UNDP Iraq has supported the Kurdistan Regional Government (KRG) to develop a Public-Private Partnership Framework, which will encourage the private sector to engage and deliver services – such as healthcare, roads, electricity and water - in partnership with the public sector. The initiative was funded by the generous support of the American people through the United States Agency for International Development (USAID)
What is a PPP framework?
A Public-Private Partnership (PPP) refers to the contractual arrangement between a Government contracting authority and a private sector entity to provide public assets, infrastructure and/or public services. Under the KRG’s Economic Reform Roadmap 2016 the PPP modality is identified as a high priority to meet increasing infrastructure demands while recovering from economic and financial challenges.
Specifically, the KRG PPP Framework outlines the:
PPP Policy – i.e., the Government’s rationale for pursuing such projects;
Legal Framework – the relevant laws and regulations supporting PPPs;
Processes and Institutional Responsibilities - steps for implementing PPPs; and
Public Financial Management Approach - control and monitoring of PPP-related fiscal commitments.
The Framework includes the creation of a PPP Unit that will be located within the Ministry of Planning. That Unit will serve as a facilitator and as a center of PPP expertise for other ministries and agencies.
Why is it important to engage the private sector?
As suggested in the Roadmap, the “Public Private Partnership (PPP) concept could be one way of bringing in nimble management skills and fresh funds and relieving government of fiscal and administrative burdens,” helping to attract Foreign Direct Investment to the KRG. In addition, it will:
Help the KRG reallocate resources. PPPs offer access to finance, so if the private sector takes on the responsibility of infrastructure development and maintenance, it allows the KRG to distribute limited Government funds to other pressing socioeconomic needs, such as improving systems and understanding community needs more thoroughly;
How was the PPP framework for KRG developed?
Step one: Securing government support. In a KRG Cabinet meeting earlier this year, the Cabinet discussed the PPP Framework and how it can be used to modernize KRI’s infrastructure. The KRG Prime Minister of the 9th cabinet of the Kurdistan Regional Government, Masrour Barzani, has expressed his support for the initiative and for the implementation of a pilot PPP project.
Step two: Seeking feedback from wider partners. It was then necessary to bring other Government stakeholders around the table to reach consensus in finalizing the draft PPP framework. UNDP Iraq held a workshop with representatives from Legal and Project Follow-up departments at the KRG Council of Ministers, and all the relevant KRG Ministries including Planning, Construction and Housing, Municipalities and Tourism, Health, Education, Trade and Industry, Electricity and the Board of Investment. In the workshop, the framework’s various sections were presented, discussed and debated. The sessions provided a common understanding of PPPs as well as achieving a consensus on moving forward. It also allowed the KRG ministries to suggest projects that could be delivered via public-private partnerships.
Step three: Approving the PPP framework. The final PPP Framework was submitted to KRG Ministry of Planning in June 2020 and approved by KRG Council of Ministers on 1st July 2020 during the Council of Ministers meeting.
UNDP Iraq is currently in discussions with the KRG on the next steps to develop a technical assistance program to support the KRG. This will involve establishing institutions such as a PPP Unit to assist line ministries and providing training to enhance the capacity of PPP staff in areas such as project selection, prioritization, procurement, and contract management.
When partnering with the public sector, companies will have the opportunity to engage in sectors that deliver efficient and quality services, including education, health care, transportation facilities, infrastructure, energy and waste management services. If projects are well designed and run and they achieve their stated results, these partnerships can encourage and enhance investment environment.
The development of the KRG PPP Framework was made possible through the generous support of the American people through the United States Agency for International Development (USAID) in coordination with the KRG’s Ministry of Planning (MoP).