The representatives of the PPP Agency have participated in the 6th session of the Working Party on Public-Private Partnerships of the UNECE Committee on Innovation, Competitiveness and PPPs
On the 1st and 2nd of December, the 6th session of the Working Party on Public-Private Partnerships of the UNECE Committee on Innovation, Competitiveness and PPPs took place in Palais des Nations in Geneva (Switzerland) and online.
The Working Party on Public-Private Partnerships is an intergovernmental body established in 2017 and it convenes over 2000 experts coming from the public and private sector, civil society and international organizations.
In the current global context of economic and social instability, where the systemic impacts of the COVID-19 pandemic remain overwhelmingly present and while the war in Ukraine is still raging, the implementation of the United Nations 2030 Agenda remains elusive. More than ever, it is consequently of utmost importance to accelerate the achievement of the SDGs in the ECE region.
Infrastructure projects that are compliant with the ECE ‘PPPs for the SDGs’ approach can play an important role towards promoting sustainability, circularity and economic recovery and reconstruction within the ECE region and globally. To this end, the policy debate at the 6th session of the Working Party was designed to contribute to the cross-cutting theme of the 69th Commission session of the ECE on the circular economy transition, while also contributing to the cross-cutting theme of the high-level segment of the 70th Commission session of the ECE which will take place in April 2023 devoted to “digital and green transformations for sustainable development in the ECE region”.
Considering this, the following issues were discussed:
- To which extent can PPPs be used for infrastructure reconstruction and economic recovery?
- How can the increasing digital transformation of PPPs improve the delivery of PPP projects for sustainable development?
Discussions on these issues helped chart a path for the Working Party towards the development and use of new and existing tools, guidelines standards and capacity building activities that promote high-quality projects that contribute to accelerate the SDG implementation in the ECE region through PPPs.
On December 1, the 6th session of the Working Party on Public-Private Partnerships took place in the format of a policy discussion in the form of a high-level debate and also two-panel discussions.
The high-level policy debate was devoted to the topic “Accelerating the achievement of the Sustainable Development Goals in the ECE region through Public-Private Partnerships”.
The participants of the debate testified that at the current pace of progress, the ECE region will only achieve 25 per cent of the SDG targets by 2030, therefore urgent action is needed to accelerate sustainable development. Furthermore, the COVID-19 pandemic and the war in Ukraine have global and systemic impacts and the outlook for the world economy is rapidly worsening.
During the debate, the participants discussed how the ECE PPP approach for the SDGs can boost SDG investment and accelerate the development of sustainable infrastructure – green, resilient, inclusive, circular, fiscally sustainable and of high quality – for economic recovery and reconstruction in the ECE region.
Key speakers shared the experience of implementing sustainable PPP infrastructure projects in Armenia, Uzbekistan and Tajikistan.
The panelists emphasized the importance of quality project preparation. In particular, Mr. Richard Threlfall, Global Head of KPMG IMPACT, emphasized the urgency of the issue of quality and, at the same time, accelerated the preparation of PPP projects. This is possible: firstly, for this, it is necessary to use already available experience (including from other countries), developed tools and practices (including UNECE), and, secondly, it is essential to develop a programmatic approach, i.e., prepare not individual projects, but complex programs that allow multiplying projects in a specific area (for example, preparing for the implementation of a program for the development of social infrastructure, which includes the reconstruction of 10-20 schools or other social objects, etc.).
Ms. Mehita Fanny, Regional Manager of the IFC’s PPP Division, spoke about sustainable financing and the possibilities of its further mainstreaming into the ECE PPP work, which in general can contribute to addressing the ever-increasing infrastructure investment gap. At the same time, International Finance Corporation’s offering for sustainability-linked financing goes beyond just the financial aspects. The IFC Public-Private Partnerships team assists governments in structuring PPPs, and IFC’s ESG performance standards and guidelines ensure that structured PPPs are bankable and deliver Value for People as well as Value for the Planet.
The first panel discussion “Sustainable economic recovery and reconstruction: How can PPPs for the SDGs accelerate the delivery of sustainable infrastructure projects?” explored opportunities and challenges in streamlining and accelerating the delivery of PPPs for the SDGs in the reconstruction phase in post-pandemic, post-disaster and post-war contexts. The panelists discussed solutions to seek a fast-track PPP process while implementing the ECE Guiding Principles on PPPs for the SDGs and meeting the PPP for the SDGs outcomes.
