Date of Submission to Coordination Unit:
- GENERAL INFORMATION
- Activity Name
Operationalizing Public Private Partnership in Tunisia
- Requestor Information
Name: Abdallah Zekri / Title: Director General in charge of multilateral cooperation
Organization and Address: Ministry of Investment and International Cooperation
Telephone: / Email:
- Recipient Entity
Name: Houda Nefzaoui Mimouni / Title: Director in charge of legal affairs
Organization and Address: Office of the Prime Minister[1]
Telephone: +216 71565400 (ext: 2239) / Email:
- ISA SC Representatives
Name: Kolster Jacob / Title: Director, North Africa Region 1
Organization and Address: African Development Bank
Telephone: +216 71 10 20 65 / Email:
Name: FABRIZIO PAGANI / Title: HEAD OF THE SHERPA OFFICE
Organization and Address: Organisation for Economic Cooperation and Development, 2 RUE ANDRE PASCAL, PARIS, FRANCE
Telephone: +33 01 45 24 18 55 / Email:
- Type of Execution
√ / Type / Endorsements / Justification
Country-Execution / Attach written endorsement from designated ISA
√ / Joint Country/ISA-Execution / Attach written endorsement from designated ISA / The project will be co-funded by the MENA Transition Fund (MENA TF) and Middle Income Technical Assistance Fund (MIC TAF) hosted by the African Development Bank (AfDB).
The portion financed by the MIC TAF will be executed by the Government of Tunisia (GoT) and will consist in the recruitment of an advisory firm which will take the lead in supporting government efforts in setting up the PPP unit.
The portion financed by the MENA TF will be jointly executed by the GoT andthe OECD.
The portion executed by the OECD will strengthen the work carried out by the GoT using the MIC TAF financed advisory services by i) engaging the Government in a self-assessment of the legal and policy framework for private sector involvement in infrastructure; ii) providing analytical recommendations and training on institutional structures for PPP implementation and securing value for money; iii) providing analytical recommendations on the fiscal and budgetary management of PPPs; iv) sharing international experience and best-practices on the structure and responsibilities of PPP Units, to ensure successful preparation and roll-out of PPP projects.
The portion executed by the GoT under the MENA TF will consist in the recruitment of an advisory firm to identify and prepare pilot PPP projects in Tunisia. The AfDB will be the only ISA responsible for the oversight and management of the funds used for the country-executed portion.
ISA-Execution for Country / Attach written endorsement from designated ISA / (Provide justification for ISA-Execution)
ISA-Execution for Parliaments / Attach written endorsements from designated Ministry and ISA
1
- Geographic Focus
√ / Individual country (name of country): Tunisia
Regional or multiple countries (list countries):
- Amount Requested (USD)
Amount Requested for direct Project Activities:
(of which Amount Requested for direct ISA-Executed Project Activities): / USD 2,200,000, including:
OECD-executed project activities: USD 800 000.00
Government of Tunisia executed activities; USD 1,400,000.00
Amount Requested for ISA Indirect Costs: / USD 100,000
Total Amount Requested: / USD 2,300,000 million
Co-Financing / AFDB MIC TAF: USD 1,200,000 (Government Executed)
Government contribution: USD 179,000.00
Total Project amount / USD 3,679,000.000
- Closing and Final Disbursement Date
Start Date: / 01/04/2013 / Closing Date: / 01/04/2015 / Final Disbursement Date: / 30/04/2015
- Pillar(s) to which Activity Responds
Pillar / Primary
(One only) / Secondary
(All that apply) / Pillar / Primary
(One only) / Secondary
(All that apply)
IThis could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity. / √ / Enhancing Economic Governance.This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems. / √
Inclusive Development and Job Creation.This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform. / √ / Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development. / √
- STRATEGIC CONTEXT
- Country and Sector Issues
Tunisia lags behind in the use of public-private partnerships (PPPs) to implement public policies. Effective & efficient PPPs are uncommon (airport, power plant, with several attempts in the late 2000s - desalination plant, sewage treatment plants), and are mostly designed as concessions. Hence, almost all essential public services are still delivered by the state or public enterprises. The reasons for the relatively low use of PPPs under the former regimeare diverse and include: the existence of efficient public operators; the willingness of the former regime to maintain a tight control over public services regulation and delivery; a relatively narrow legal environment and a lack of transparency and good governance at the state and government.
