Public-Private Infrastructure Advisory Facility

Introduction

In its ‘Program Charter’ the Public-Private Infrastructure Advisory Council (PPIAF) suggests its operations are “helping to eliminate poverty and achieve sustainable development by facilitating private involvement in infrastructure.”

PPIAF was established in 1999 by the governments of the United Kingdom and Japan in partnership with the World Bank. PPIAF is facilitated by the World Bank Group’s Infrastructure Action Program and managed by the World Bank’s Program Management Unit in Washington, DC. PPIAF is governed by a Program Council made up of donors who also own and direct the organisation. Some of these donors include, the World Bank, the International Financial Corporation (IFC), the European Commission, United Nations Development Programme, the Asian Development Bank, as well as a host of First World governmental agencies. The Program Council is advised by a Technical Advisory Panel made up of members with expertise on issues relating to private sector participation including, pricing, restructuring and regulation of public sectors, corporate finance, development of consumer rights institutions.

PPIAF Operations

Pertaining to their operational logistics PPIAF notes, "Support comes in the form of grants to help governments explore public-private partnerships in the financing, ownership, operation, rehabilitation, maintenance, or management of eligible infrastructure services. These include roads, ports, airports, railways, electricity, telecommunications, solid waste, water and sewerage, and gas transmission and distribution."

PPIAF doesn't fund privatisation projects, as their name suggests they are an 'advisory facility'. Instead, as their mission statement suggests, the PPIAF: offers 'technical assistance'; 'identifies, disseminates and shares best practices'; 'frame(s) infrastructure development strategies', 'create(s) outreach and communication programs', 'design(s) and implement(s) policy'. In other words, as the World Development Movement (WDM) rightly notes, PPIAF is in the business of 'consensus building'. WDM point out that PPIAF's 'consensus building' activities "promote the benefits of privatisation or particular privatisation options and/or attempt to persuade members of governments, parliaments, business, trade uinons, civil society and citizens that privatisation in in their interests."

Ideological Underpinnings

In its Program Charter, PPIAF uses many controversial yet quintessential free market ideological arguments to garner support for private sector participation. PPIAF stresses the importance of decentralization and an appropriate ‘enabling policy environment’ for public-private partnerships to thrive. PPIAF notes, "Experience over the last decade or so has confirmed the important contribution that the private sector can make toward the improvement of infrastructure services. Potential benefits of private involvement include access to management expertise, stronger incentives for efficient operation, improved financial performance, and enhanced responsiveness to consumers, Access to private financial resources can also free up public resource for other social purposes.”

Like many bilateral and multilateral development agencies and international financial institutions, it would seem that PPIAF uses the current global financial situation as rationale for increased private sector participation. In their 2008 Annual Report PPIAF’s Program Manager, Jyoti Shukla suggests,

"Governments will be forced to rethink economic regulation across the board. As existing projects are tested by the stress of changing market conditions, new importance will be placed on post-transaction support. And as new projects deal with tightened credit markets, there will be a need for innovative project models and financing arrangements. Financing new projects may mean greater engagement with non-traditional financiers: non-OECDF investors, private equity partners, or sovereign wealth funds. PPIAF can provide the resources to help governments cope with the changing landscape of infrastructure finance and evolving regulatory needs."

Water Projects

With respect to water and sanitation project the PPIAF note in their 2008 Annual Report that the number projects reached an all time high in 2007, with investment more than US$3.2 billion (an 18 percent increase from 2006). Specific to water provision, PPIAF sheepishly notes that there may be a mixed record when it comes to public-private partnerships; even so, they note, “empirical studies have demonstrated that private participation is associated with increases in coverage, efficiency, and labour productivity. Other studies have shown that improvements in services have led to improvements in human health, such as lower child mortality and a reduction in waterborne diseases. Private sector participation has also reduced labour costs and increased efficiencies in the delivery of water and power.”

These aforementioned comments are extremely misleading. Indeed it is the case that improvements in service relate to improvements in health, lower child mortality rates and a reduction in waterborne diseases; however, improvements in service do not necessarily take the form of public-private partnerships. There is an excess of reports that contradict PPIAF’s claims that the private sector increases efficiency. In fact, these reports link increased private involvement with negative health outcomes due to increased water rates and a decrease in service which is often symptomatic of a dismantled labour force – yet another characterisation of public-private sector partnerships as PPIAF so rightly notes in the aforementioned quote.

Government Agencies Involved in PPIAF’s Program Council

• Australia – Australian Agency for International Development (AusAID)
• Canada – Canada International Development Agency (CIDA)
• France – Agence Française de Développement (AFD)
• Germany – Federal Ministry for Economic Cooperation and Development
• Italy – Ministry of Foreign Affairs
• Japan – Ministry of Finance
• Netherlands – Ministry of Foreign Affairs
• Norway – Norwegian Agency for Development Cooperation
• Switzerland – State Secretariat for Foreign Economic Affairs
• United Kingdom – Department for International Development (DFID)
• United States – U.S. Agency for International Development (USAID)

Technical Advisory Panel

• Anton Eberhard – Director, Management Program in Infrastructure Reform and Regulation, University of Cape Town, South Africa
• Diane Rudo - President, Rudo International Advisors
• Eduardo M. Engel - Professor of Economics, Yale University
• Nasser Munjee – Chairman, Development Credit Bank, India
• Robin Simpson - Independent Consultant
• Valentine Chitalu – Former Head, Zambia Privatization Agency