There is great potential for applying the Public-Private Partnership(PPP) model in environmental protection, but this has not happenedbecause a proper legal framework is missing, experts say.
"Thereare many bad things happening to the environment and we need a propermechanism so that we can mobilise all resources to deal with them," saidHo Cong Hoa, an economist with the Central Institute for EconomicManagement (CIEM).
Speaking at a meeting held in Hanoi last weekon ways to promote PPP in protecting the marine and coastal environment,he said Vietnam faced many challenges in protecting its naturalresources and coastal environment, including pollution from the mainland(wastewater and solid waste), over-exploitation of resources,destruction of mangrove forests and coral reefs, climate change, rise inwater levels and land erosion.
"At present, the Government hasbeen investing and operating on its own as it copes with all theseproblems, but it is hampered by scarce resources, reduced ODA, increasedpublic debt, and inefficient operations," he added.
In 2012,over 31,226 tonnes of solid waste was generated everyday and by 2025,the figure is expected to double. The money needed to treat this wastewill also increase sharply, from 30 trillion VND (1.5 billion USD) in2012 to 83.5 trillion VND (4 billion USD) in 2025.
Hoa said theanswer to this problem was the PPP model, with relevant authoritiescooperating with private partners to provide public services undercontracts, sharing responsibility, risks and benefits.
Non-governmentorganisations (NGOs), other sponsors and the larger community alsoplayed an important role in successful implementation of PPP projects,he said.
The model would help increase the number of projects inenvironmental protection, reduce risks and reduce financial pressure onthe Government, he said.
"The most important thing is to minimise monopoly in providing public services," Hoa said.
However,he also said that despite the potential, actual application of PPP inenvironmental protection would face several hurdles.
Transactioncosts and legal expenditure would be very high, and it might take manyyears to strike a deal. The success of contract negotiations woulddepend on the capabilities of relevant authorities. And in case theprivate partner goes bankrupt, political problems would arise.
Hoa said it was important that the difference between PPP and privatisation was understood clearly.
VuQuynh Le, Deputy Head of the Ministry of Planning and Investment'sBidding Department, agreed with Hoa, saying that both increasedawareness of PPP was necessary both within the Government and among thegeneral public.
She said efficient and frequent communication was an important factor in deciding the success of PPP projects.
StephenRaggett, PPP advisor to the Ministry of Planning and Investment, saidthe model was a proven procurement option for public infrastructure,allowing the private sector to innovate in the delivery of publicservices and manage more of the project risks involved in construction,operation, and financing.
He said the model would also bring in"a lot of benefits," including: more transparency in planning,procurement, and service delivery as well as rigorous projectpreparation and consideration of lifecycle costs/demand. It wouldencourage innovation and maximise the value of infrastructure assets,increase sources of investment capital while enabling efficientallocation of project risks.
Compared with other servicedelivery options, PPPs can provide clearer accountability andenforcement of standards, greater compliance with regulations, removeconflicts of interest and facilitate access to international technicaland management expertise, he added.
"But the private sector has to be able to manage or mitigate project risks," the expert stressed.
Coastaldefence projects would require significant capital and maintenanceexpenditures, but economic benefits could be difficult to obtain, henoted.
For extreme weather events, "output specification may belinked to flood/tide return period," and the government would need totake risks "beyond the specified design period," he said.
"TheGovernment of Vietnam is committed to effective use of PPP and willingto learn from international experience but issues of tariffs andregulation will need to be addressed," Raggett said.
He alsostressed the need to develop a domestic supplier base and financialmarkets, as well as "clear opportunities for private investment."-VNA
"Thereare many bad things happening to the environment and we need a propermechanism so that we can mobilise all resources to deal with them," saidHo Cong Hoa, an economist with the Central Institute for EconomicManagement (CIEM).
Speaking at a meeting held in Hanoi last weekon ways to promote PPP in protecting the marine and coastal environment,he said Vietnam faced many challenges in protecting its naturalresources and coastal environment, including pollution from the mainland(wastewater and solid waste), over-exploitation of resources,destruction of mangrove forests and coral reefs, climate change, rise inwater levels and land erosion.
"At present, the Government hasbeen investing and operating on its own as it copes with all theseproblems, but it is hampered by scarce resources, reduced ODA, increasedpublic debt, and inefficient operations," he added.
In 2012,over 31,226 tonnes of solid waste was generated everyday and by 2025,the figure is expected to double. The money needed to treat this wastewill also increase sharply, from 30 trillion VND (1.5 billion USD) in2012 to 83.5 trillion VND (4 billion USD) in 2025.
Hoa said theanswer to this problem was the PPP model, with relevant authoritiescooperating with private partners to provide public services undercontracts, sharing responsibility, risks and benefits.
Non-governmentorganisations (NGOs), other sponsors and the larger community alsoplayed an important role in successful implementation of PPP projects,he said.
The model would help increase the number of projects inenvironmental protection, reduce risks and reduce financial pressure onthe Government, he said.
"The most important thing is to minimise monopoly in providing public services," Hoa said.
However,he also said that despite the potential, actual application of PPP inenvironmental protection would face several hurdles.
Transactioncosts and legal expenditure would be very high, and it might take manyyears to strike a deal. The success of contract negotiations woulddepend on the capabilities of relevant authorities. And in case theprivate partner goes bankrupt, political problems would arise.
Hoa said it was important that the difference between PPP and privatisation was understood clearly.
VuQuynh Le, Deputy Head of the Ministry of Planning and Investment'sBidding Department, agreed with Hoa, saying that both increasedawareness of PPP was necessary both within the Government and among thegeneral public.
She said efficient and frequent communication was an important factor in deciding the success of PPP projects.
StephenRaggett, PPP advisor to the Ministry of Planning and Investment, saidthe model was a proven procurement option for public infrastructure,allowing the private sector to innovate in the delivery of publicservices and manage more of the project risks involved in construction,operation, and financing.
He said the model would also bring in"a lot of benefits," including: more transparency in planning,procurement, and service delivery as well as rigorous projectpreparation and consideration of lifecycle costs/demand. It wouldencourage innovation and maximise the value of infrastructure assets,increase sources of investment capital while enabling efficientallocation of project risks.
Compared with other servicedelivery options, PPPs can provide clearer accountability andenforcement of standards, greater compliance with regulations, removeconflicts of interest and facilitate access to international technicaland management expertise, he added.
"But the private sector has to be able to manage or mitigate project risks," the expert stressed.
Coastaldefence projects would require significant capital and maintenanceexpenditures, but economic benefits could be difficult to obtain, henoted.
For extreme weather events, "output specification may belinked to flood/tide return period," and the government would need totake risks "beyond the specified design period," he said.
"TheGovernment of Vietnam is committed to effective use of PPP and willingto learn from international experience but issues of tariffs andregulation will need to be addressed," Raggett said.
He alsostressed the need to develop a domestic supplier base and financialmarkets, as well as "clear opportunities for private investment."-VNA