After the revolution the new Tunisian authorities expressed their willingness to promote the use of such partnerships, with the aim, among others, to lighten the state investment burden, to improve public and private governance, to improve the quality of servicedelivery, to improveinfrastructuremaintenance and to increase foreign direct investment.In this context a new law has been prepared during the course of the year 2012. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013(and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructureprojects. In parallel to the finalization and adoption of the new PPP law, Tunisia critically needs to embark on operationalizingthis reform in a context wherePPPs knowledge is relatively limitednationally. The establishment of a specific unit – which will be a foundation for good governance and expertise in this specific field - is critical. Indeed,the increasing willingness (and pressure) of the private sector to engage on this front in Tunisia could potentially cause distortions and represents a risk if not managed properly.
- Alignment with Transition Fund Objective
The objective of the Transition Fund is to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms.
The proposed project will directly support the Competitiveness and Integration pillar of the MENA Trust Fund by facilitating the financing of infrastructure projects while supporting private sector development and trade. Indeed, while the GoT clearly recognizes the important need for public investments to support economic sophistication, the current fiscal environment is a constraint for their financing. The Operationalization of the Public Private Partnership Law will in this regard allow the GoT to mobilize untapped resources. Among the projects identified by the GoT for PPP financing (and presented to the international community in May 2012), infrastructure projects accounts for the lion share and includes: energy (conventional and solar), water (desalinization), port and export related activities (deep see water, logistic zone, special economic zone). In addition to the private sector involvement for the implementation of this project, a series of project also intend to directly support the sophistication of Tunisia’s industry and services with projects identified to create industrial and technology parks and to improve the tourism industry.
The proposed project by facilitating Public Private Investments will also support the Investing in Sustainable Growth, Enhancing Economic Governance and Inclusive Development and Job Creation pillars of the MENA trust fund by (i) directly stimulating job creation through Public Private investments (ii) strengthening governance in the delivery of public services and the design of PPP contracts, (iii) increasing public investment efficiency, and (iv) promoting investments in the region using a PPP approach (investments which would have not materialized otherwise).
Finally, the Transition Fund encourages South-South knowledge exchange, which is part of the proposed project, namely by way of twinning arrangements, staff exchange and case studies to be organized with countries having faced similar challenges (Egypt, India, Senegal, Mauritius).
- Alignment with Country’s National Strategy
Following the revolution, the Interim Government has adopted an economic and social development agenda based on the implementation of far-reaching policy reforms to meet the aspirations of the revolution as well as sector policies centered on major infrastructure projects and the implementation of reforms to transform Tunisia's development model.
This plan - The Jasmine Plan - has been articulated along a three-pronged approach: (i) Post-revolution crisis management and political reform, (ii) carrying out the transition towards democracy, and (iii) setting forth the conditions for sustained social and economic development in the medium term.
More specifically under the third pillar the GoT plan indicates that in addition to the short term economic and social emergency measures initiated by the government (job-support programs, enhanced financial support for social and regional development, assistance to those enterprises that were adversely affected by social disturbances, as well as various fiscal incentives aimed at reactivating the economy), the interim government isconducting a complete overhaul of the regulatory frameworks pertaining to microfinance, private equity, Public Private Partnership (‘PPP’), and SMEs in support of the view of their immediate impact on job creation and on bolstering innovation, R&D and investment in human capital. For the latter these will include the development of a technological infrastructure and encouraging the creation of a knowledge-based economy. The GoT’s Plan makes in this regard reference to a National Initiative for Industrial and Technological Development in cooperation with the private sector setting forth 80 measures and actions aimed at bolstering the technological content of the Tunisian economy (highlighting the urgent need for a revised PPP law).
In this context a new law has been prepared during the course of the year 2012 with the support of the donor community and more specifically the EU. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013 (and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructure projects.
- PROJECT DESCRIPTION
- Project Objective
The objective of the project is to support the Government in operationalizing the new PPP law and implementation decrees, expected to have been adopted by April 2013, in a manner which will promote transparency, efficiency and effectiveness of public spending, and help the government of Tunisia in meeting its public policy objectives (economic transformation, job creation, nature of services and sectors covered, balanced development in the country, attracting Foreign Direct Investments, nature of the partnerships established). The proposed project shouldenable the rapid implementation of a number ofPPP transactionsso as to deliver tangible results and achieve quick wins (learning by doing and reassuring investors foreign and local). The project will ensure that PPPs are undertaken for reasons of value for money and are based on the appropriate skills, structures and tools. The project will build on experiences and best practices throughout the world.
