Presented at the inaugural conference of the MENA-OECD Investment Security in the Mediterranean Working Group, 9 December 2013, by the Confederation of International Contractors' Associations.

1. MENA – OECD INVESTMENT SECURITY IN THE MEDITERRANEAN
(ISMED) WORKING GROUP
INAUGURAL CONFERENCE
Fostering Infrastructure Investment in the MENA Region
Managing Risk in Uncertain Times
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
1

2. Managing risk in Infrastructure project in the MENA region
 The PPP: contractual mode well adapted to large, complex and
innovative infrastructures
 Risk management: is more a matter of good understanding of
the PPP’s basic concepts than of peculiarities of the MENA zone
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
2

3.  Introduction: a fast overview of the PPP in the other zones (1)

Situation in the UK:



Situation in LDCs:


Some success, mostly failures
Situation in North America:



Development and brake: UK Treasury note leading to PF 2.
Main Issues and changes: transaction and financial costs, lack of
transparency, speculative profits, inflexible standard
contracts, reevaluation of risk allocation, etc.
Development in Canada (essentially PFI/PPP)
Very little in the USA but seriously considered
Situation in France:


17/12/2013
Numerous concession/PPP in operation: not much controversy.
Development of PFI/CP/PPP: some controversy: stadium, hospital,
public building complex.
Managing Risk in Infrastructure projects in
the MENA Region
3

4.  Introduction: PPPs are controversial. Why? (2)
 The PPP delivery method is made of sets of complex elements, hardly never
aggregated in a single contractual arrangement: very little practice in most
countries
 Concessions and other PPPs remain to be defined in most jurisdictions: no
satisfactory definition at international level.
 Conclusion: It is necessary to clarify at the outset the meaning of PPP (too
much confusion leading to inappropriate conclusions and hazardous
decisions).
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
4

5. 
A growing consensus between international practitioners

Two families

PFI or CP/PPP: Recovery from public funds over the years and no
transfer of the operation of public service.

Concession/PPP: Recovery entirely or mostly from end users of the
service, structured transfer of a full operation of a public service
(but not privatization).

The rationale for the definition

Some common features between the two families but:


17/12/2013
Substantial differences on the risk and reward matrix
Substantial differences in bid preparation, procurement,
contract conditions, public service obligations, regulation,
etc.
Managing Risk in Infrastructure projects in
the MENA Region
5

6.  The need of PPP in public infrastructure service sector: the PPP gap
and its consequences

Evaluation of the current situation of PPP projects in emerging and LDCs
 Projects in distress:
 More than half of them after only 2 years of operation, for
contracts which should have lasted for several decades.

Projects in the drawing board but never implemented:
 75% of the projects announced and more or less prepared from an
engineering side are aborted.

Projects which could have been developed but never considered: any
statistic?
 Likely more than 50% of all other projects announced. How to
approach this critical matter for reaching the development
objectives?
Focus in MENA region: PPP is no more an option, but a top priority
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
6

7.  Developing pipelines of resilient PPPs: is an illusion? (1)

Lessons learnt
 Projects insufficiently prepared by the public bodies:
 absence of correct identification of needs,
 too often vague definition of the objectives and the
functionalities which the project will have to fulfill,
 insufficient measure of the likely impact of the project on the
economy of the zone,
 return on the public finances over the project life cycle,
 budgetary sustainability,
 research for elements demonstrating relevance of the choice of
this form of Govment Procurement compared with the other
traditional forms of Govment Procurement,
 quality of the technical studies, the traffic /
attendance, design, etc.
Focus in MENA region: PPP is no more an option, but a top priority
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
7

8.  Developing pipelines of resilient PPPs: is an illusion? (2)
 Lessons learnt
 Pricing and willingness / capacity to pay from users for the projects
undertaken through the concession style contract.
 The misunderstanding or the deficient application of “best
practices/Golden rules/ policies” adapted to this nature of project, a
contract law and contractual clauses inappropriate.
 Institutional and legal architecture to be improved.
Focus in MENA region: PPP is no more an option, but a top priority,
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
8

