YALE UNIVERSITY

PPPUE Working Paper Series Volume II

Joint Venture Public-

Private Partnerships for
Urban Environmental
Services

Report on UNDP/PPPUE’s
Project Development Facility
(PDF)
(1995 –1999)

Written by:
Elizabeth Bennett, Seldon James and Peter Grohmann with
contributions from Luis Gomez-Echeverri, Nicholas Livingston,
Brad Gentry, Michael Gucovsky and Benedict Latto

New York, 2000

UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Foreword
Much has been written about the desperate pressures that the world’s cities are facing as the new millennium
begins. Much has also been said about the need to devise new ways of financing sustainable development in
countries faced with a decline in official development assistance. The Public Private Partnerships for the
Urban Environment (PPPUE) Programme, which initiated the Project Development Facility (PDF) described
in this publication, has pioneered concrete solutions to address these problems.

PPPUE has developed a unique approach to increasing the access of the urban poor to water, sanitation,
waste and energy services. Private and public sectors are brought together as genuine partners with shared
responsibilities, shared risks, and shared benefits.

The United Nations Development Programme (UNDP), Sustainable Project Management (SPM), and Yale
University have been essential partners in the development of the PDF. The Sustainable Energy and
Environment Division of UNDP has played a co-ordinating role, both at headquarters and through the UNDP
country offices. SPM, a not-for-profit Swiss association, has contributed negotiation and project development
experience through its network of experts. Yale University was instrumental in developing the PPPUE Global
Learning Network, distilling the global experience of public-private collaboration and facilitating its exchange.

This publication details the fruit of this innovative collaboration. We hope it will provide the impetus for the
next phase of the PPPUE and for other initiatives that will substantially improve the livelihoods of the urban
poor.

Roberto Lenton, Director

Sustainable Energy and Environment Division
United Nations Development Programme

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Contents
Foreword 2

I Introduction 4

II The Urban Challenge 7

III The Joint Venture PPP Approach 10

IV The PPPUE PDF Process 15

V Project Actors 21

VI Results and Benefits of the PDF 25

VII Procurement Solutions 30

VIII Lessons Learned And Conclusions 33

IX The Way Forward 36

Appendix A: Forms of Public-Private Collaboration 38

Appendix B: PPPUE PDF Project Profiles 40

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

I Introduction
In developing countries today, the public sector
provides most water, waste, sanitation, and
energy services. Experience demonstrates,
however, that municipalities alone cannot meet
the continually growing demand for services.
While traditional development assistance plays a
vital role in enabling some governments to meet
these challenges, it provides only a fraction of the
needed investment. New partnerships for
sustainable growth – sources of financing,
technology, capacity building and management –
are urgently needed. True partnerships between
public and private sector organisations are one of
the most promising emerging forms of co-
operation. Through such joint ventures, cities and
businesses pool their resources, expertise, and
approaches to solving problems in order to tackle
urban challenges in a sustainable manner.

Following the 1992 Earth Summit, the United

Nations Development Programme (UNDP)
initiated a global programme in collaboration with
the Business Council for Sustainable
Development (BCSD), and Sustainable Project
Management (SPM), a not-for-profit Swiss
organisation (an off-shoot of BCSD), to promote
public-private partnerships (PPPs) to improve
urban environmental services in the developing
world. UNDP's Public-Private Partnerships for the
Urban Environment programme (PPPUE) became
operational in 1995.

This report focuses on the experiences of the

initial Project Development Facility (PDF) phase of
the PPPUE. The central objective of the PDF has
been to promote private sector involvement in
implementing sustainable solutions to urban
environmental problems through the
establishment of joint venture businesses with the
public sector. It is important to note that the
PPPUE Programme is concerned with
partnerships, not privatisation. A related objective
of the Programme has been to share and advance
knowledge gained from project experiences, and
to identify the elements of success so that they
can be replicated and future obstacles overcome.

Between 1995 and 1999, the PPPUE Programme

introduced its joint venture PPP methodology to
20 national governments as well as numerous
regional and municipal authorities within these
countries. Through these relationships, the
PPPUE Programme brought project identification,

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

structuring, and development experiences to over to push the projects through each of the individual
100 public-sector executives, building a foundation steps of the process. The key players were
of PPP experience in diverse operating developing country governments, local and
environments. PPPUE has also built awareness international private sector, and NGOs and the
within numerous national and international local community. The UNDP Offices together with
corporations involved in water, waste, sanitation, the Project Development Advisor and in
and energy services, some of which have become collaboration with the donor community, initiated
actively involved in PPP ventures. In short, the and facilitated the project development process,
PDF has set a new precedent for the joint venture which, in the best case, was taken over soon by
PPP process in developing countries throughout project "champions" from the public and/or private
the world that are in desperate need of new sectors.
approaches to their urban problems.
Chapter V reports the results and benefits of the
The following report contains eight chapters that PDF experience, which included the initiation of
describe the context, process, and results of the nine projects in eight countries and preliminary
PDF experiences. The first chapter presents the efforts in a number of others at a total cost of
backdrop of the infrastructure crisis facing about $2 million over four years. The nine projects
developing country cities in recent decades and initiated by the PDF have reached different stages
the challenge of providing critical basic services to of development. At least six will lead to the
the urban poor. It frames the challenge in the establishment of joint venture companies. The
context of rapidly expanding urban populations, overall benefit of these interventions, in addition to
the impact of the trend to decentralise the role of tangible steps towards the goal of alleviating a
governments and the changing nature of serious urban environmental problem, was
international capital flows. Over the past decade, progress in the establishment of a more
as the volume of private capital eclipsed the favourable political and cultural environment for
amount of official development assistance (ODA) future partnerships. This is especially true for the
flowing into developing countries, it has become public sector partners, which benefited from the
clear that traditional funding approaches for experience of participating in the process and
infrastructure development need to be re-thought. establishing constructive working relationships
Today, there is wider recognition that the need to with private sector partners.
provide urban services can only be addressed by
expanding the sources of capital and managerial The report includes a special section that
inputs - an expansion that will require new examines the issue of procurement for private
financial mechanisms and management sector services and inputs. The reason for the
structures. emphasis on this element of PPP development
relates to the constraints associated with
Chapter II introduces public-private partnerships traditional international competitive bidding (ICB),
as a promising new approach and sets the stage which works better under conditions of greater
for evaluating the joint-venture PPP model in certainty than most PPPs offer. In fact, PPPs tend
particular. Joint ventures are a particularly to be more fluid and dynamic than traditional
interesting arrangement from a spectrum of public sector project development and therefore
alternative PPP arrangements that are available to will require flexible procurement procedures to
municipalities, because they are based on the reduce the financial risks for private sector
idea of sharing risks and rewards equally between involvement in start-up projects. This section goes
public and private sector partners. Chapter III then on to propose alternatives and to suggest ways of
describes the actual process that was employed minimising the risks of corruption.
by PPPUE during the PDF phase in order to
introduce the joint-venture concept to municipal The last two chapters distil the lessons learned
governments of developing countries from the from the PDF experience and elaborate on the
identification of a business opportunity to the next steps for UNDP's PPPUE. Some of the most
actual formation of the mixed-capital partnership. important lessons highlighted during the PDF are:
• Demand for technical assistance in
In Chapter IV, the report describes the relevant partnership development is high, but national
actors whose roles assured transparency, and local governments need to build capacity;
commitment and balance between public and • Project development takes time and requires
private sector responsibilities and who were able local leadership and continuity;

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• High-level political commitment is essential. and open spectrum of options should be

National Governments need to create the right developed.
policy and legal environment to make PPP
development at the local level possible; With these lessons of the PDF phase and the
• Local governments are at the frontline for PPP positive reaction from municipal governments to
development in environmental services. They the PPP concept, the PPPUE programme
need to build the capacity to become equal launched a new implementation phase in late
partners with business; 1999. This new phase will focus on identifying
• Every project needs a champion and an PPP opportunities in the water, waste and energy
independent facilitator; sectors of cities in a number of developing
• National private sector is the driving force in countries and will also be prepared to respond to
small and medium sized investments; specific requests for technical assistance as they
• NGOs and communities are important arise around the world. In addition, PPPUE will
partners in project development; continue to gather information and experiences
• Partnerships are sustainable only if they are about PPP projects in order to establish a baseline
mutually beneficial; of knowledge for the benefit of municipal leaders
• Building mutual trust is vital; and private sector actors who are looking for
innovative ways to resolve the dilemma of urban
• A new approach in development assistance
environmental services and who are willing to
needs time to be accepted;
work together to help address the needs of the
• A focus on joint ventures alone is too narrow.
urban poor.
A new approach based on alternative PPP
solutions for different situations from a wide

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

II The Urban Challenge

Rapid population growth throughout the
developing world has created desperate
conditions in urban centres, as citizens,
particularly the poor, lack access to basic water,
sanitation, waste and energy services. This
section looks at these conditions and discusses
why municipal governments, which are
increasingly charged with implementing solutions,
have been unable to do so using more traditional
approaches such as financial assistance from
development organisations or directly embarked
on full-fledge privatisation.

The Urbanising World

The end of the 20th century witnessed

unprecedented change in the pattern of human
settlements. For the first time in history, more
people are living in cities and towns than in rural
areas. During the past three decades, the urban
population of developing countries has tripled and,
by the year 2000, some 2.2 billion people live in
the urban centres of Asia, Africa, and Latin
America alone, approximately one-half in cities of
one million or more inhabitants. This urbanisation
has been accompanied by an alarming growth in
the incidence of poverty. Today, one out of four
urban dwellers lives in "absolute poverty," while
another one in four is classified as "relatively
poor."

More than simply a demographic phenomenon,

the rapid concentration of hundreds of millions of
people in urban areas throughout the developing
world is one of the most significant processes
affecting developing countries and shaping their
future. The result is a radical transformation in the
structure of cities, accompanied by complex
social, economic, and environmental changes.

Urbanisation has placed an extraordinary strain on

governments, both national and local, to meet
their citizens’ basic needs. Urban environmental
problems, such as insufficient water supply and
sanitation facilities, inadequate waste
management, and unsustainable energy systems,
are particularly acute, and growing worse, as
available services and resources are
overwhelmed by expanding populations. The
World Health Organisation estimates that 25 to 30
percent of urban residents in Latin America,
Africa, and the Middle East lack access to potable

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

water, and that more than one third in Asia are not charged, collection has typically been
serviced. In addition, municipal authorities typically problematic;
collect less than half of the waste generated each • Many municipalities have large debt
day in large cities, and in many cities disposal obligations, leaving little room for major new
service is not provided to slums and squatter loans.
settlements. • Municipal managers are limited in number and
tend to be inexperienced and unprepared for
Governments simply lack the resources to provide their new public service responsibilities;
adequate services. They are finding that their • Municipal managers often have little access to
limited financial resources are not sufficient to information on new technology options that
cover the needed expansion of these services and could provide better and more cost-effective
ODA has not been able to fill the gap. Even where services;
governments do find the resources to subsidise • Municipal managers frequently have little
public utilities, inadequate management and understanding of the potential of the national
technical skills often result in poor service, with or international private sector as a partner in
poorer sectors of the population remaining largely resolving these problems. Where interest does
under-served. exist, limited economic resources often
prevent them from undertaking the necessary
A New Role For Municipalities preparatory or marketing work to attract
private sector interest and commitment.
The global trend toward political and economic
decentralisation has placed municipalities on the How Traditional Funding Options Are Falling
front lines of this public service crisis. Some Short
municipalities, by virtue of their size or political
importance, are well positioned to address the Official Development Assistance
major challenges of water, waste, and energy
service delivery. Most, however, are not prepared Financial and technical assistance from bilateral
to solve their growing problems. The following and multilateral institutions has increased the
conditions help to explain why: capacity of many governments to meet some of
the challenges posed by rapid urbanisation. ODA
• The current and projected revenue base of is limited, however, and can only provide a fraction
most municipalities is inadequate to finance of what is needed (Figure 1). Foreign direct
capital improvements and associated investment of private capital now far exceeds ODA
operating costs; investments and promises to be the most
• Decentralised authority has not come with significant economic driving force for many
decentralisation of national budgets, so developing countries in the future.
municipalities end up with broader governance
mandates, but fewer financial resources to As small and medium-sized cities grow and
allocate to them; become increasingly complex socio-economic
• Most water and waste services are provided at centres, they present a special challenge for ODA,
no cost to users, or at prices substantially which tries to achieve broad impacts with limited
below cost. The user fee concept, endorsed at resources. Furthermore, ODA does not provide a
the United Nations Conference on long-term framework for the ongoing delivery,
Environment and Development (UNCED) in management, and operation of services.
1992, has not been given political support
locally or internationally. Even where fees are

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Figure 1: Private Capital Flows to Developing Countries and Official Development Assistance, 1990
to 1998

350

300

250
UN Target
200
ODA
150 Private
100

50

0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999a
Year

Source: Private Capital Flows and the Environment, B. Gentry, ed., Edward Elgar Publishing (1998); UN,
Agenda 21 (1992); World Bank, Global Development Finance (1999).

