Public-private partnership must for infrastructure development

LAHORE: Although there is more activity on state funded infrastructure projects, further acceleration is needed through public-private partnerships to grab the potential opportunities coming Pakistan’s way.   

Infrastructure requires lot of capital and it is not available with governments the world over. In case of Pakistan, the entire infrastructure funding is arranged through borrowing. The availability of finances does not guarantee the success of a project. The absence of political consensus effectively kills the delivery of infrastructure.

There is a need to create across the board political ownership of all infrastructure projects. The China-Pakistan Economic Corridor (CPEC) project is moving at a fast pace because the entire political leadership is on board and any hitch that occurs is promptly debated and removed.

Innovation, as in any business model, is essential in planning and executing infrastructure projects. However, governments are generally wary of taking risks and for them innovation is an unknown territory; they thwart innovation. This is the reason the private sector is needed as a partner in infrastructure projects, so as a stakeholder it could convince the government and the general public about the infrastructure risks and benefits.

The private sector should develop projects that are in line with the strategy of the state, and then seek funds from government development finance institutions. Public sector delivery institutions should be strengthened to reduce political risk. The private sector should also look beyond traditional funding sources to get better risk-adjusted returns. For the government it is advisable to pursue long-term leases and operating agreements. Straight privatisation is not a politically acceptable option.

Pakistan lags far behind its regional competitors in economic growth. Sustained growth is possible only if the productivity increases significantly; and productivity cannot increase to the desired level unless sound and stable infrastructure is in place.

Punjab model of project execution should be adopted where contracts are awarded on 24/7 operation basis wherever possible. It is true the cost slightly escalates but practically the cost is lower as the projects are completed on time.

Another lesson to be learnt from Punjab is completing the paper work and land acquisitions before launching the project. The court stay orders inordinately delay the execution after all the construction equipment is mobilised. The recent delays in Orange Train project in Lahore is one such example.

The contractors should work closely with the government, keeping them in loop about the progress and benefits. Private sector should encourage experimentation during the execution of the project that could improve the engineering design and reduce procurement time through an innovative strategy. All stakeholders must realise that value will come when the efficiency and productivity of the project increases.

The stakeholders and the potential partners should be engaged right from the start. This will create a vision among them about the potential benefits. Most development projects that are closer to municipalities have more public acceptance as they are close to where most of the people live.

Cities are destined to move at a faster pace than rest of the regions. However, the development in the cities should be carried out holistically. Growing cities need more infrastructure, water, transportation, energy, water, and social environment. Planners should not ignore any of these services because liveability in cities would be determined on quality of civic services available in them.

Gwadar for instance needs a very large water reservoir if it is to be replica of our metropolitan cities. 

The physical infrastructure being built around this port city would remain under utilised if its future water, power and energy needs are not addressed through proper planning. This calls for independently assessed project pipelines that should ultimately drive more confidence in the market.