9.  Developing pipelines of resilient PPPs: is an illusion? (3)

In spite of apparent financial constraints and prima facie perception
of risks, the future of PPP in the core public service infrastructure
sector is promising.
 The list of core issues preventing large scale PPP development goes
well beyond a traditional list of issues and related solutions and
best practices proposed.
 Unless main core issues are addressed in a holistic manner, there
are insufficient chances to have better statistics on PPP in many
areas.
 For many core issues, the formulation of related best practices
remains to a large extent to be designed in an authoritative manner.
 PPIAF reference book on PPP of 2012: “the state of knowledge [on
PPP] is not well enough developed to prescribe best practices”.
Focus in MENA region: PPP is no more an option, but a top priority
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
9

10.  Prioritization needed in order to make a “leap frog” for the success
of pipeline of PPP projects (1):
 Not to spend too much further on capacity building or assistance
programs since key messages to be delivered in an integrated manner
have not yet reached out the international community, or the
consultancy world.
 TOP PRIORITY IS TO AGGREGATE USEFULLY AND, AS EFFICIENTLY AS
POSSIBLE, THE LESSONS LEARNT THROUGH THE WORLD AND TO
FORMULATE BEST PRACTICES OFTEN OF UNIVERSAL USE.
 Then put those best practices, including related guidance note and various
documents and templates, at the disposal of the international consultants
and international community for contributing to the drafting regional or
State laws, or securitizing existing projects or projects in the pipeline.
Focus in MENA region: PPP is no more an option, but a top priority
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
10

11.  Prioritization needed in order to make a “leap frog” for the success
of pipeline of PPP projects (2):

In a nutshell, the core issues which prevent pipelines of PPP
development in LDCs can be summarized as follows:
 project planning and prioritization
 project preparation
 content of bidding documents/procurement
 contract conditions
 underlying legal principles
 central level institutions
 local level institutions
 use of outside really qualified experts and consultants

Concession/PPP Self-Evaluation Index
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
11

12. Conclusion I
A widely shared report
A working program proposal by a team of selected PPP’s experts
A carefully designed methodological approach aggregating lessons learnt and
tested
 The content of the work program (1)
 Gathering representative and useful raw materials adapted to MENA
region





17/12/2013
Identifying the materials
Searching or gathering the materials
Sorting and reviewing the materials
Analyzing the materials
Blueprint of concept notes or position memorandums
Managing Risk in Infrastructure projects in
the MENA Region
12

13. Conclusion II
A widely shared report
A working program proposal by a team of selected PPP’s experts
A carefully designed methodological approach aggregating lessons learnt and
tested
 The content of the work program (2)
 Drafting concept-notes and memorandums
 For the purpose of packaging and disseminating the
information
 For the purpose of training
 For the purpose of e-learning
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
13

14. Conclusion III
A widely shared report
A working program proposal by a team of selected PPP’s experts
A carefully designed methodological approach aggregating lessons
learnt and tested
 To set up a high level expert group addressing the issues
 The need of a neutral, high level and truly experienced
international/regional expert team.
 The need of an expert team able to work efficiently in a coordinated
manner.
 The very limited number of international/regional experts able to qualify
for working in such a team.
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
14

15. Conclusion IV
A widely shared report
A working program proposal by a team of selected PPP’s experts
A carefully designed methodological approach aggregating lessons learnt and
tested
 How to achieve these high standard goals?
 Respect strict obligation to become a full member:
 A prescriptive charter offering the best guarantees of:
- Professionalism,
- Neutrality,
- Efficiency,
- Cost limitation.
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
15

16. Thank you for attention
Joint presentation and proposals by:
Institute of International French Legal Experts (IFEJI)
Marc Frilet : Vice-President
&
Confederation of International Contractors’ Association (CICA)
Roger Fiszelson : Director General
17/12/2013
Managing Risk in Infrastructure projects in
the MENA Region
16