Privatisation problems involve smaller projects (that is,

investments of less than $25 million) that are
Throughout the 1990s, many developing countries unable to attract this type of private sector
and economies in transition shifted away from investment. Smaller projects typically have the
public sector dominance in a variety of economic same degree of political and commercial risk as
sectors, including the provision of water, waste, larger projects; however, the risks and project
and energy services. This shift usually takes the development costs tend to outweigh the potential
form of wholesale privatisation, whereby the financial gains (in this regard, the absence of user
government cedes total ownership and control of fee charges has been one of the most serious
the service and its underlying assets to a private obstacles to private sector investments in urban
organisation, either through outright sale or water, waste, and energy services). Another
through long-term concession. Under such problem with full-scale privatisation is that
circumstances, the government typically maintains governments do not remain directly involved in
responsibility for the public welfare through providing basic public services. Their involvement
regulatory commissions or other statutory powers guarantees a degree of public accountability,
of surveillance and sanction. preserves the public service ethos, ensures the
protection of all sectors of society, and
Privatisation has a number of limitations with underwrites the delivery of social and
regard to the environmental services that are so environmental, as well as economic benefits. That
desperately needed in developing countries. While is, it meets sustainable development as well as
it may be a viable option for some large-scale purely financial goals.
projects, most of the critical urban environmental

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

III The Joint Venture PPP

Approach
The 1992 Earth Summit in Rio de Janeiro sent a
clear message that the issues facing urban
centres in the developing world were too important
and too great in scope for governments to address
them acting alone – new partnerships would have
to be forged with the private sector. Agenda 21
talked aggressively about “public-private
partnerships”, stating that the public and private
sectors “should strengthen partnerships to
implement the principles and criteria for
sustainable development,” and the public sector
“should establish procedures” to allow for an
“expanded role” for the private sector.

The urgent insistence that the private sector have

an expanded role in moving Agenda 21 forward
unlocked the door to a completely different
approach. Following the summit, UNDP and SPM
began to develop a new model to engage the
private sector in designing and implementing
solutions to urban environmental issues – the joint
venture PPP.

Joint Venture Public-Private Partnerships

Structure

At their best, joint ventures are an efficient way to

capitalise on the unique strengths of the public
and private sectors – providing a vehicle for the
private sector to help deliver public services at
lower cost without adversely affecting quality or
accessibility. Under the joint venture model, the
public and private sector partners accept the idea
of shared risk and shared reward; each must be
willing to make quantifiable contributions during
the project development and implementation
process. Figure 2 provides a conceptual image of
the joint venture PPP model.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Figure 2: The Joint Venture PPP

THE PROBLEM PARTNERSHIP

DYNAMIC
ENERGY WASTE WATER
OPTIMIZATION
PUBLIC PRIVATE
SECTOR SECTOR
THE PARTNERSHIP
POLITICAL SUPPORT TECHNOLOGY
SOCIAL RESPONSIBILITY GOVERNANCE MANAGEMENT
INFRASTRUCTURE FINANCE
PROJECT
DEVELOPMENT
ENTITY
OWNERSHIP COMMITMENT
FINANCIAL / TECHNICAL SUPPORT
FOR PROJECT DEVELOPMENT

ODA FDI
SPM

Public and private sector goals do not have to be and technical skills that are necessary to run a
identical for a joint venture PPP to succeed, they profitable public service.1
must merely be compatible and lead to a common
or shared outcome. For example, one partner may A Continued Role for the Public Sector
be interested in financial return, the other in
improving customer service, yet both share the Under the joint venture PPP scenario, private
common goal of creating a viable and sustainable sector involvement alters, but by no means
organisation. eliminates public sector responsibilities. The
private business sector is driven by profit, and if
Under joint ventures, the government is both the left unregulated, this pursuit of financial gain can
ultimate regulator, as well as an active lead to under-investment in the human and social
shareholder in the operating company, allowing it capital that is necessary to meet basic
to maintain a controlling interest in the venture for infrastructure needs. Governments must maintain
the sake of safeguarding public needs and responsibility for ensuring that adequate and
interests. From this position, it may share in the
operating company’s profits and help ensure the 1
In the case of environmental services, it can be to the public
wider political acceptability of its efforts. The sector’s advantage to partially divest in order to benefit from
private sector partner often has the primary the infusion of private capital and improved operating efficiency
responsibility for performing daily management while maintaining a role as shareholder in the new venture. In
this capacity, the government maintains an insider’s view of the
operations. However, the public sector typically operation and voting rights, which can be a more effective
continues to play a role at the corporate control measure than regulatory oversight alone. Following
governance and day-to-day management levels, completion of the terms of agreement, the government can
which helps public employees gain the managerial choose to fully divest if it is satisfied with the performance of
the private partner and the direction of the joint venture
business.

2
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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

affordable infrastructure services are provided to Most importantly, joint venture PPPs bring
all citizens. Whether they exercise this business solutions, not aid or debt, to urgent
responsibility as a provider, partner, or regulator urban problems. They combine the advantages of
will depend on the government’s needs, the private sector – dynamism, access to finance,
constraints, and capacity. knowledge of technologies, managerial efficiency,
and entrepreneurial spirit – with the social
Continued government involvement in certain responsibility, environmental awareness, local
services helps ensure the efficiency of economic knowledge, and job generation concerns of the
markets by reducing capital risks, increasing public sector. Experiences to date show that joint
access to information, and reducing monopoly venture PPPs work, bringing a badly needed
power. In addition, government involvement can infusion of technology, finance, and management
serve to increase public accountability, ensure to tackle desperately serious urban problems
equal distribution of goods and services, and (Faulkner, 1997).
maintain partial control in publicly important
industries. The Spectrum of Public-Private Partnerships

Benefits of the Joint Venture Approach Joint venture PPPs are just one of a vast array of
possible options for public-private collaboration.
The joint venture approach offers numerous The term “public-private partnership” describes a
benefits to the public and private sector partners. spectrum of possible relationships between public
It has built awareness among local political and private actors for the co-operative provision of
authorities and public-sector partners of the infrastructure services (Figure 3). The only
advantages of the free market approach and essential ingredient is some degree of private
decentralised decision-making. It has also participation in the delivery of traditionally public-
demonstrated the importance of least-cost domain services. There are virtually infinite
solutions to reduce total investment, generating numbers of individual points on the spectrum, with
profits to ensure long-term project survival, and new models for co-operation being developed all
motivating employees to work for the good of the the time. The broadest definition of a PPP is any
company. For the private sector, participation in a form of voluntary co-operation between public and
joint venture in effect makes them a long-term private actors – the joint venture PPP discussed in
partner in efforts to attend to the needs of a this report is in the centre of the spectrum.
country’s population, while earning an adequate
rate of return and gaining access to new markets.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Figure 3: The Spectrum of Public-Private Partnerships

Broadest Definition of “Public-Private Partnerships”

Agreeing Traditional Joint Ventures Passive Public

Frameworks Public Co-ownership Investment
Local Agenda 21 Contracting Co-responsibility Equity
Fully Fully
Community Design Debt Guarantees
Public Private
Visioning Build Grants
Sector Sector

Building For-Profit
Awareness Passive Service Build Agreeing Non-Profit
Private Contracts Operate Frameworks Building
Investment Operate and Invest Regulatory Awareness
Government Maintain BOT Dialogue
Bonds Lease Concession Covenants

Public Private
Enabler
Provider Government Role
and
Regulator
Selecting the best PPP option depends on a produced by the private sector. However, they are
variety of cultural, economic, and social factors – often hesitant to enter more complex relationships.
the joint venture model will not always be the most Governments are typically concerned that private
appropriate choice. PPPs are context-based. They businesses will take advantage of them, while
vary in target, form, process and parties. Flexibility businesses tend to consider government
is key and needs to be exercised when choosing approaches to be burdensome and wasteful.
parties to play the different roles – who will best
serve varies from case to case. Flexibility also So what does it take to coax these groups off their
needs to be present in the choice of response in traditional paths and persuade them to work
order to maximise effectiveness and optimise together? Generally, it takes a widely
system efficiency. The most successful acknowledged crisis – one multiple groups
arrangements come from a flexible, opportunistic acknowledge as affecting their core interests. In
approach, drawing from experiences in other the case of urban environmental issues, the
cases. problems facing so many cities throughout the
developing world constitute such crises and have
How Public-Private Partnerships Come been key drivers in the formation of PPPs.
Together Sometimes, even in the absence of a significant
crisis, an individual, group, or organisation will
For both public and private sector groups, getting realise that separate, uncoordinated actions are
involved in a PPP, particularly a joint venture, creating redundancies and missed opportunities
often does not seem like a desirable solution at for optimising the use of scarce resources. Such
first. Most organisations prefer to stay on familiar “champions” can be government officials, non-
paths, sharing goals and work practices with other governmental organisations (NGOs), business
groups that think and act like them – governments people, or citizens who – through their personal
working with governments, businesses with other motivation – make partnerships happen. In other
businesses, non-profit groups with other non-profit cases, they are service providers who stand to
groups. profit from the partnership. Although one hopes
that progress can be made in the absence of a
Governments and private firms have long worked crisis, in practice, the inertia that keeps many of us
together under simple arrangements such as on our familiar paths is usually only broken by a
government purchases of products that are pressing need to work together.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

IV The PPPUE PDF

Process
Project Criteria

The underlying objectives of the PDF were to

introduce the joint venture model to the
governments of developing nations, and to
promote actual partnerships between the public
and private sectors in these countries to address
urgent problems in the water, waste, sanitation,
and energy services sectors.

PPPUE concentrated on projects that by virtue of

their size and socio-economic impact were not
attracting mainstream technical and financial
support or the financial and international
contracting community's attention (that is, projects
of less than $25 million). PPPUE also sought out
projects that, by building on their latent revenue
streams (polluter pays and user fees, for
example), would transform an environmental
problem into a successful business, profitable
enough to attract private-sector investments.
PPPUE anticipated that these projects would
provide a testing ground on which to develop an
alternative but verifiable methodology for project
development that would bring demonstrable
benefits in terms of lower transaction costs,
shared roles, and replicability. PPPUE strove to
promote projects that improved social conditions
through job creation and overall improvement of
city services and living conditions. Projects
needed to respect local cultural values and
established traditions, use eco-efficient
technologies, and involve NGOs, community
groups, and other local stakeholders whenever
possible.

PPPUE wanted to tackle priority problems for local

authorities and central governments, and
specifically sought out projects that addressed
problems shared by other cities in the region or
sub-region. PPPUE gave preference to projects in
stable political environments, with a reasonable
time frame for project implementation and
acceptable electoral deadlines.