Mr. Sam Tabuchi from Toyo University (Japan) emphasized the importance of learning from past lessons learned from the speedy and successful implementation of PPP projects for post-disaster infrastructure reconstruction (particularly the East Japan Disaster in 2011 [Earthquake/Tsunami and Nuclear Accident]).
In particular, Mr. Sam Tabuchi singled out the following lessons learned:
- the importance of involving local authorities, the private sector, NGOs, and active citizens in the planning and implementation of infrastructure reconstruction PPP projects for better/more effective results;
- the importance of studying the experience of previous disasters and preparing for potential new ones;
- the importance of educating the younger generation;
- the possibility of applying for international support (if necessary).
Some Suggestions for Ukraine Reconstruction from Japan’s Experiences:
First, it is the determination of the Target Industry Investments and the introduction of a Promotion Policy.
For example, Japan in 1946 targeted Coal, Steel, Power industries through the participation of private.
In addition, the established Reconstruction Bank (now DBJ), which followed national guidelines, played an important role in maintaining transparency and fairness in the structure of project financing.
A Promotion Policy was introduced to encourage the use and participation of private financing for recovery (PPP).
Secondly, the involvement of all interested parties, and key stakeholders in decision-making processes.
Third, the emphasis on high-quality and high-tech infrastructure for the sustainability of the infrastructure in the future.
And last but not least, the use of the best world experience and special practices for reconstruction in each field.
Ms. Rose-Lourdes Elysée, Chief of the Central Management Unit of PPP (Haiti), spoke about the experience of rebuilding infrastructure after the 2010 earthquake, noting that long-term recovery is still a goal that has not been fully achieved. At the same time, she said that many restoration projects were implemented using traditional methods, which did not allow for achieving infrastructure sustainability. That is why the government sees excellent potential in the PPP mechanism, which will create structural, strong ties with the private sector and attract private capital, innovations, and new technologies.
The Director of the PPP Agency, Mr. Niko Gachechiladze, together with the Director of Investment Department of the Ministry of Economy of Ukraine, Ms. Julia Skubak, also participated in the discussions as panelists with the report focusing on post-war reconstruction in Ukraine.
Mr. Niko Gachechiladze noted that a new chapter in history has already begun for Ukraine – the leaders of the European Union agreed to grant the status of a candidate for EU membership, but we have already started a clear and concrete path to accelerate the transformation and recovery of our country after the beginning of the unmotivated, brutal attack by the russian federation and its accomplices from belarus.
It is without a doubt that government has a significant role to play in ensuring the success of public infrastructure projects, especially those that it plans to procure and finance through the PPP model.
In this context, the Director of the PPP Agency noted the transformational changes in the legislation:
- on August 16, 2022, the President of Ukraine signed the Law of Ukraine, “On Amendments to the Budget Code of Ukraine,” which makes it possible to make long-term liabilities within the framework of public-private partnership agreements. This is an essential step for the implementation of socially significant projects, which are most often implemented according to the Availability based PPP model. Furthermore, during martial law, when the enemy is causing considerable destruction to the country’s infrastructure, attracting investment in the restoration of infrastructure is a priority for the government. From now on, government support of the private partner will be guaranteed, predictable, and a priority, which is a positive indicator for the market and prospective investors.
- in addition, the Verkhovna Rada of Ukraine considered in the first reading and adopted as a basis the draft Law “On Amendments to Certain Legislative Acts of Ukraine on Improving the Mechanism of Attracting Private Investments Using the Public-Private Partnership Mechanism to Speed Up the Restoration of War-Destroyed Objects and Construction of New “objects related to the post-war reconstruction of the economy of Ukraine” (reg. No. 7508 dated 01.07.2022), which was developed to accelerate the restoration of objects destroyed by the war and the construction of new objects related to the post-war reconstruction of the economy of Ukraine through the mechanism of public-private partnership.
Mr. Niko Gachechiladze focused the attention of the panelists on the importance of rebuilding according to the “build-back-better” principle, as well as on the fact that as currently drafted, Article 3 draft PPP Law reflects the UNECE recommendations to the Government of Ukraine, which has been provided over the past three years as part of UNECE’s assistance to bring PPPs in Ukraine in line with the United Nations Sustainable Development Goals (SDGs). Aligning PPPs with the SDGs is critical in the reconstruction and recovery phase and would ensure that the PPP selection and evaluation process fully reflects the sustainability objectives of Ukraine.
