CDIA tools and learning material

PPP Guide for Municipalities

The Cities Development Initiative for Asia (CDIA) has prepared a PPP Guide for Municipalities offering an innovative view to help local governments understand how to approach a potential PPP project and to review some issues that may come up in the process.

It is one of the few guides that are specifically targeted at city officials, such as mayors and council members, as well as senior technical staff in different sectors (e.g. water, energy, roads, ports) that are just beginning to look at PPP options. It is not a book of comprehensive answers but a basic guide about how to view PPPs and where to find more information so that local authorities can come to find their own answers.

Some readers might view PPPs as an entirely new concept. For this group, we hope the guide can help you understand the many potential advantages of PPPs, along with some potential pitfalls. For other readers who might be more familiar with PPPs, we hope the guide will shed new light on certain aspects of PPPs or give you a new perspective about them.

In the guidebook, we highlight some key points as follows:

• PPP is far from a new concept, as private sector involvement in infrastructure goes back to the Middle Ages. However, while PPP has existed for centuries, many Asian cities are just now discovering their potential benefits.
• While engaging with the private sector in infrastructure provision might seem daunting and complex at first glance, and might also be perceived by the public to have undertones of political involvement and questionable motives, the overall concept of PPP is not a difficult one and can offer many public benefits.
• For local governments, a well structured partnership with a qualified private sector partner can provide much-needed finance, limit public risks, and provide cities with far more certainty, while helping to ensure that quality urban services can be provided quickly and efficiently.
• PPP can work if certain pre-conditions are met, including clear commitment and vision. The proof is in the implementation. Many past problems with PPPs have been due to faulty design and implementation, not necessarily with the concession model and conceptual framework.
• In pursuing a PPP, local authorities must often adapt to a different mindset and role compared to what they assume under a traditional publicly-financed project. Perhaps most importantly, projects must be structured in a way that makes them attractive in a free and competitive market. They must be “bankable,” meaning that they must look attractive to bankers and other providers of financing.
• There is more than one way to develop and implement a PPP. Each project is unique and there are endless possibilities. There is a lot of room for creativity, so public authorities should not feel boxed-in by narrowly-defined contract types.
• One of the most important considerations for local authorities is drafting a good contract with fair provisions for risk sharing and risk mitigation. Understanding the risks will protect both private and public parties to the agreements.

You may download a copy of the Guide by clicking here, or through our Document section

PFS guideline

This guide has been developed to clarify the term “Prefeasibility Study (PFS)” and aims to further clarify what the typical contents of a PFS could contain. This document was formulated primarily for our CDIA stakeholders (local governments of medium-sized cities in Asia), and not in the least for consultants who are hired to undertake and implement CDIA supported assignments.

The guide can be downloaded free of charge [by clicking here] or from the documents section of our website.