Underlying Themes of the PPPUE PDF Process

The premise of the joint venture approach is that

shared risk equals shared reward. The process
therefore advocates joint ownership and
governance throughout the project development
and implementation processes. It supports the

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

application of tendering and joint venturing Initially, PPPUE consultants conducted an

methods that, while ensuring total flexibility, exploratory project identification mission in a host
transparency and cost-efficiency, provide the country. The mission was generally organised and
private sector with the confidence that its "up- supported by the local UNDP country office.
front" investment in the project’s development will During the mission, the PPPUE team met with
be rewarded with an equitable participation in the interested parties from the public and private
final business. The process acknowledges that sectors to gauge the applicability of the joint
time is of the essence, while recognising that venture PPP approach and the level of interest.
projects in the developing world take time. The Following the mission, the team conducted a
principal building blocks of the process are tried preliminary “reality check” to confirm the project’s
and tested, drawn from decades of project viability and the government’s interest in pursuing
financing and structuring experiences around the it.
world.
Step Two: Partner Identification
From the start, PPPUE understood that the vast
majority of developing countries would consider Step Two encompasses the establishment of
the joint venture approach to be a significant interest among public and private sector
departure from their accepted practices. The organisations to work toward the environmental
underlying "shared risk = shared reward" problem’s resolution. The partner identification
philosophy implied a change in attitude from process typically entailed the following sequence
traditional reliance on ODA and more of events:
straightforward contractual relationships with the
private sector. Operating in the groundbreaking 1. The host government issued a preliminary
area of environmental services only added to the project endorsement in the form of a formal
challenge, as private-sector enthusiasm for such request to UNDP that they provide technical
PPPs depends upon the stringency of local assistance to the selected project by offering
legislation, the urgency of the problem, and the the services of an independent project
perceived direct economic benefits. development advisor (PDA).
2. The PDA identified and secured the support of
Steps in the PPPUE PDF Process local public-sector partners (typically the
project sponsors), and facilitated their signing
The joint venture PPP process is based on five of a Letter of Intent (LOI). Where appropriate,
main steps: (1) project identification and the the PDA identified and engaged the support of
“reality check”; (2) partner identification; (3) local private-sector partners through
working group formation and signing of a explanatory meetings organised by UNDP or
memorandum of understanding (MOU); (4) project the host government.
design and development; (5) formation of the joint 3. The project sponsor(s), with help from the
venture business; and (6) assessment for PDA, UNDP Country Offices, and other
replicability. The following discussion outlines the sources, identified and recruited local support
specific efforts that are often involved in each consultants.
step. 4. The PDA scoped out the project in agreement
with the project sponsor(s), possibly
Step One: Project Identification and the “Reality developing a preliminary economic model of
Check” the proposed business.
5. The sponsor(s) took a negotiated contract
approach to selecting a private-sector partner.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Partner Identification in Tunisia

A PPPUE team visited Tunis in 1997 in co-ordination with the local UNDP office. The PPPUE team
met with many potential stakeholders including the Ministry of Environment, Aménagement du
Territoire, the National Waste Management Programme (PRONAGDEC), and the Loi Cadre on
Waste. The UNDP Country Office made all the arrangements and provided a local representative to
accompany the PPPUE Team during its initial exploratory mission. The Tunisian government agreed
to public sector involvement in the project, while the Ministry of Environment insisted that the project
address the operational and management issues on a sustainable basis. After reviewing three of the
Ministry’s candidate projects, PPPUE selected the Recycling and Collection of Packaging Waste
project. The scope of the project is to form a joint venture business to address the collection, sorting
and recycling of packaging waste in Tunis, including paper, cardboard, glass, and aluminium, and to
sell the recycled waste to re-users and energy generators such as the cement industry.

The strong position of the central Tunisian government with regard to the private sector made the
central Ministry of Environment, acting through the National Agency for the Protection of the
Environment (ANPE), an obvious initial public sector partner. Preliminary meetings, organised by
ANPE, welcomed companies from the waste generating sectors (supermarkets, bottling companies,
and soft drink manufacturers) as well as from the recycling sectors (plastic waste and pulp and paper
recyclers). The meetings gave the private sector firms an opportunity to air their concerns and express
their interests to the public sector officials, which facilitated a mutual understanding of each sides’
priorities. ANPE gave the project priority, contemplated a series of economic and other mechanisms to
ensure project profitability, and participated in the project design process, all of which provided
additional incentive to the private sector to move forward.

Step Three: Working Group Formation and directly (in cash or in kind) to the successful
Signing of a Memorandum of Understanding workings of the new public-private entity.
(MOU) Typically, it covered the scope of the project; the
formation, governance and administrative
When a government decides to use a joint venture structure and membership of the working group;
PPP approach, the partners must construct an the roles and responsibilities of all parties
agreement that defines the roles and the including the PDA and UNDP; the contributions
responsibilities of each partner as they move (cash or in-kind) of future joint venture partners;
forward. This is typically accomplished through the the project development process; measures to
development of a MOU, which in essence creates ensure transparency in contracting, sub-
a joint working group. The process rests on the contracting and pricing issues; and a time-line for
premise that only in this manner can the key preparing the “bankable document.”
principles of the process be assured: ownership of
the project by both sectors; demonstrable The establishment of a joint working group
economic (and political) commitment to the project introduced certain invaluable innovations to the
by all parties; and operational/administrative project development process that reflected a
management (governance) of the project. The private-sector, entrepreneurial approach to project
joint working group provides the necessary forum design, financing, and execution. These include:
for constructive, collaborative, and confidence-
building dialogue and interaction among the public • Minimisation of project development costs
and private sector partners. It ensures joint (taking a project from identification to
entrepreneurial problem solving in the context of a execution optimally should not exceed four to
transparent and pragmatic project design and six percent of the final investment; if the costs
contracting process. of a feasibility study can be minimised and
shared between the parties, the resulting
The MOU was signed by all project partners and value of the work will be higher; the private
other interested parties, including, the PDA, sector does its own analyses and does not
PPPUE, and any other body (public, private, typically hire outsiders to do the studies for
bilateral or multilateral) interested in contributing their investments);

16
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• Greater confidence that comes from one's Once the MOU was signed, the joint working
own work; group undertook the project development work
• The ability to maintain negotiation margins with support, as necessary, from the PDA, its local
throughout the design process, with both sides consultants, UNDP Country Offices, and additional
well placed to make the final concessions on bilateral or multilateral agencies (as appropriate).
tariffs or price that will secure profitability; Project development typically included a pre-
• Efficiency, in that the time and pace of work feasibility analysis of the market (upstream and
are of the essence if the project is to maintain downstream); an analysis of the regulatory
private-sector interest. If the bulk of the environment; a technical analysis and evaluation
economic burden of developing a project falls of technical options (national and international);
on the private sector, it is reasonable to move and an economic and financial analysis. The
at that sector’s pace; and feasibility studies were generally funded by the
• Optimisation of the ultimate financing package private sector partner(s). Once these analyses
for the project. The technical, economic and were complete, the joint working group prepared
financial parameters of the project, as it is an investment proposal and "bankable document.”
designed jointly by the public and private
sectors, determine the nature of the project’s Throughout the process, with the direct support of
funding. the PDA, the joint working group was fully
responsible for its own work programme, its speed
Inevitably, the working group process varied from of implementation and the maximum number of
project to project, reflecting, among other things, tasks it was capable of performing, thereby
the pressure and perception of the environmental minimising the project's reliance on external
problem, the nature of the dialogue between the support. Traditional investment planning in
public and private sectors, and the regulatory emerging markets has tended to rely heavily on
environment in which the project has developed. A the work of external consultants, often financed by
joint venture PPP is not merely a semblance of third parties. This has meant less responsibility for
dialogue and consultation between the public and the local partners and project design by persons
private sectors, but a concrete exercise in joint who will never be called upon to invest in it or to
problem solving and burden sharing, leading to “make it work.” Experience has shown that
the establishment of a jointly owned, economically technical studies in which the ultimate participants
sustainable enterprise. have been directly involved from the outset are
usually more focused, more cost-effective and
Step Four: Project Design and Development ultimately more valuable from an investment
viewpoint, being tailor-made not only to the project
but also to its ultimate shareholders.

17
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Project Design and Development in Willowvale, Zimbabwe

The Government of Zimbabwe is eager to find solutions that will ease the increasing strain on the
country’s energy and water resources resulting from the growth of Zimbabwe’s industrial base and
heavily industrialised areas. PPPUE undertook several exploratory missions in 1994 and 1995, during
which the team met with central government and municipal officials to present the PPP approach and
gather advice on potential projects. Consultation with the Public Works Department of the City of
Harare, the Ministry of Transport, the Energy Power Utility ZESA, and select private sector businesses
suggested a common interest in a pilot project to optimise the use of energy, water and waste in an
established industrial area in Willowvale (located 5 miles Southwest of Harare). The public and private
sector partners planned to form a joint venture business to buy bulk electricity and manage its
distribution within Willowvale Industrial Park. The project was intended to include demand side
management and the provision of technical advice and services to customers in the Park.

The public and private sector partners came together easily for this project. Public sector partners
included the providers of power, water and waste disposal services; private sector partners included
the industrial users of these services in Willowvale. PPPUE undertook a pre-feasibility study of the
project in 1995 that included workshops involving the utilities, participating industries and a local non-
governmental organisation. The study indicated that a viable business could be created to respond to
the energy, water, and waste issues of the industrial area and was sufficiently positive for the public
and private sector groups to come together to move the project forward. The partners signed an MOU
shortly thereafter, which triggered the German Investment and Development Company (DEG) to
express interest in the project and to finance a full feasibility study for the Willowvale Industrial Park
energy-service company. The MOU provided for an Executive Committee (EC), comprised of the
public and private sector partners, to manage the project. PPPUE assumed an advisory role within the
EC, which met regularly and made all major decisions regarding the project. A Technical and
Economic Working Group, under the leadership of the local NGO Southern Centre for Energy and
Environment, contributed to the development of a Business Plan against which the partners could
make their investment decisions.

Step Five: Formation of the Joint Venture international finance institutions. With financing
Business secured, the partners implement the project.

Once they had developed the bankable Step Six: Assessment for Replicability
documents, the project partners entered into final
negotiation with the project’s investors and When the project is underway, PPPUE, the PDA,
lenders. If appropriate, the PDA supported the and the national and regional government
negotiations with potential national and assessed the project and the specific project
development experiences for replicability.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Opportunities for Replicability in Caldas, Colombia

The coffee sector plays a significant role in Colombia’s national economy, and the Department of
Caldas, in particular, represents 50 percent of the nation’s coffee producing capacity. The coffee-bean
washing process generates a significant amount of contaminated water, which a large number of
independent coffee growers usually discharge into streams and rivers. The application of new coffee
washing technology would lead to a major reduction in water consumption and pollution.

PPPUE and Fundacolon, a non-governmental organisation in Bogota, first identified a potential coffee
PPP project in mid-1994. The project established a joint venture business, Agua Pura S.A. (APSA),
bringing together five regional public sector groups and two regional private sector groups to address
water quality issues in the coffee-producing region of Central Colombia. The partners identified the
comprehensive urban waste management of 21 outlying towns as a way to reduce pollution in the
area’s rivers and streams, and the project became operational in 1996.

The design and implementation of a joint venture business to manage coffee waste in the multi-
municipal area of the Department of Caldas should provide the optimum solution to the resulting
environmental problems that have confronted the local government and the citizens for many years.
The project serves as a sound model for exploring similar PPP solutions throughout the region and the
world.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

V Project Actors
Joint venture projects require access to skills that
can bring solutions to the PPP process. The PDF
found this skill base in experts inside the UNDP
system, particularly in the country offices, and in
the project teams that were deployed by PPPUE
and reinforced by local consultants. Some projects
required additional financial and technical
resources, which were provided by ODA and
academic institutions. Together, these “project
actors” brought unparalleled project experience
and extensive networks of contacts to the projects.
Following is an overview of these different actors
and the roles they played in the PDF at the
programmes and project levels.

Developing Country Governments

PPPUE encouraged national governments to

identify PPP opportunities that addressed priority
problems and could justify government funding of
a portion of the start-up costs. National
governments were also essential in removing legal
bottlenecks. In some cases, national governments
had to change legislation to allow local
governments to engage with the private sector. At
the local level, the municipality was often engaged
in PPP negotiations and typically served as an
active partner in the PPP process. Local
governments were also typically responsible for
ensuring that other sectors of civil society were
fully involved in the PPP process. Their ongoing
role includes facilitating the entry of appropriate
technologies and investments, and demonstrating
a continued commitment to the PPP process.