“The UNECE PPP Evaluation Methodology for the SDGs, which is referenced in Article 3 of the draft law, is a unique tool that can be useful for Ukraine’s sustainable recovery and instrumental in the implementation of SDG-compliant PPPs” – said the Director of the PPP Agency, Mr. Niko Gachechiladze.
Ms. Julia Skubak spoke about the cooperation of the Government of Ukraine with consultants, the PPP Agency, other actors in the PPP structure, and other key stakeholders.
The Government of Ukraine has approached the International Finance Corporation (IFC) with a request to play a supporting role in the reconstruction effort after the war, and IFC proposes to act as a Strategic Adviser to Government of Ukraine to help Government attract private investment and provide better leverage for donor and public funding to rebuild Ukraine’s infrastructure in a way compatible with the principles of environmental sustainability and digital transformation.
On October 28, the Cabinet of Ministers of Ukraine has approved the draft Memorandum of Understanding between the Government of Ukraine and the International Finance Corporation (IFC), which is a member of the World Bank Group.
This Memorandum will allow us to jointly identify and work on the financing of public-private partnership projects in various areas of the economy. We are talking about projects in the following sectors: transport and logistics (airports, ports, logistics centers, rail stations, roads), urban infrastructure (public transport, district heating, waste and water), social infrastructure (schools and kindergartens, affordable housing, hospitals), energy (power distribution, battery storage).
IFC will coordinate its work with the International Bank for Reconstruction and Development (IBRD), the Multilateral Investment Guarantee Agency (MIGA) as well as with other Developmental Finance Institutions (DFIs).
In addition, already in November of this year, IFC plans to submit an aid package for Ukraine to the Board of Directors of the World Bank for approval. The package will include $1 billion in financing, direct lending, financial guarantees, and trade finance instruments.
“The Government of Ukraine is making every effort to rebuild the economy of Ukraine and create a new, modern, prosperous country” – said the Director of Investment Department of the Ministry of Economy of Ukraine, Ms. Julia Skubak.
Mr. Oleksiy Vavokhin, Development and Coordination Officer at the UN Resident Coordinator Office in Ukraine, spoke about the support of UN in the country’s recovery process and emphasized the importance of the sustainability of this process. PPP is one of the tools of effective recovery, including for the sectors most affected by the impact of the war. Mr. Oleksiy Vavokhin also emphasized the importance of following the principles of “build-back-better” and the Guiding Principles on Public-Private Partnerships in support of the UN SDG.
The second panel discussion “Digital transformation: How can the PPP lifecycle be improved to deliver PPP projects in support of the SDGs?” was dedicated to discussing how the adoption of digital solutions and technologies can enhance the delivery, performance and sustainability of PPP projects in support of the SDGs.
In particular, the participants explored opportunities to improve each stage of the PPP lifecycle with the use of data, information technology, and other digital approaches. It was also discusses how to achieve digital transformation in countries and cities and to promote the development of sustainable digital ecosystems through PPPs for the SDGs.
On December 2, a general segment of the session was held with important discussions and decisions on the EEC PPP program, including future work.
During the Panel Discussion “The work of the Economic Cooperation and Trade Division (ECTD) and outputs on infrastructure and financing of the circular economy transition” three documents prepared by ECTD as a contribution to the cross-cutting ECE theme of the 69th Commission session in 2021 were presented and discussed, namely:
(i) Policy Paper on Financing for Circular Economy and Sustainable Use of Natural Resources.
The Working Party discussed proposals for further work and the Implementation plan for 2022-2023, as well as the EU Commission guidance on the use of public-private partnerships in the framework of preventing and fighting money laundering and terrorist financing.
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For reference:
The decision by the UNECE Committee on Innovation, Competitiveness and PPPs at its fifteenth session on 25-27 May 2022:
regarding the continued use of the name “People-first PPPs for the SDGs”, the Committee took note of the results of the information consultations conducted with interested delegations on the matter since the fifth session of the Working Party on PPPs in November 2021, and decided to
i. Change the name to “PPPs for the SDGs”; and
ii. Progressively reissue the documents endorsed and adopted by the Committee and the Working Party on PPPs.