Nine thoughts on differences between procurement and PPPs (No 1)

Public Procurement (PP) in Nigeria is often clearly distinguishable into goods, works and services. In many instances goods are procured separately from works and or services.  The exception to this general rule will include turnkey procurement projects, where a combination of goods, works and services are jointly procured. On the other hand Public Private Partnerships (PPPs) typically involve procurement of a combination of goods, works and services needed for the operation of a public infrastructure and delivery of a public service by the private partner. Would  you agree or differ?

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6 thoughts on “Nine thoughts on differences between procurement and PPPs (No 1)

  1. I agree but my main concern with PPP is that we want a private partner to drive the public sector for a certain period maybe 5 or 10 years. I think that Nigeria should look beyond PPP. This may seem like a rhetorical question, but should Nigerians be content with Public Private Partnership (PPP). What if we have 100% private sector driven investments in Nigeria. See what happened to the telecommunication sector with the entrance of MTN, AIRTEL, GLO, ETISALAT and others. Nigerians now find it easy to communicate with one another. This has led to good competition- you can port from one network provider to the other, you only pay whoever provides the best service.
    But look at the health Sector, Yes PPP has resulted in new or upgraded hospitals. But even at that, these hospitals are definitely not that well equipped if for instance you have Cancer or are in kidney failure. The easy solution is to travel abroad (medical tourism) if you can afford it. If not, you know the answer. What stops a large multinational corporation or an individual with a huge capital base from purchasing most sought after equipment or providing accessible health care? By this I am not referring to sterilizing units, long-lasting mosquito net or X ray machines. In the developed world a lot of economic and industrial development is driven 100 % by the private sector. For instance hospitals are built but most importantly equipped by private contributors without necessarily considering such a service as that of the public sector. Sports has become a multi-million dollar business, investments in farming is passed from generation to generation. This is all private sector investment and not PPP. So why PPP?

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    1. It is important to distinguish between sectors completely open to private investments, and others who as a result of their strategic nature are traditionally managed by government. Whilst it is certainly easier for any qualified health services company that meets set criteria to open and operate a hospital, and many of such hospitals are being opened by private interests. It might not be feasible for different companies to establish and operate public water purification and distribution outfits, have each of their own distribution pipelines and supply different neighborhoods. To be able to achieve break even and or make profit which is the primary motive of businesses, some exclusivity is required by such a private business,exclusivity which belongs naturally to government. This does not take away from the fact that a developed housing estate can have its own internal water supply independent of the public water supply system. So encouraging direct business engagements, ownership and operation of businesses providing infrastructure related services is good, but outright privatization of public infrastructure may not in all cases be feasible, so there is always a place for PPPs, particularly at this time when government revenues and therefore ability to finance infrastructure development is dwindling.

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  2. PPP and Privatization involve private parties however in varied degrees. Privatizations are mostly used to achieve quick service delivery whereas PPP target great quality output and effectiveness. In PPP, parties share risks unlike in Privatization where the private party bears all the risks.

    Just like in Privatization, Nigeria has also had successful PPP projects eg. the Domestic Terminal of Murtala Muhammed Ariport, Lagos; Lekki Toll Road Concession Project. It would interest us to know that there are currently over 70 ongoing PPP projects in Nigeria at different phases.

    Both concepts have their strengths however, our current political and economic situation call more for PPP driven projects.

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  3. I do understand the benefits of PPP, however I still think we are moving in baby steps towards industrialization. So what role has the advantages of privatization, such as relief on government funding through its allocations from the federation accounts to cater for public enterprises and managerial expertise, hiring the best brains for the job, got to play in Nigeria’s current political and economic situation.

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  4. I entirely agree on the distinction made between PPPs and Procurement.The former involves a combination of goods,works and services,while leading to more private sector participation in the management and delivery of public infrastructure and services with government articulating and monitoring the framework and policies.Procurement on the other hand entails the acquisition of specific works ,goods or services,save for turnkey projects by government (a procuring entity),through procedures prescribed by the Law in force through the most transparent means,mostly open competitive procedures,with few exceptions.However,are there no circumstances where to deliver and manage a particular project could involve a combination of public procurement and PPP procedures?.,if there are possibilities of such occurrences,may we identify them or are the differentiating factors between procurement and PPPs water tight?,may we know the meeting points.
    Secondly,unlike procurement,in PPPs,the concessionaires make their returns and profits directly from the citizens.Most times,this has led to increased costs in accessing basic amenities,services and infrastructure by ordinary citizens.Is there no better means to be adopted by Government in the concession of these infrastructure and services to increase citizens access in the overall public interest.

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    1. Indeed implementation of every PPP in Nigeria involves procurement procedures. Traditionally most PPP implementation processes involve procurement of transaction adviser to develop an Outline and later a final business case. There is no doubt that PPPs do sometimes result in increased costs for access to services,but these increased costs can and should result in improved services. There are also occasions where PPPs have by increasing efficiency delivered lower prizes. Yes there are occasions and transaction structures and methods that can deliver better services, and at costs that provide value for every naira. The reason PPPs are expected to commence with detailed appraisal and feasibility studies is exactly to identify those cases that provide this kind of value offering, and to identify those that will not and provide the basis for the leadership to decide in favour of only those PPP projects where evidence exists that such expected value offering is not only possible but probable.It is not about one method or the other, it often is also about unique technical and other features of a project,related economic indicators,existing demand for services etc that should not be pre-determined without detailed economic, legal, technical and social evaluations of viability.

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