Private Sector

Local private sector involvement was a

requirement for every project; international private
sector involvement was encouraged to provide
financial investment, management skills, and
technologies. PPPUE promoted the use of a
transparent process based on clearly defined
criteria to identify all private sector partners. In
order to be eligible for selection, the private
partner had to: (1) be willing to contribute to the
cost of the project’s pre-feasibility and feasibility
studies; (2) be prepared to invest in the new
company when it was formed; (3) have experience
operating the eco-efficient technologies to be used
by the new company; (4) have experience
operating in the country where the new company

20
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

was established; (5) have the support of its own transparent and available to all interested parties.
government’s development agency; and (6) In addition, the country offices provided input into
strongly support and advocate eco-efficiency, local the project development process to help balance
participation, and respect for local cultural values. economic, social, and environmental concerns.
UNDP country offices often helped ensure that
UNDP gaps not filled by the public and private sector
partners received appropriate support. This
UNDP played a co-ordinating role in the PPPUE included contributions to the cost of essential
Programme at headquarters through the studies (e.g., legal, market, and pre-feasibility),
Sustainable Energy and Environment Division of and the deployment of complementary capacity-
the Bureau for Policy Development, and at the building programmes.
project level through its network of Country Offices
and through the funding of PDAs, who played a In addition, UNDP country offices encouraged and
critical role in facilitating the PPP process. facilitated the involvement of governments and the
local private sector in individual projects by
UNDP Headquarters received funding requests helping to ensure that projects were
and assisted in the selection of projects that met understandable and inviting to these potential
the established project criteria. Headquarters partners. In most circumstances, the presence of
helped to ensure that PPPUE pursued project local UNDP officials, working alongside and
activities that responded to the needs of through the PDA, served as an important
developing countries, complemented UNDP guarantee of transparency and credibility. UNDP
country programmes, had economic and political country offices ensured that, whenever possible,
value, and served as vectors of innovative bridge projects were co-ordinated with other urban and
building to the public sector. Early in the process, environment activities within the United Nations.
the UNDP country offices helped disseminate They also played a critical role in transmitting
information on the PPPUE to developing countries successes and quantifiable benefits to potentially
to ensure that opportunities for participation were interested donor and other agencies.

Role of the UNDP Country Office in Costa Rica

The establishment of a joint venture energy services company in Costa Rica, ESCO, required the
close involvement of UNDP’s local office. Constant interaction with the office of the Resident
Representative from the outset emphasised the compatibility of the PPPUE approach with the country
programme. The country office played an important role in helping to select the project and the local
consultants, and throughout the project development process, PPPUE and the UNDP country office
co-ordinated closely all major developments and steps taken by the PDA and local consultants.

Early on, the UNDP country office expressed a willingness to finance support activities, and ultimately
contributed 50 per cent of the cost of a preliminary legal opinion on the modalities of the PPP
corporate and bidding structure in Costa Rica.

The PPPUE ESCO project is perceived at the highest government level as a timely and valuable
example of how to move towards private-sector engagement in infrastructure and environmental
activities. The public-sector partner, CNFL, expects that ESCO will not only play a significant role in
the Costa Rican market, but will provide a commercial and technical springboard to expand into the
rest of the Central American and Caribbean market.

Project Development Advisor (PDA) project catalyst, moderator, and intermediary

between the public and private sector partners,
UNDP played a critical role in funding an helping each to understand the other better,
international PDA for each PPP project. The thereby facilitating a cost-effective, equitable and
consistent hands-on support of a PDA at every transparent decision-making process. The PDA
stage of the process was central to the success of typically brought vital negotiation and project
the PPPUE methodology. The PDA acted as a development experience in areas such as

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

technology options, finance, eco-efficient ensured the progress monitoring function (which
technologies, public-sector project advisory work, can, in economic terms, only be assured by
private-sector corporate finance, user fee someone on site), reinforced the PDA with critical
structures, asset valuation techniques, and local knowledge and contacts, built "cultural"
institutional structuring. The international PDA was bridges between the PDA and the project
asked to maximise the transfer of PPPUE project participants, and consolidated the technology
"technology" to the host country by recruiting and transfer and local capacity-building goals of the
managing local consultants, thereby facilitating PPPUE Programme.
future replication. PDAs also identified the
capabilities of new partners and found ways to fill Donor Countries
any gaps in the project development process.
In addition to contributing financial resources to
In essence, the PDA built bridges between the the PPPUE Trust Fund, donor countries provided
public and private sector organisations, and often expertise and technological innovations to a
broke the “logjams” traditionally associated with number of PPP projects. Donor countries have
public-private project development. For all parties, involved their own private sector and academic
the PDA, along with UNDP and NGOs, also resources and bilateral agencies in projects. They
helped to ensure transparency. The independence have also encouraged private sector involvement
and total impartiality of the PDA was assured in project design, development, and investment,
through local politics, local pressure groups, and and contributed funds to supplementary
local and international business and contracting components of the project development process,
organisations. The partners in the vast majority of such as feasibility studies. Donor countries
PPP projects considered the PDA an essential benefited from their involvement in that the PDF
component of the project. process provided their private companies with
access, on a competitive basis, to pre-vetted and
The international PDA was supported by local identified projects, to which a high level of host
consultants or advisors, who were selected for government commitment has been previously
their experience in comparable project situations secured.
and usually known to UNDP. These consultants

Donor Country Involvement in Batangas, Philippines

UNDP Philippines suggested that PPPUE help implementing a PPP initiative in Batangas, Philippines.
The proposed project would bring together public and private sector partners to form a joint venture
company that would develop a collection, transfer, recycling, treatment and disposal facility for
municipal solid wastes, as well as for medical and hazardous wastes in the Province of Batangas.

As the process got underway the project was presented to the New Zealand ODA (NZODA) and
stimulated sufficient interest to support its development. PPPUE helped the regional programme office
organise an “investors roundtable” to present the PPP project to potential private sector investors and
contractors.

At first, larger multinational firms were sceptical of the PPP process and whether or not the public
sector was sufficiently committed. Furthermore, most of the firms considered investment in the
Philippines too risky. Several firms (specifically those from New Zealand), however, felt more
confident knowing that the national aid agency was directly involved. The national and multilateral
involvement combined with the PPPUE team’s knowledge base proved sufficient to manage the
concerns over political uncertainties.

Based on competitive presentations, the project’s working group unanimously elected to award the
project to the New Zealand Management Limited (NZWML) consortium. The working group ensured
that the entire selection process remained transparent.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Project “Champion” the fruit of her dynamic vision of the most cost-
effective mechanism to deliver a project.
Although not an official project actor, the project
“champion” – whether from the public or private NGOs and the Local Community
sector – has been of critical importance to a
project’s success. The ability of a public-sector In many cases, NGOs provided valuable local
champion to generate the initial momentum to knowledge, insights, and contact networks that
make the necessary "leap of faith," when the improved project quality and the increased the
benefits of the process were difficult to level of local participation. The Southern Centre
demonstrate, was often critical to the initiation of a for Energy and Environment in Zimbabwe, for
PPP process. In Colombia, for example, the example, even took over the leadership in the
former Governor of the Department of Caldas business plan development. In general, NGO
served as the key driving force behind the PPP participation lent greater transparency to the PPP
process leading the incorporation of a joint venture process and helped ensure that local needs and
company. The incorporation and adequate priorities were met in a cost-effective manner.
capitalisation of the company were in large part

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

VI Results and Benefits of

the PDF
Project Costs

The joint venture PPP process is often complex,

labour-intensive, and time-consuming, and
sophisticated skills are needed to ensure success.
Yet, as the following results demonstrate, in terms
of tangible progress toward the creation of viable
environmental businesses and the mobilisation of
public and private sector investments in time and
cash, the PPPUE PDF approach offered good
value for money.

The PPPUE PDF was funded at approximately $2

million between 1995 and 1999. It benefited from
major contributions from the Swiss and New
Zealand governments, as well as inputs from
Germany, the United Kingdom, and the
Netherlands. Based on its experience in the initial
phase (1995 to 1996), the PPPUE established a
per-project technical assistance budget of
$250,000. In practice, expenditure on projects has
varied. Experience shows that time, distance, and
costs are closely related. Therefore, the longer
the process, the greater were the costs of each
project. Thus, the Willowvale Industrial Park
project in Zimbabwe has cost some $220,000 in
the four years since it started, while the pursuit of
two projects simultaneously in Costa Rica has
cost $205,000 in 18 months ($90,000 for the
energy project and $115,000 for the solid waste
project). The average expenditure on four
suspended projects has been on the order of
$40,000.

Projects Results

The nine projects initiated by the PPPUE PDF

have reached different stages of development.
Three projects (Colombia, Costa Rica-ESCO,
Zimbabwe) have resulted in PPP businesses or
will do so in the near future; three others (Costa
Rica-MSW, Namibia, Philippines) plan to establish
a joint venture business, and were brought to
advanced development stages where they were
picked up by other programmes or donors to bring
them to final fruition. The remaining three projects
(Poland, Tunis, Turkey) ultimately overlapped with
a parallel strategy of traditional tendering and
procurement. Time or political (electoral)
constraints forced authorities to resolve the
problem with more familiar methods of project

24
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

implementation, building on the groundwork local CNFL labour force, acting through its
provided by the PPPUE. Even though no joint trade union, may also be allocated shares in
venture businesses were established in these the new company. CNFL sees ESCO as a
cases, the success lies in solving an source of revenue and as a major contributor
environmental problem, which had not found an to the range of services it can provide to its
adequate answer before PPPUE got involved. client base, thereby cementing long-term
client relationships in a period of technical
In addition to these project efforts, PPPUE transition and growing deregulation. CNFL
undertook preliminary project identification and expects that ESCO will not only play a
awareness-building missions to eleven additional significant role in the Costa Rican market, but
countries (Cuba, South Africa, Syria, Morocco, will provide a springboard to expand into the
Kazakhstan, Jordan, Lebanon, Guatemala, rest of Central America and the Caribbean;
Honduras, Mexico, and Peru), thereby bringing 20 • In the central valley of Costa Rica, PPPUE
countries to a point of potentially or actually helped form a joint venture company that will
committing to the joint venture PPP process. In develop and implement an economically
total, the projects have provided business sustainable solid waste management
development experience to nearly 100 middle response to improve waste collection,
management executives in the public sector; in- transport, disposal, and recycling processes.
depth project design and structuring experience to San Jose and its surrounding municipalities
more than 10 local consultants; and on-going established an internal working group in
business development experience to participating January 1999 to manage the process and
UNDP country offices. decided to finalise a pre-feasibility study to
help municipalities decide whether to pursue
Following are some of the results the PPPUE PPP projects, make larger direct contributions,
programme achieved through its PDF (see and engage the private sector in the first
Appendix B for more detailed discussions of round of negotiations. The Municipalities of
individual projects): San Jose and the surrounding metropolitan
area view the integrated waste management
• PPPUE helped establish a $3.5-million multi- system as a means of providing better service
municipality domestic waste management to their citizens, charging a market rate for
project in the Department of Caldas, these services as a result, and transforming a
Colombia. Under the project, five public-sector former loss into cost recovery or profit
and two private-sector entities formed an initial scenario;
limited-liability company, Agua Pura S.A., to • In Namibia, PPPUE has helped public and
protect the coffee-growing region's declining private sector partners form a joint venture
water resources on a sustainable basis. With PPP to use industrial water and waste as input
the technical support from PPPUE and the materials for a range of downstream agri- and
local UNDP office, Agua Pura S.A. designed a aqua-businesses using zero-emissions
waste collection business, into which they technology at a water treatment site. For this
were ultimately able to attract additional project, the PPPUE team has enjoyed the full
private-sector investors from Colombia to support and co-operation of the Namibian
serve as the firm’s operator and stakeholders. government at the highest levels. The
The Agua Pura S.A. project development government, institutional and private sector
process was initially funded by U.S.$70,000 in partners signed an MOU in November 1997
working capital from the partners, that committed them to establishing the joint
complemented by U.S.$80,000 in technical working group to explore the creation of a joint
assistance support by the PPPUE PDF. Agua venture Environmental Project Development
Pura S.A. has been operational since 1996; Company (EPDC). A feasibility study, which
• In Costa Rica, PPPUE helped form a joint- includes a Business Plan, has been
venture energy services company (ESCO) to completed by March 1999. EPDC initially
respond to the demand for energy efficiency implements a small-scale version of the Bio
services. CNFL, the electric utility, approved System Project, to test the integration of the
the creation of ESCO and registered it as a process in a productive environment and to
subsidiary. ESCO will sell controlling interest provide an opportunity for skills training. Once
to domestic and/or international partners, with in full operation, the EPDC project can be
CNFL maintaining a minority interest. The replicated by other municipalities and will

