Punjab public-private partnership: Cell failed to kick-off any project since inception

Failure attributed to bad governance and public-private trust deficit.

Anwer Sumra August 17, 2012


The Punjab Public-Private Partnership (PPP) cell has failed to start ground work on even a single project since its inception in November 2010 despite incurring huge expenditures, The Express Tribune has learnt.

The cell was established to expand the provision of infrastructure services and improve their reliability, quality for accelerating economic growth and achieving social objectives in the province.

Since the founding of the PPP, the officials incurred huge expenditures on the treasury’s account, however no project was initiated despite claims of Punjab government, an official requesting anonymity said. If any department failed to achieve its objectives, the project was discontinued to protect the public exchequer from extra burden, the official added.

In July 2010, the Government of Punjab framed and enforce the Punjab Public–Private Partnership for Infrastructure Act to mobilise the private sector resources for financing, construction, maintenance and operation of infrastructure projects; to improve efficiency of management, operation and maintenance of infrastructure facilities by introduction of modern technologies and management techniques; to incorporate principles of fairness, competition and transparency in public-private partnership projects and to provide for ancillary matters in the province.

Under the Act, a cell headed by a senior official hired from the private sector had been set up under the direct supervision of the chairman of the Planning and Development Board to invite private sector for investments in mega-projects in the public sector.

Meanwhile, the cell started recruiting to meet the desired manpower to make it an efficient entity as there was no mechanism to motivate private entrepreneurs for investment in huge projects in the government sector.

The cell remained dormant as it failed to remove the trust deficit that existed among the private investors who intended to invest in public sector if security assurance and good returns were provided.

The cell initiated work on four mega-projects including the Punjab Grains Silos project with a total outlay of Rs5.7 billion. According to the business plan, the private investors were to be invited to invest in construction of wheat storage silos in seven districts.

The Punjab government constructed the Lahore’s ring road northern loop, but its southern loop was abandoned due to lack of finance as reserved funds were diverted towards the Bus Rapid Transit project and other development schemes by the government. The cell estimated that the construction of southern loop would cost $550 million.

The cell also prepared a document to build three multimodal inter-city bus terminals with a total cost of Rs5 billion in Lahore. Another project namely ‘Vehicle Inspection and Certification’ was estimated to have an outlay of Rs673 million.

The cell failed to attract any investment towards the four projects despite the lapse of a two year period because of the unwillingness of the private sector to invest in high-risk public sector projects.

Dr Muhammad Arshed, head of the PPP, said that it was true that the cell has been unsuccessful in starting up any project. The cell needs a new paradigm and time to bridge trust deficits between the private and the government sector and execute the projects.

Published in The Express Tribune, August 18th, 2012.