC SECTOR PRIVATE SECTOR Revenue Stream (e.g. User fees, fares, tolls, etc) FUNDING FINANCING Federal Lender Public Asset Owner (Proponent) • Private • Consortia • Design • Build • Operate • Maintenance • Co-finance Province / Territory Builder / Designer Municipality / Regional Entity Operator / Maintainer Other Public Entity Concession agreement establishing legal relationship between asset owner and private consortia

  7. PPP – Current conditions in Canada Municipal Provincial Federal

  8. PPP – Current conditions in Canada Municipal Provincial Federal Federal • Develop policy • Departments owning assets and contribute to infrastructure project • Canada Strategic Infrastructure Fund

  9. PPP – Current conditions in Canada Municipal Provincial Federal • Established in August 2002 • Coordinates federal efforts on cities and communities and supports infrastructure investments across the country through partnerships that meet local community needs

  10. PPP – Current conditions in Canada Municipal Provincial Federal Provincial • Emphasis on PPP as a preferred choice for delivering public infrastructure • Owner of assets

  11. PPP – Current conditions in Canada Municipal Provincial Federal • Ontario • hospital, water and education will remain in public but does not exclude private sector participation • Alberta • 25% of new infrastructure will go PPP

  12. PPP – Current conditions in Canada Municipal Provincial Federal • British Columbia • PPPs are expected to meet 10-20% of the province’s capital infrastructure requirements

  13. PPP – Current conditions in Canada Municipal Provincial Federal Municipal • Focused used of PPP for capital construction • Owner of assets • Could not involve in projects longer than 5 years without public endorsement

  14. Potential problems for PPPs in Canada • Opposed by Trade Unions • Misperceptions • Fairness, probity and transparency • Increase in service fee and changes in service standards • Political commitment (want to be sure PPP provides appropriate benefits) • PPP market not mature yet (each province has different views on implementing PPPs) • Government not authorized to engage in a long term agreement, budget is on annual basis

  15. What are private sector partners looking for? • Strong political leadership • Firm political commitment • Supportive regulatory and legislative framework • Public support and awareness of PPPs • Informed decision making by bureaucracy • Incentives for authorities to comply with delivery process

  16. Expertise within government • Dedicated organizations have been set up to facilitate the consideration and implementation of PPPs : • federal level (e.g. Infrastructure Canada) • provincial level (e.g. Partnerships British Columbia)

  17. Expertise within government • The role of these institutions are: • to strength knowledge base to ensure policies and decisions can be evidence-based • to establish a recognized centre of expertise on infrastructure, cities and communities research • to assist other bureaux / departments in negotiating, concluding and managing PPP contracts • to provide project and contract management services to other ministries / departments for complex infrastructure projects • to conduct independent public sector comparator studies

  18. The End

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