25
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

create opportunities for pursuing similar Bursa, the private sector CEVKO Packaging
ventures in water and waste management Producers Trust, and multinational packaging
throughout the region; companies. The project partners examined the
• In the Philippines, PPPUE helped form a joint project’s potential for operation on an
venture business that will address the economically viable basis, and possible
collection, transfer, recycling, treatment, and expansion of the project’s scope to include
disposal of wastes in the Province of urban domestic waste, industrial waste, and
Batangas. The private sector partner toxic/hospital waste. In June 1998, the
completed the feasibility study by the end of Working Group decided to focus on a
1999 after all parties signed the MOU in May prototype project that would entail a recycling
1999. The joint venture PPP model under company handling industrial waste from the
development with the active participation of Bursa Organised Industrial Park (BOIP). The
Batangas and associated municipal project involved two key industrialists and it
governments provides a workable model for was designed to become a “test-bed” for joint
other municipalities to engage the private public-private project design and
sector in solving urban environmental implementation. This venture, however,
problems, especially waste and water; encountered serious difficulties and delays
• In Poland, PPPUE initiated the formation of a related to obtaining the necessary government
joint- company addressing wastewater approval for the Municipality to become a
problems in the Municipality of Siewierz. shareholder in a joint-venture company.
Under the project, the Municipality of Siewierz Election pressure and time constraints finally
sought private sector partners to develop a prompted the Municipality’s decision to tender
PPP project involving the construction of 105 the project and to follow a BOT model instead
km of a new sewer system, a white water of pursuing the joint venture approach.
collection system and two water treatment • In Zimbabwe, PPPUE provided critical
plants. While there was potential to create a technical support in the design of a joint
company in form of a joint-venture PPP with venture, demand-side management energy
the companies selected through international services company, in which the national utility
tender, the Municipality finally decided to and the private sector would be shareholders.
pursue a more traditional build-operate- The company would have rationalised and
transfer (BOT) approach because of political reduced electricity consumption on the
reasons. Willowvale Industrial Park, just outside Harare
• In Tunisia, the project’s objective was the in Zimbabwe. An exhaustive feasibility study
formation of a mixed-capital company to bring and a business plan were developed. Both
economically sustainable solutions to received positive feedback from all public and
packaging waste collection, transport, disposal private partners who indicated strong interest
and recycling. The project addressed the in investing in the company. Unfortunately,
collection, sorting and recycling of packaging just at this point in the project development
waste, including paper, cardboard, glass, and process the economic and political crisis in
aluminium in Tunis, and the sale of the Zimbabwe aggravated and caused the
recycled waste to re-users and energy postponement of any investment decisions.
generators such as the cement industry. A
number of potential international business In addition to the nine main PPPUE projects,
partners became interested in forming a joint- PPPUE has provided technical assistance to the
venture company. The government, however, following countries:
decided to opt for a World Bank loan and
traditional tendering with the support from the • In Bulgaria, PPPUE provided ongoing
World Bank. Even though the final decision technical assistance to potential and existing
did not include the joint-venture option, the local partnerships for the establishment of a
PPPUE work helped to initiate a process that joint venture PPP project in water treatment
will provide a sustainable solution to an urgent and supply in Bulgaria. The Municipality of
environmental problem in Tunis. Svishtov considers a PPP water project as a
• In Turkey, the planned waste management cost-effective way of upgrading its services to
project built on existing public-private the point of cost recovery.
collaboration in packaging waste collection • In Cuba, PPPUE provided project
and recycling between the Municipality of development advice for energy efficiency and

26
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• water treatment and supply projects, and in • An opportunity to get in on the “ground floor”
Vietnam for small and medium-sized industry in the design, development, and
capacity building. implementation of a potentially profitable
• PPPUE identified and evaluated potential PPP business with the public sector as minority
projects in South Africa, Syria and Morocco, partner;
and has conducted project identification • Reduction of project risk
missions in Kazakhstan, Syria, Morocco, (political/regulatory/economic) by virtue of the
Jordan, Lebanon, Guatemala, Honduras, working group mechanism, being a tangible
Mexico and Colombia. expression of the government's commitment
to the project;
Project Benefits • Reduction of project development and
transaction costs; and
Virtually every PPPUE project was characterised • Opportunity to forge alliances with
by a crisis situation in which the public and private international contractors and investors
sectors had previously been unable to identify facilitated by the PDA, the donors or other
common interests and work towards a common project participants.
solution, largely due to conflicting mind-sets and
lack of a common language. Within this context, To civil society:
the PDF PPP process brought the following
benefits: • A mechanism providing for transparency;
• A new form of dialogue among all sectors,
To the public sector: providing true access to decision-making;
• Promotion of the concept and culture of
• A framework for reconciling the economic sustainable development, eco-efficiency and
benefits traditionally associated with pure public participation;
privatisation with the public sector’s social and • Stimulating pragmatic and replicable solutions
environmental responsibilities; to some of the most widespread
• A new form of dialogue with the private sector environmental problems affecting urban
regarding social services; dwellers world-wide; and
• Assistance in selecting the most committed • Facilitation of proper solutions through a
partners and support in the negotiation greater dialogue in which full value is given to
process; local knowledge and interests.
• A transparent and defensible methodology for
project development; Capacity Building And Institutional
• An acceleration of technology advances and Strengthening
“leapfrogging” to meet urban environmental
needs; and One of the PPPUE programme’s most valuable
• A new forum for dialogue with civil society in contributions has been the project experience
which the civil servant deals on equal terms gained by local partners, particularly among public
with all interested parties. sector officials. The experience of participating in
the operations of the joint working group,
To the private sector: extending over the development life of the project
exceeds anything that could be learned through
• An opportunity to develop an innovative, the conceptual training associated with seminars
proactive dialogue with the public sector on and workshops. This is due in part to the fact that
matters of common environmental concern; the motivation of the pubic-sector partners is
• A way through institutional “red tape” and the totally different, since the public-sector manager is
opportunity to benefit from a negotiated treated as an equal in the joint working group,
contract approach (as opposed to an helping to design his or her own future.
international competitive bidding, or ICB
approach); Throughout the project development and
• Assistance in negotiating efficiency goals and implementation process, the public and even
securing government commitment to them; private sector participants acquire skills in cutting
• New insight into public sector responsibilities edge project management methods. These skills
and concerns, arbitrated by a neutral entity; are then immediately transferable to comparable
activities that are not necessarily related to the

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

PPPUE process. They include but are not limited including financial and econometric modelling;
to: data analysis and collation; market analysis; project financing; negotiations with contractors
technology identification and evaluation; inter- and suppliers; and negotiations with bilateral and
sectoral negotiation; business plan preparation, multilateral financial institutions.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

VII Procurement
Solutions
Joint project development through public-private
working groups raises questions about alternative
public procurement options and accountability.
Governments that are addressing public service
infrastructure projects increasingly prefer to
maximise the role of the local contracting and
business community. They are better placed to
reduce the project's foreign exchange risk and are
often more willing to accept the lower rates of
return and longer payback periods inherent in
such projects. Concurrently, international
contractors have demonstrated a growing
preference for the role of “investor/contract
manager,” rather than “lead investor/lead
contractor.” These circumstances accompany a
new search for alternative public sector
contracting methodologies that will reduce
transaction costs, ensure more rapid solutions,
facilitate an agreed rate of return acceptable to all
parties, and provide the necessary transparency
to protect the interest and impartiality of the public
sector.

Above all, the PPP process aims to attract private

sector finance and knowledge to what has
traditionally been the riskiest stage of project
development – start-up. If the private sector
accepts the challenge of becoming (effectively)
the “contract manager” of the project development
process, it will likely want to be assured of a
privileged position in the project implementation
contracting process. This means that the public
sector must be prepared from the start to consider
a contracting process that respects this right. In
addition, if firms working on the design phase are
barred from bidding on the implementation, they
will lack the incentive to develop solutions that are
workable.

In some cases, the public sector had difficulty

accepting the PPP approach. In most cases, the
main area of difficulty was acceptance of the idea
that private sector partners can be engaged in a
process potentially leading to a profitable business
made possible by the good will of the public
sector. The public sector has a tendency to fall
back into the more traditional "We design, you bid"
relationship with the private sector. In this context,
the public sector has tended to argue the
following:

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• The regulatory environment (regulations they are flexible and encourage private-sector
governing the award of public contracts) does innovation; and
not accommodate anything other than the • ICB is not suitable for small sized projects. It is
traditional international competitive bidding expensive to organise and the ratio between
(ICB) approach; ICB costs and actual investment can become
• The PPP partner selection process, taking unfavourable.
place by definition before the economic and
technical parameters of the final project have Procurement Alternatives
been finally determined, may ultimately lead
the public sector into a "shotgun marriage;" These concerns have sparked international
• Any departure from the sealed-bid tender and discussions about possible procurement
contracting method will open the government alternatives. Many agree that, at a minimum, new
to accusations of partiality or corruption; and procurement alternatives should:
• Sharing the valuable database of the public
service with a partner whose long-term • State the desired end goal of the project and
commitment to the project cannot be assured minimise specific requirements to the greatest
from the outset is a price too high to pay. degree possible, allowing the private sector to
innovate and propose creative solutions;
Why ICB Will Not Work • Ensure that potential private sector partners
retain or are appropriately compensated for
International competitive bidding (ICB) rules are their intellectual property rights in the event
designed to ensure a procurement process that is they are not brought into the project;
transparent, stimulates interest among a broad • Establish performance measures and include
range of potential bidders, and delivers the monitoring provisions, either by a third party or
product or service at the lowest possible cost to autonomous government agency or official;
the government. Under conditions of certainty, and
such as government purchase of a specific good • Include provisions for renegotiating the terms
or service, these processes have generally of the contract over time.
worked well to inhibit corruption and get the best
possible value for the government. As PPPs Some established national procurement practices
emerge throughout the world, however, provide preliminary frameworks for developing
participants have begun to identify inherent alternative PPP procurement procedures that
conflicts between ICB and the objectives and embody these guidelines. For example, under the
organisational structures generally associated with Bechtel “Open Book” system, the private sector
joint ventures: "contract manager" guarantees full access at all
times to the public-sector partner in all his
• ICB is designed to work under conditions of discussions with sub-contractors, suppliers and
certainty, whereas PPPs start and generally others. Under the “Swiss Challenge,” the “insider”
evolve under conditions of uncertainty; private-sector organisation is asked to match the
• ICB generally prohibits informal lowest or most attractive offer secured through a
communication between the public and private more traditional open tender procedure.
sectors, whereas communication is the
cornerstone of a successful PPP and must Concerns About Corruption
start as early as possible in the project
planning process; Alternative forms of negotiation often raise
• ICB is designed to get the lowest price for a concerns about corruption. The mixed-capital
given product or service, whereas PPPs nature of joint venture PPPs, however, inherently
involve multiple design proposals and often mitigates some concerns about corruption. In
place the highest value on criteria other than addition to the disastrous costs that it brings to
the lowest price; society, corruption is a price that parties often
• ICB requires the government to set specific accept must be paid early in the process. It is
design criteria, limiting the ability of private therefore, in some regard, a cost of developing the
bidders to propose alternative approaches, project that each partner capitalises into the
whereas PPPs succeed where traditional operating company. The higher these initial costs,
approaches have sometimes failed because the lower the subsequent return on the investment
will be. In a PPP, both groups share an equal

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

interest in the return on the investment. In doing linear relationship between profits conceded to the
so, the ultimate shareholders have little interest in contractor and the quality of goods and services it
front-loading the costs, as this only detracts from ultimately provides. It provides only relative
their long-term benefits. At all times, the PDA, protection against corruption, which is increasingly
UNDP and NGOs can help guarantee the accepted by all as a built-in transaction cost. The
transparency, the workability and reliability of such negotiated contract, in contrast, provides a
systems. simpler, faster pre-qualification process; a true
partnership in negotiation; equivalent or greater
The ICB/public tender process usually fosters the transparency; the possibility of a pre-agreed return
lowest bid but ultimately the highest price, as on equity for both parties; lower transaction costs,
profits sacrificed at the bid stage need to be agreed budgets and shared project development
recovered at the design and implementation costs; fewer design changes and delays; and
stage. It can create an adversarial relationship shared goals regarding profits and quality of
between the public sector and contractors, and a service.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

