Public-Private Partnerships in Mongolia: Now and Futures Prospects

PUBLIC-PRIVATE PARTNERSHIPS IN MONGOLIA Now and Futures Prospects

E.Enerelt, ADB

June 6, 2014

WHAT IS PPP? ADB’s PPP Operational Plan (mid-2012) defines publicprivate partnership as:  “… a contractual arrangement between public (national, state, provincial, or local) and private entities through which the skills, assets, and/or financial resources of each of the public and private sectors are allocated in a complementary manner, thereby sharing the risks and rewards, to seek to provide optimal service delivery and good value to citizens.”

Public procurement

NOT

Privatization 2

WHY CHOOSE PPP? Risk transfer Whole of life-costing/ maintenance Innovation Maximization of asset utilization

Disadvantages: -Off-balance financing -Cost of capital is expensive -Can be complex and difficult to implement

Mobilization of additional resources

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HOW TO IDENTIFY A PPP PROJECT?

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PPP MODALITIES

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SHARE OF PUBLIC INVESTMENT DELIVERED THROUGH PPPS IN 2011 Country

Share (percent) Australia >10 - 15 Canada >1 - 3 Czech Republic >0 - 1 Finland >10 - 15 Germany >3 - 5 Italy >1 - 3 Korea >5 - 10 Luxembourg >5 - 10 Mexico >15 New Zealand >1 - 3 Norway >3 - 5 South Africa >3 - 5 Spain >3 - 5 United Kingdom >15 Source: Burger and Hawkesworth (2013). OECD.

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ADB SUPPORT FOR PPPS IN MONGOLIA 

ADB’s country partnership strategy for Mongolia, 2012–2016 - Inclusive and sustainable growth; - Support for PPPs will bring in private financing for the infrastructure needed to improve access to essential public services.

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Current Status - ADB has supported Mongolia’s PPP work since 2009: 1. The first technical assistance (TA) helped draft the Concessions Law and establish a PPP Unit as a coordinating body for PPPs; 2. A follow-on TA strengthened PPP regulations, helped build the capacity of the PPP Unit and develop a pipeline of PPP projects and more; 3. The third TA, “Developing a Conducive Environment for PPPs”, was approved in December 2012.

- In June 2011, ADB was appointed as the mandated adviser to the PPP for

CHP5, the mandate was renewed in December 2013 (A $1.2 million TA that will fund additional advisers); - Other IFIs and countries such as the World Bank Group are in discussion with the government.

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PPP LEGAL FRAMEWORK •

Parliamentary Ad hoc committee on PPPs - Nov 2008

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State Policy on PPP - Oct 15, 2009 • to promote private sector participation in all sectors of economy

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The Law on Concession - Jan 28, 2010 • Defines the processes of PPP implementation.

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In 2010, the Government has approved several regulations regarding the detailed bidding process and evaluation of bid proposals

III. LIST OF CONCESSION PROJECTS 

In 2010, the Government approved the list of 121 concession projects.

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The Cabinet made amendments to the list of Concession projects (reduced to 51 projects) 2013.09.06 №317

BY SECTORS –7  Road and transportation – 17  Pipeline transport – 2  Airport – 2  Energy -12  Environment – 4  Education - 2  Health – 1  Culture and sport - 4  Infrastructure

BY TYPES OF PPP BOT – 8  BOO – 12  BT – 19  OTHER - 12 

Contact:

Enerelt Enkhbold [email protected]