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Group A – Mix of English speaking participants

Group A – Mix of English speaking participants PPP WHAT is it? WHEN do we need it? WHY do we need it? CACG A private company with a public mandate Operates on a long term concession to manage irrigation professionally Accounting principles, flexibility to operate

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Group A – Mix of English speaking participants

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  1. Group A – Mix of English speaking participants PPP WHAT is it? WHEN do we need it? WHY do we need it? Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  2. CACG • A private company with a public mandate • Operates on a long term concession to manage irrigation professionally • Accounting principles, flexibility to operate • Accountable to a board • Government oversight and regulation through the terms of the contract • Make decisions in consultation with the board • Profit? –not to make losses… Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  3. Murray Irrigation Company • Farmer owned private company • Working on professional lines • Accountable to a board elected by farmers • Government oversight Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  4. The Main Principles: • BOT – BTO (anglo-sacson law vs. latin law). • Assets remain a public property. • The one who manages the assets has an accounting arrangements. • The concessionaire should show the value of the assets on their books. • The day the contract ends, the assets revert back to the government. • In a public assets, the value is not depreciated – as investments are made constantly plouging in profits and subsidies. • Essence of business of a private enterprise with a social mission Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  5. The need to look beyond! • Need for focusing on the irrigation sector • Irrigation consumes 80% of the water – need for improving efficiency to make water available for increasing demands • Business as usual will not work! • Diverse situations among and within countries (India, Pakistan, Mexico) • Need to explore new options • Professionalizing agencies, entering into new partnerships, empowering user organizations, new contractual arrangements • Building capacities to explore options Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  6. On Public-Private Partnerships • The term “Private” highly emotive • PPP is -- complex issue --- needs insights on how to go about it • Site, country specific solutions, and there are no blueprints • Need for focusing attention on the irrigation sector Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  7. Where do we go… • Public Objective of Equity managed professionally. • How to do the change needs to be examined in specific situations Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  8. What is INPIM’s role Create awareness and build capacities. Disseminate information Best practices Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  9. We will put up all the presentations and materials on the INPIM Website http://www.inpim.org Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  10. Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  11. What is PPP? CACG – Private company performing public mandate, Government is the major shareholder Separate different functions – cost them, account for them Staff – not civil servants, hire and fire policy in place Freedom to choose salaries and make decisions Culture – not profit driven, but avoid losses Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  12. Who is investing in the company? Government has a vested interest and right? • Is this is an equivalent of a parastatal in other countries? • The objective of the CACG to have a significant role in rural development • Even if the shadow of the state is always present, the actual decision maker is the board of directors Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  13. Process of decentralization – transfer of assets – development of the water sector through professional agencies, main objective of the professionals is to give salaries?? • Water is a public good and a private company should provide it in a professional and efficient manner • BOT – BTO (anglo-sacson law vs. latin law). Assets remain a public property. The one who manages the assets has an accounting arrangements. The concessionaire should show the value of the assets on their books. The day the contract ends, the assets revert back to the government. In a public assets, the value is not depreciated – as investments are maid constantly from subsidies. Essence of business of a private enterprise with a social mission Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  14. Operational surplus – income above and over salaries, energy cost, etc. – is invested back into the renewal and maintenance, as opposed to traditional private company, where the profit is paid to shareholders in the form of dividend Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  15. When farmers participate is it PPP? • Does it have to be a company to be called a PPP? • What is the role of the Government in PPP? • What is the motivation for the company to provide services? Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  16. PIM between state and farmer for better equity of water distribution. Privatization has been dominating the discussion – not the intent of INPIM. Need to keep the concept simple. The case might not be applicable for most of the countries present here. • Professionals built the system – engineer oriented. Later infusion of other disciplines not worked successfully. Farmers left out paved the way for PIM. Farmers are being made central to governance issues. Where is the professionalization required? No need Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  17. PIM • Public (equity)----------PPP (Professionalism with 3rd Party)-------- private (efficiency) • Goods and services • Assets • Who will operate • Who will finance Shifts take a long time Externalities – public financing constraints Seeking private financing sources Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  18. Conclusion • Publicly owned, operated according to the business law • Many hybrids • Private companies almost always are brought for efficiency gains • To reduce political interference – ring-fencing through a mixed representation of public and private in the board of directors Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  19. Public objective of equity and development objectives • Private objective of cost-effectiveness • Are the farmers actually interested in the management??? In reality they are more interested in getting/having the service whenever they need it (on time and quantities required), regardless who provides is – public or private sectors? • Farmer empowerment • Outsourcing – in Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

  20. Governance – direct and indirect • Operation and maintenance Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

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