VIII Lessons Learned and

Conclusions
Lessons Learned

Five years of practical project development work

through the PPPUE Project Development Facility
has generated a number of lessons for the design
of joint ventures and public private partnerships in
general. Following is a summary of the lessons
learned from the experiences of the PPPUE PDF:

• There is great demand for technical

assistance in partnership development.
Programme countries received PPPUE “with
open arms.” PPPUE received more requests
from senior government representatives and
UNDP country offices than it could handle with
its limited resources. National and local
governments are receptive to finding
alternative solutions to traditional public
service provision arrangements. In addition,
full-scale privatisation of basic public services,
such as water, is viewed with considerable
scepticism in many developing countries,
making the PPP approach an increasingly
attractive option;
• National and local governments need to
build capacity. Municipalities as well as
national governments need to develop their
regulatory and legal capacity to foster and
participate in PPPs effectively. Projects cannot
succeed under prohibitive legal and regulatory
frameworks. Before technical assistance can
be of much help, national and local
governments need help building supportive
legal and regulatory environments;
• Choose the right project. There is no
shortage of potential projects for the PPP
approach. The key is to choose one with well-
established criteria that has real commitment
from the local public and private partners to
make it succeed;
• Projects must be packaged properly. This
is particularly true of small and medium-sized
projects. Smaller projects have proportionately
higher transaction costs and political risks
than larger projects. Also, by adding the
innovation of securing eco-efficiency goals
and waste minimisation, the importance of
packaging, brokering, and convincing
becomes clear;

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• Projects take time. Although the PPP methodologies are respected, timelines kept,
process has the potential to be faster and and technical and financial criteria adhered to;
more cost-effective than traditional project • Projects need an independent facilitator.
development processes, it must still be seen The trust building process needs time and an
as a work of patience and detail. There are no independent facilitator who in the role of the
real shortcuts to projects in the developing “honest broker” brings all partners with their
world, and joint venture PPPs are no different institutional cultures and interests
exception. Bringing so many potential partners around one table to define common interests.
together is a complicated and time-consuming UNDP is recognised as an independent broker
task and one that begins with careful by all parties and therefore is well-positioned
groundwork and preparation; to play this role;
• High-level political commitment is • National private sector is the driving force
essential, but it is important to focus on in small and medium sized investments.
the local level. Discussions of PPPs at the Most projects developed under the PDF
national level tend to be general in character, started with national private sector partners
and it is important to move quickly to the local and/or with subsidiaries of international
level to work with those directly affected by the companies in the country. The size of the
problems being addressed. Introduction by investments as well as the joint-venture
and approval from the central government is approach, which requires early involvement of
often necessary and useful, but project all partners, makes it less attractive to
negotiations are best handled at the local international partners to participate from the
level, where the commitment tends to be beginning;
stronger; • Projects must reconcile the different
• Local leadership is critical. Projects cannot public- and private-sector cultures. The
be developed from overseas. While the PPP approach is designed to do this by
external facilitator as well as the right expert promoting early dialogue and understanding
for certain assignments are important, it is based on common goals and interests;
equally important to have the local partners in • NGOs and communities are important
the driver’s seat. Local ownership and the partners in project development. While in
identification of local champions are extremely some PDF projects local NGOs already
important. The full involvement of the UNDP played an important role, communities were
country offices in project formulation not involved. As the programme turns toward
development is the best guarantee for building bringing services to the poor, community-
local ownership; based organisations (CBOs) and NGOs will
• Local governments are at the frontline for become more important in the role of users as
PPP development in environmental well as partners in investment and operation;
services. The most important partners for • Partnerships are sustainable only if they
PPP development today are local are mutually beneficial. A dynamic and
governments, which have to find innovative innovative project development process can
answers for the crisis in urban services create unexpected opportunities and bring
inherited from the higher tiers of government tangible benefits to all interested parties;
during the decentralisation process. While a • Building mutual trust is vital. The PPP
high level political commitment is essential for model is based on trying to work problems out
dealing with the legal and political bottlenecks, early in the process and on avoiding
capacity building should focus on local adversarial posturing between the two sectors.
governments and other local partners; Getting both sides to the table to consider
• Every project needs a champion. Ideally, problems together and to identify joint
every project needs two champions – one solutions is a critical first step;
from the public and one from the private • A new approach in development
sector. In this vein, outside catalysts can be assistance needs time to be accepted.
critical factors in bringing public-private Even though many national and municipal
partnerships to life; governments were attracted by the prospect of
• Every project needs constant guidance private investments in infrastructure, practice
throughout the project design process. revealed various constraints on the political
Local and international PDAs are instrumental level (e.g., labour and community resistance),
in ensuring that sound project development and on the legal environment and capacity of

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• local authorities. The old habit of receiving another viable and sustainable methodology to be
grant resources or loans for infrastructure applied to environmental infrastructure problems
investments is deeply rooted and the change in the developing world, then the effort would have
to a new approach, where everyone has to been more than worthwhile. Clearly, however, the
contribute, takes time; programme has done much more for the nine
• Projects need to maintain their momentum. countries in which it started projects and the
Shortening the time frame by maintaining and dozens of other governments and organisations it
concentrating the momentum of the technical has affected through its workshops, Internet
assistance, with maximum reliance on local databases, and other capacity building tools.
support consultants, increases the chances of
project success by reducing “project fatigue.” The demands of infrastructure projects in the $1 to
It also reduces the likelihood that macro- $25 million range throughout the developing world
political and economic changes will ultimately are enormous. The major international contracting
interfere with project progress (the window of groups have shown little interest in this area,
opportunity for such projects is not eternal), where economies of scale are less readily
which reduces the overall development cost; identified, and where transaction costs and
and political risks are similar to those of the much
• A focus on joint ventures alone is too larger projects they typically target. In absolute
narrow. Various projects initiated during the terms, however, the problems are more acute in
PDF phase have changed their course and this segment of the urban spectrum, as medium-
the public partner used traditional contracting sized municipalities struggle with exploding
or concession modalities instead of building populations, decaying infrastructure, inadequate
joint ventures. This shows that municipalities human and technical resources and traditionally
need support in choosing from a menu of poor financial resources. Worldwide, this segment
options rather than forcing one predefined must become a central focus of development
model. On the spectrum of PPP possibilities, agencies and the international and national
the joint venture approach plays an important entrepreneurial sector.
but not exclusive role.
The PPPUE PDF process is well adapted to
Of the many lessons learned in the PDF phase of opportunities among the so-called “secondary
PPPUE, perhaps the most important in guiding the cities” because the nature of the problem is often
future direction of the program is this: the best more critical, and the range of projects tends to be
project identification and technical assistance is broader. Furthermore, municipalities perceive their
not always enough. In order for PPPs to succeed project structuring and funding capacities as more
in improving the lives of the urban poor, national modest than in capital cities, and their willingness
and local governments must be willing to build to accept PPPUE-style assistance is
supportive regulatory and legal environments. As commensurately greater. The municipal support
the PPPUE enters its new phase, it will use the typically serves to reinforce the catalytic, technical
lessons learned from its past and continuing assistance role of the PDA, supported by the
participation in actual PPP projects to make critical global mandate and credibility of UNDP in
capacity building tools and information resources sustainable human development. This is an
available to governments throughout the economic and political area that has, in relative
developing world. terms, been overlooked by the world's major
investment banking and infrastructure contracting
Conclusions institutions. The interest of UNDP and the bilateral
donor community is all the more appreciated for
If PPPUE PDF had done nothing more than this reason.
demonstrate that joint venture PPPs present

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

IX The Way Forward

In the fall of 1999, the PPPUE facility entered a
new phase, building largely on the experiences of
the PDF projects described in this report. After
testing the joint venture approach in diverse
environmental projects, the main objective of the
new PPPUE Facility is to increase the access of
the urban poor to basic services by leveraging
investments from all potential private partners,
including informal sector and communities. The
redesign of the programme also takes into
account the special need for creating an enabling
environment for public-private partnerships at the
local level. This will include policy development
and legal advice for pro-poor public private
partnerships, and capacity building for local
governments, local business and communities on
strategies and options to create sustainable and
poverty relevant partnerships.

The new PPPUE Facility has three interrelated

components: (1) the integral PPPUE National
Programmes, which are designed and
implemented in the country and managed directly
by the UNDP country offices; (2) the PPPUE
Flexible Response Facility, which provides
resources for specific PPP interventions in
ongoing projects and is managed by the PPPUE
management team; and (3) the PPPUE Global
Learning Network, which facilitates research and
the exchange of best practices and case studies
on the global and regional level and which is
managed by the PPPUE management team in
partnership with various academic institutions,
development agencies and others.

PPPUE is designed to complement existing

initiatives, providing very specific expertise on
partnership development with the private sector.
As such, the new phase of the facility will focus
heavily on partnerships. PPPUE intends to link its
activities to related programmes and projects in
the local UNDP offices to the greatest degree
possible. PPPUE will also continue to work closely
with major urban-environment and private sector
related programmes of UNDP, other UN Agencies
and international programmes. The new PPPUE
will work in close collaboration with the Public-
Private Infrastructure Advisory Facility (PPIAF),
which is hosted by the World Bank. Other
partners include international programmes in the
water, waste, energy and local governance area,
academic institutions, donor governments and

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

their development agencies, and international 1999), and particularly the PDF, provided a strong
NGOs. foundation for meeting these goals, greatly
increasing PPPUE’s understanding of the
PPPUE’s core objectives are to increase access problems at hand and indicating the most effective
to basic environmental services, particularly for ways to address them. The new PPPUE Facility
the urban poor, and to help create healthy will build on these experiences and holds great
environments and improve living conditions in the promise for affecting real, positive change in the
urban and peri-urban areas of developing lives of urban dwellers throughout the developing
countries. PPPUE’s experimental phase (1995 to world.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Appendix A:
Forms of Public-Private
Collaboration
Following are brief descriptions of some of the
more common types of public-private partnerships
for the provision of basic environmental services.
In reality, these common types are often modified
and complemented or mixed with others from
along the spectrum. The purpose is to offer a
menu of options that can be tailored to address
local needs in a cost-effective manner.