- Project Components
The development and implementation of well-structured and balanced PPP implies 1) identifying the key challenges in the current situation, 2) training and sensitizing Government officials on PPP principles, 3) implementing a systematic and transparent selection and approval process, 4) applying rigorous and standardized quantitative and qualitative methods in order to 5) achieve bankable, balanced and sustainable models.
The proposed project (operationalization of the PPP law)addresses the above mentioned challenges through an integrated approach which will look at 1) the definition of the policy and institutional framework, 2) the establishment of a PPP Unit, 3) the development of in-house capacity,4) the identification and preparation of PPP pilot projects, 5) the implementation of a consultation and communication strategy and 6) program management.
The proposed project will be structured in phases. The first phase, subject of the present application, will span a period of about two years. The subsequent phase will depend on the success of the first phase and will primarily focus on the identification and preparation of additional pilot projects.
The proposed project will use two sources of financing: The Middle Income Country Technical Assistance Fund (MIC TAF) hosted by the AfDB and the MENA Transition Fund (MENA TF).
The MIC TAF resources will be Government executed. This resources will be used to directly support GoT’s capacity in taking the lead for the implementation of components 1-A,2-A,3-A & 5-A. The services of a firm will be acquired competitively in this regard.
The MENA TF resources will be both Government and OECD executed. For the Government executed activities financed under theMENA TF, the resources will be used to directly support GoT’s capacity in taking the lead for the implementation of components 4 and 6. The services of advisory firmsand a consultant will be acquired competitively in this regard. The OECD executed activities financed under the MENA TF will cover components 1-B,2-B,3-B & 5-B. For these components the OCED will mobilized its expertise to advise the GoT and strengthened the work carried by the GoT and the firm recruited using MIC TAF resources.
Component 1: PPP policy and institutional framework
This component will be designed to develop fundamental aspects of Tunisia’s PPP policy and institutional framework and will be jointly executed by the GoT (using MIC TAF resources) and the OECD (using MENA-TF resources).
Component 1-A: Activities executed by the GoT (MIC TAF)
The GoT executed activities, funded the MIC TAF, consist in the mobilization of an advisory firm supporting the Tunisian authorities develop a PPP policy and institutional framework.
The overall PPP framework must ensure policy coherence. Consequently the clarity and presence of key institutional roles and responsibilities will enable the implementation of concrete PPPs within a regulatory environment that is responsive and clear.Best practices from various countries’ experiences indicate that in order to secure value for money from PPPs, a number of central ministries and authorities must have clear policies, roles and responsibilities regarding PPPs. Key institutions include the Ministry of Finance, the Chief Executive, the Supreme Audit Institution, the relevant procuring authorities, the PPP Unit, the relevant economic and social regulators. Of importance is also the interaction and interface between the State and civil society (private sector, consumers associations and labor unions).
The effort will focus on:
- The state level (interface with sector ministries, cross-cutting ministries, the ministry of finance and regulatory agencies)
- The local level (region and municipalities): identification of need and communication with central authorities
- The broader policy framework: Beyond the PPP Law itself, the implementation of Tunisia’s PPP policy framework will rely on the coherence of the PPP Law with broader investment regulations, as well as with other relevant legal and regulatory provisions (such as laws governing concessions, specific economic sectors, procurement and competition). Competent public bodies will be involved in an interactive assessment exercise to evaluate and take stock of this broader policy framework.
- Regulations that may follow on the PPP Law will also be an integral part of the PPP policy and institutional framework.
This componentcould be reinforced by diagnostic missions composed of experts and peers from other developing countries recognized for having successfully implemented and operationalized PPP units. Such countries could include India, Senegal and South Africa.
Component 1-B: Activities executed by the OECD (MENA TF)
The activities executed by the GoT will be reinforced by drawing inputs and lessons learned from OECD countries[2] where PPP Framework Reviews and/or investment policy reviews were recently undertaken and recommendations on PPP public governance gathered.