• Awareness Building: Building the awareness

of either governments or private parties of the
opportunities for improving the delivery of
environmental services through the spectrum
of collaborative approaches;
• Agreeing Frameworks: Agreeing on the
basic frameworks for community or private
action through participatory mechanisms,
ranging from Local Agenda 21 processes to
negotiation of contractual terms;
• Passive Private Investment: Making private
investment available to government-run
operations, such as through the purchase of
municipal bonds;
• Traditional Public Contracting: Entering into
a contractual relationship under which the
public sector purchases a product from the
private sector or hires a private organisation to
design or build a new facility;
• Operation, Maintenance and Service
Contracts: Entering into a contractual
relationship under which the public sector
essentially hires a private organisation to carry
out one or more specified tasks or services for
a specified period. The public sector remains
the primary provider of the infrastructure
service and is responsible for funding any
capital investments needed to expand or
improve the system;
• Joint Ventures (Mixed-Capital
Partnerships): Creating a company jointly
owned by the government and private
companies, in which they assume co-
responsibility for the delivery of infrastructure
services. The public- and private-sector
partners can either hold shares in a new
company or assume joint ownership of an
existing company (for example, the public
sector sells shares of an existing municipal
company to the private sector), which provides

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• urban infrastructure services. Joint ventures being the provider of the service to the
require that both parties accept the idea of regulator of its price and quantity. The fixed
shared risk and shared reward—each must be infrastructure assets are entrusted to the
willing to make quantifiable contributions concessionaire for the duration of the contract
throughout the project development and (typically 25 years), but they remain
implementation process; government property;
• Build-Operate-Transfer (BOT) Contracts: • Passive Public Investment: Bringing
Bringing private investment into the government funds to private operations
construction of new infrastructure plants or the through the grants, equity investments, loans
substantial renovation of existing ones by or guarantees offered by a range of public
using BOT contracts. Under a BOT, the institutions, such as the International Finance
private sector finances, builds and operates a Corporation; and
new infrastructure facility or system according • Community-Based Provision: Using any of
to performance standards set by the these or other options to help communities
government for time periods ranging from 10 address their own needs. Community-based
to 20 years. The government retains provision starts when financial or institutional
ownership of the infrastructure facility and limitations prevent the government from
becomes both the customer and the regulator providing adequate waste and water services
of the service; to particular sectors of the population, forcing
• Concessions: Awarding a private firm residents to find their own means of meeting
(concessionaire) full responsibility for the their needs. Community-based providers
delivery of infrastructure services in a might include individuals, families or local
specified area, including all related operation, micro-enterprises. Community-based
maintenance, fee collection and management organisations often play a key role in
activities. The concessionaire is also organising poor residents into taking collective
responsible for any capital investments action and in representing their interests in
required to build, upgrade or expand the negotiations with non-governmental
system, as well as for financing those organisations and governments. Community-
investments using the tariffs paid by system based provision schemes may also be
users. The government is responsible for integrated with the formal systems run by the
establishing performance standards and public, the formal business sector or both.
ensuring that the concessionaire meets them.
In essence, the public sector's role shifts from

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Appendix B:
PPPUE PDF Project
Profiles
Between 1995 and 1999, UNDP/PPPUE has
provided funding for the development of nine
projects under the Project Development Facility.
The following profiles give an overview of the type
of projects, the project development process and
lessons learned for each individual process. The
reporting period covers 1995 to the closure of the
PDF in mid 1999. The nine projects are:

• COLOMBIA: Agua Pura, S.A., Urban Waste

Management in Manizales;
• COSTA RICA I: Energy Services Company to
Promote Energy Efficiency in San Jose;
• COSTA RICA II: Solid Waste Management in
the San Jose Metropolitan Area;
• NAMIBIA: Environmental Project Development
Company to Address Water and Waste
Problems in Windhoek;
• PHILIPPINES: Integrated Regional Waste
Management Facility in Batangas Bay;
• POLAND: Waste Water Management in
Siewierz;
• TUNISIA: Greater Tunis Packaging Waste
Disposal and Recycling Project;
• TURKEY: Integrated Waste Management
Project in Bursa; and
• ZIMBABWE: Energy and Environment
Management Enterprise at Willowvale
Industrial Park, Harare

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

COLOMBIA:
Agua Pura, S.A., Urban Waste Management in Manizales

Region: Latin America

Reporting Period: Late 1994 – April 1997
Project Status: Completed
Location: Manizales, Colombia
Project Type: Urban Waste Management
Estimated Investment Range: U.S. $3.5 M

I. Project Summary

Project Objective
To establish a mixed-capital company to address water quality issues in central Colombia’s coffee growing
region.

Current Partners – Potential Shareholders

Public Sector
• Gobernación de Caldas
• Empresas Publicas de Manizales (EE.PP.MM)
• Corporación Autónoma Regional de Caldas (CORPOCALDAS)
• Corporación de Obras Sanitarias de Caldas (EMPOCALDAS)
• Central Hidroélectrica de Caldas (CHEC)

Private Sector
• Coffee Growers Federation
• Corporación Financiera de Caldas (CFC)
• EMAS (operator)

Project Description
The project established a mixed-capital company, bringing together five regional public sector groups and two
regional private sector groups, to address water quality issues in the coffee-producing region of Central
Colombia. The partners identified the comprehensive urban waste management of 21 outlying towns as a
way to reduce pollution in the area’s rivers and streams. The project serves over a quarter of a million people
in 1998.

Financial Arrangements
In 1996, the public-private group established a subsidiary of Agua Pura, S.A., with an U.S. $600,000 capital
structure. The subsidiary included the municipalities, a private sector operator, and a number of private
investors to undertake a global investment of U.S. $3.5 M.

Shareholders:
• Agua Pura (12 percent)
• EMAS (27 percent)
• Municipalities (22 percent)
• Central Hidroélectrica de Caldas (5 percent)
• Empresas Publicas de Manizales (28 percent)
• Private Investors (7 percent)

Operational Arrangements
The private firm EMAS operates the mixed-capital company.

II. Project Development Process

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Introduction
The coffee sector plays a significant role in Colombia’s economy, employing approximately 120,000 people,
with an additional 70,000 at harvest time. Caldas represents 50 per cent of the nation’s coffee producing
capacity. The coffee-bean washing process (separation of the skin from the bean) generates a significant
amount of pollution, causing the large number of independent coffer growers to discharge highly polluted
water into the streams and rivers of the Department of Caldas. The widespread application of a new coffee
washing technology, developed by Cenicafe, would lead to a major reduction in water consumption and
pollution.

The Colombian government has tended to manage its pubic sector operations well, limiting pressures to
involve the private sector in these types of matters. Prior to PPPUE involvement, Colombia had not been
involved in any joint venture public-private partnerships (PPPs). The PPPUE and Fundacolon, a non-
governmental organisation in Bogota, first identified the coffee project in mid-1994. In October 1994, an
independent mixed capital company, Agua Pura S.A. (APSA) was established, bringing together five public
sector and two private sector entities. The initial authorised capitalisation of the Company was set at
Colombian Pesos 70 million (U.S. $ 75,000 approximately). The 7,000 shares were initially divided equally
among the seven entities.

Identification of Public Sector Partners and Engagement of Government Support

Four major state/departmental agencies joined the Gobernación of Caldas as shareholders in the venture.
These included CORPOCALDAS, which addresses environmental issues; EE.PP.MM., which addresses
water supply, solid waste and telephone service; EMPOCALDAS, which addresses water distribution; and
CHEC, which manages electricity generation and distribution. These parties were chosen because they had
an economic interest in resolving the environmental situation in the coffee-growing region, namely the water
supply and water quality problems.

The outgoing Governor of Caldas was a key force in driving the creation of APSA, and with the full support of
the incoming Governor, was nominated as the Governor’s representative on the new firm’s Board. The public
sector’s willingness to involve qualified personnel in the APSA project was instrumental to its success.

Identification of Private Sector Partners

Given the specific nature of the PPP venture, the Coffee Growers Federation was the obvious choice for a
private sector partner. The other private sector partner, Corporación Financiera de Caldas (CFC) is a
financial institution and subsidiary of the Coffee Growers Federation.

The Departmental Committee of Coffee Growers includes four divisions: Administration and Finance;
Engineering; Technical; and Planning and Development. The Engineering Division is responsible for the
design, construction and maintenance of infrastructure investments in the area. In the period 1989 – 1993,
the Committee invested more in infrastructure projects than the central government. In terms of
environmental commitments, the Committee addressed the following issues: deforestation and pollution of
watercourses; reforestation; WHO food programme implementation; and the ecological washing of the coffee
bean.

Memorandum of Understanding
A Memorandum of Understanding was considered redundant given the early formation of APSA and
commitments included in its statute.

Working Group
The fact that APSA was a legally registered commercial company with its own working capital early in the
process was fundamental to the success of the PPP process. Early on, the PPPUE consultants asked APSA
to develop ideas for a series of projects focused on improving water supply and quality. APSA management
presented more than a dozen projects in May 1995 to a UNDP-hosted meeting of potential donors. The
PPPUE Project Manager worked with APSA to prioritise the projects to help secure the commitment of key
shareholders to the following PPP parameters for the interim APSA business plan:
• Demonstration of effective PPP;
• Economic viability of selected projects;

41
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

• Maximisation of APSA “value adding” role in project management;

• Desirability of early results for credibility with potential lenders;
• Demonstrably beneficial environmental impact; and
• Replicability.

ASPA, with input from the PPPUE project team, selected a multiple-municipality domestic waste project for
priority economic and technical analysis. In spring 1996, as the Business Plan approached maturity, it
became apparent that certain shareholders (particularly the financial institution) had identified an attractive
opportunity to lead the funding process for the company. APSA management saw little merit in pursuing the
funding strategy initially outlined under the PPPUE programme, which would have entailed presentation of
the business plan and investment opportunity to external donors and multi-lateral financial institutions,
preferring instead to rely on locally-generated funding. APSA management made it clear to UNDP that it was
now prepared to “go it alone” and saw no further need for technical assistance from the PPPUE consultants.

The subsidiary company was established later in 1996 (see Figure for the business structure). Although the
public sector maintains the majority of the subsidiary’s shares, management control rests with the operating
company (EMAS). (EMAS is also the operator of the Manizales solid waste collection concession, which
contributes certain economies of scale). The significant shareholding presence of the Municipalities (22
percent) ensures that they have retained the political benefits of solid waste management, while forming part
of a well-managed, improved service to the public. The enhanced presence of the electric generation and
distribution company, CHEC, in the subsidiary reflects their role in the invoicing process – the waste services
are in effect added to the customer’s electricity bill.

Financial / In Kind Contributions of Respective Partners

The contribution of US $70,000 in working capital from the APSA partners, as well as access to in-house
specialists among the shareholders, ensured that APSA was able to match all contributions made by the
PPPUE programme. As a result, the project never experienced a loss of momentum. Furthermore, the fact
that each shareholder had an economic stake in the company ensured that solidarity could be maintained
among the partners throughout the process.

III. PROJECT Status and Future Prospects

Current Status of Project Advancement

APSA and its subsidiary operation were capitalised and began operations in 1996. During this time, the
original APSA holding company worked with departmental public and private entities to develop
environmental strategies.

Future Prospects
The design and implementation of a mixed-capital company to manage solid waste in the multi-municipal
area of the Department of Caldas should provide the optimum solution to the unmanageable solid waste
collection and management problem that has confronted the local government and the citizens for many
years. The project serves as a sound model for exploring similar PPP solutions throughout the region and the
world.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong environmental awareness and regulatory framework provided project partners with the necessary
incentives.

Public Sector Partners

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

9 The project benefited from a large and diverse set of public sector partners that, among other things,
helped to ensure broad-based support of the PPP approach; and
9 Novelty of the PPP approach stimulated interest in capacity building among the public sector partners.

Private Sector Partners

9 Strong local partners gave the project widespread credibility; and
9 The presence of local financial institutions facilitated funding of the project in later stages.

UNDP
9 The PPPUE team provided an adequate level of information to the UNDP country office.

PPP Methodology
9 Existence of a registered, capitalised company provided invaluable strength to the PPP project
development process;
9 Governance, ownership and commitment to the project was tangibly demonstrated;
9 Internal management and governance mechanisms ensured cost-effective execution of project design
process, maximising PPPUE inputs;
9 Local partners visibly matched the economic contribution of the PPPUE programme;
9 Financial commitment from the partners ensured cost-effective decision-making; and
9 Many of the partners benefited from good capacity-building and project management experience.

OBSTACLES AND WEAKNESSES

Public Sector Partners

✘ Novelty of the PPP entrepreneurial approach to some of the public sector partners; and
✘ Legislation did not allow municipalities to become shareholders in a mixed-capital company. Through the
intervention of the Gobernación de Caldas the obstacle could be removed.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Costa Rica I
Energy Services Company to Promote Energy Efficiency in San Jose

Region: Latin America

Reporting Period: May 1997 – December 1998
Project Status: Advanced Development
Location: San Jose, Costa Rica
Project Type: Demand Side Management, Energy Efficiency and Conservation
Estimated Investment Range: U.S. $1 – 2 Million

I. Project Summary

Project Objective
To form a mixed-capital Energy Service Company that responds to the demand for energy efficiency services
in Costa Rica.

Current Partners – Potential Shareholders

Public Sector
• Ministry of the Environment and Energy (MINAE)
• CNFL (electric utility)
• ITCR
• Banco Credito Agricola de Cartago

Private Sector
• INTECO (energy efficient equipment company)
• Costa Rican Chamber of Commerce and Industry

Potential Donor Partners

• SwissContact

Project Description
The scope of the project includes the creation of an Energy Services Company (ESCO) that will perform
services, conduct research, and establish of an energy efficiency fund. The services will include energy
audits, energy efficiency advisory services, national and regional energy conservation strategy formulation,
and the promotion and commercialisation of energy efficient equipment. Research will be conducted to define
technical and energy efficiency norms for equipment and equipment certification. The Energy Efficiency Fund
will finance the implementation of efficiency projects and related research efforts.

Financial Arrangements
ESCO will operate as a wholly owned subsidiary of CNFL, selling controlling interest to domestic and/or
international partners. CNFL will maintain a minority interest.

II. Project Development Process

Introduction
Costa Rica launched a privatisation programme in the early 1990s. While the government did establish a
programme for energy efficiency and conservation, there were no public-private partnership (PPP) joint
ventures prior to the Public Private Partnerships for the Urban Environment’s (PPPUE’s) involvement.

UNDP New York initially approached the Costa Rican government about the PPPUE at the presidential level,
which elicited a formal invitation for the PPPUE to send a mission to Costa Rica in June 1997. The UNDP
Country Office made all arrangements for the exploratory mission and sent a representative to accompany
the PPPUE team. During the mission, the PPPUE team met with public sector groups including Presidential
advisors, MINAE, CNFL, Unidad Ejecutora de Rio Azul (UERA), the San Jose Municipality, and a federation

44
UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

of municipalities that includes San Jose (COCIM). The team also approached potential private sector
partners at this time, including the operator of the Alajuela waste site (WPP Continental de Costa Rica S.A.),
an association of over fifty small recyclers and sorters (CANARDES), the National Chamber of Commerce
and Industry, and CEGESTI.

During the mission, the government presented a variety of projects for consideration. The PPPUE team
determined that running two projects simultaneously would increase the chances for success as well as offset
variable costs such as travel and communications. The government agreed and two projects were selected:
• The formation of an energy efficiency services company (ESCO) by CNFL; and
• The integral management of municipal solid waste (MSW) in the San Jose area.

This report summarises the ESCO project.

Identification of Public Sector Partners and Engagement of Government Support

Since the proposed energy services company was to be a joint venture with the electric utility, CNFL, the
utility was the clear choice to be the public sector partner. Other public sector partners were identified who
would not be shareholders but would support the commercialisation of ESCO’s services. These partners
included the Banco de Credito Agricola de Cartago to finance energy efficient investments and INTECO, the
existing normative body for energy efficient equipment. The Ministry of Environment and Energy, MINAE, was
also regularly updated as it provided continuous support for the project. Although government elections in
January 1998 brought some political change, the ESCO project advanced steadily, driven by the General
Manager of CNFL and the Director of CNFL’s Energy Conservation Department.

Identification of Private Sector Partners

CNFL initially identified a local consulting firm as a potential co-shareholder in the company. This firm,
however, perceived the project as a high-risk investment with no guarantee of final participation and opted
not to participate. CNFL therefore developed a preliminary business plan without a private sector partner, but
with the support of the PPPUE team. The new company, ESCO, obtained CNFL Board approval to create a
wholly-owned subsidiary, from which it would sell controlling interest to national and/or international private
sector partners. The ESCO project maintained communications with SwissContact, who had indicated a
potential willingness to invest. In addition, ESCO kept the Costa Rican Chamber of Commerce and Industry
informed of its progress because it had shown a willingness to help market ESCO services.

Memorandum of Understanding
The ESCO project began with the negotiation of a preliminary Memorandum of Understanding (MOU).
However, because CEGESTI did not become a partner, the MOU was not signed by all the parties identified
during the initial period.

Working Group
The Working Group consisted of executives and technical and legal experts from CNFL, the PPPUE team,
and outside consultants. Working together, the Group prepared a Business Plan for the formation of ESCO.
The proposal included an analysis of recent developments in the worldwide ESCO market germane to
CNFL’s strategy. The CNFL Board approved the Plan in December 1998. Throughout the process, the
PPPUE team communicated with CNFL Board and was able to address concerns as they arose. The PPPUE
team also maintained contact with the General Manager of CNFL to ensure on-going political backing for the
project.

Financial / In Kind Contributions of Respective Partners

CNFL contributed personnel to the project, namely the Director of the Energy Efficiency and Conservation
Department and two of his assistants.

III. Project STATUS and Future Prospects

Current Status of Project Advancement

The CNFL Board approved the creation of the mixed-capital ESCO and registered it as a subsidiary. ESCO
will sell controlling interest to domestic and/or international partners, with CNFL maintaining a minority

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

interest. The local CNFL labour force, acting through its trade union, may also be allocated shares in the new
company.

Partner negotiations are under way. CNFL has requested that the PPPUE team be present during final
partner negotiations. Future consultant input will be managed and financed directly by the UNDP Country
Office in Costa Rica.

Future Prospects
CNFL expects that ESCO will not only play a significant role in the internal ESCO market of Costa Rica, but
will provide a commercial and technical springboard to expand into the rest of the Central American and
Caribbean market.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong initial support from the highest levels of the government;
9 The PPP ESCO initiative coincided with the government’s new approach to privatisation. At the highest
level of government the project is perceived as a timely and valuable example of how to move toward
private sector engagement in infrastructure and environmental activities; and
9 Ministerial support of the project during key stages further emphasised the relevance of the mixed-capital
ESCO to Costa Rica’s environmental, energy and privatisation developments.

Public Sector Partners

9 Automatic identification of interested public sector partners;
9 Committed internal management within CNFL; and
9 Small, focused public sector team streamlined the project development process and facilitated the
presentation of a sound business proposal to the CNFL Board.

UNDP
9 Constant contact with the UNDP Country Office from the outset emphasised the compatibility of the
PPPUE with the country programme;
9 Played an important role in helping to select the project and the local consultants; and
9 UNDP Costa Rica will support the project directly in the future.

PPP Methodology
9 Dynamic local team was able to maintain an acceptable pace of project development and maximise in-
country PPP technology transfer;
9 Low profile project was able to make progress in spite of governmental changes; and
9 Sharing variable costs with the Costa Rican MSW project reduced the overall project costs.

OBSTACLES AND WEAKNESSES

Country
✘ Project selection occurred only six months before a presidential election.

PPP Methodology
✘ The project will not include a private sector partner until fairly late in the business structuring process,
which is not the preferred PPP methodology;
✘ Low final investment costs of service company versus an infrastructure project; and
✘ High impact of variable costs on the ESCO’s development.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

COSTA RICA II:

Solid Waste Management in the San Jose Metropolitan Area

Region: Latin America

Reporting Period: May 1997 – August 1999
Project Status: Advanced Development
Location: San Jose Metropolitan Area
Project Type: Urban Solid Waste Collection, Disposal, and Recycling (Biogas)
Estimated Investment Range: U.S. $10 – 30 M

I. Project Summary

Project Objective
To form a mixed-capital company that will develop and implement an economically sustainable solid waste
management response to improve waste collection, transport, disposal, and recycling processes in the
central valley of Costa Rica.

Current Partners – Potential Shareholders

Public Sector
• Ministry of the Environment and Energy (MINAE)
• San Jose and Surrounding Municipalities (COCIM)
• CNFL (electric utility)

Private Sector
• Tradasa (waste collection service company)
• Caleras de Patarra S.A. (waste collection service company)
• 915 S.A. (Canadian group)
• Canardes (federation of recyclers and scavengers)

Project Description
The scope of the project includes the design and implementation of a mixed-capital company to manage solid
waste collection, transport, disposal, and recycling in the San Jose Metropolitan area. Among other things,
the project will facilitate the transition from the Rio Azul waste disposal site, which has reached capacity, to a
new waste disposal site. Also, CNFL will contribute to a proposed effort to capture and burn biogas from the
Rio Azul waste site under the scope of the project.

II. Project Development Process

Introduction
Costa Rica launched a privatisation programme in the early 1990s; however, no projects were ever initiated.
While the government did establish a programme for energy efficiency and conservation, there were no
public-private partnership (PPP) joint ventures prior to the Public Private Partnerships for the Urban
Environment’s (PPPUE’s) involvement.

UNDP New York initially approached the Costa Rican government about the PPPUE at the presidential level,
which elicited a formal invitation for the PPPUE to send a mission to Costa Rica in June 1997. The UNDP
Country Office made all arrangements for the exploratory mission and sent a representative to accompany
the PPPUE team. During the mission, the PPPUE team met with public sector groups including Presidential
advisors, MINAE, CNFL, Unidad Ejecutora de Rio Azul (UERA), the San Jose Municipality, and a federation
of municipalities that includes San Jose (COCIM). The team also approached potential private sector
partners at this time, including the operator of the Alajuela waste site (WPP Continental de Costa Rica S.A.),
an association of over fifty small recyclers and sorters (CANARDES), the National Chamber of Commerce
and Industry, and CEGESTI.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

During the mission, the government presented a variety of projects for consideration. The PPPUE team
determined that running two projects simultaneously would increase the chances for success as well as offset
variable costs such as travel and communications. The government agreed and two projects were selected:

• The formation of an energy efficiency services company (ESCO) by CNFL; and

• The integral management of municipal solid waste (MSW) in the San Jose area.

This report summarises the MSW project.

Identification of Public Sector Partners and Engagement of Government Support

Early in the process, the Ministry of Environment and Energy (MINAE), working through UREA, and the San
Jose and Surrounding Municipalities (COCIM) expressed interest in becoming public sector partners. In
addition, CNFL, the electric utility, expressed interest in harnessing the biogas energy potential of the Rio
Azul waste site as part of the PPP effort.

Elections and governmental changes caused government support of the MSW project to advance slowly. Up
until January 1998, uncertainty about the elections made it difficult to mobilise the necessary local
government resources to push ahead with the project analysis. Once the were elections over, the Working
Group prepared a formal proposal to submit to the incoming Government, outlining the merits of the public-
private partnership (PPP) “shared risk-shared reward” approach. Soon after, the new Government decided to
allocate solid waste issues to a “parent” ministry, resulting in a switch from MINAE to the Ministry of Health.
During this time the PPPUE MSW proposal moved through the Government with the active support of the
President of the Private Sector Recycling Federation, CANARDES, the Minister of the Presidency, and the
Mayor of San Jose. At a joint meeting in December 1998, the Ministry of Health and COCIM formally
endorsed the PPP approach and submitted a written request to the UNDP office in San Jose to support
COCIM in the development of the MSW project.

Identification of Private Sector Partners

The public sector was willing to include any company in the PPP process that was contractually involved in
the solid waste business in and around San Jose. This led to the inclusion of a number of small companies,
such as truckers and equipment leasing companies, none of which had the managerial experience or the
financial backing needed to drive the process. The larger firms that had expressed some interest in the PPP
process ultimately decided not to become partners. Political uncertainties, at both the national and municipal
level may have stifled interest in becoming involved in a PPP venture.

Memorandum of Understanding
All parties identified in the initial period negotiated and eventually signed a Memorandum of Understanding
(MOU). The MOU articulated the commitment of the local parties to mobilise all resources necessary to carry
the project development process forward. The MOU process brought together a number of public and private
groups that had never worked together to examine a common problem.

Working Group
The Working Group, lead by the Director of UREA, met on a regular basis from October 1998 to January
1998, but uncertainty about upcoming elections made it difficult to mobilise the local government and private
sector resources needed to push ahead with the project analysis. Once the elections were over, the Group
prepared a formal proposal to submit to the incoming Government. PPPUE and local consultants played a
key role in helping to prepare the proposal. Drawing on information from MINAE, UERA, and COCIM, the
proposal analysed the solid waste situation and outlined the merits of the PPP “shared risk/shared reward”
approach. The visible participation of a wide spectrum of public institutions around a common problem lent
tremendous credibility to the proposal.

Financial / In Kind Contributions of Respective Partners

The senior public sector officers contributed a reasonable amount of time to the project and the CNFL
members of the Working Group made a significant effort to advance the project analysis. COCIM provided
office and secretarial support to the project development team and UNDP helped finance the work of the

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Working Group co-ordinator. Neither the public nor the private sector partners made a financial contribution to
the project.

III. Project Status and Future Prospects

Current Status of Project Advancement

The Costa Rican Ministry of Health endorsed COCIM’s decision to pursue the PPP approach with PPPUE
support. COCIM established an internal working group in January 1999 to manage the process, under the
leadership of the former President of CANARDES. COCIM has provided the project development team with
access to office space as well as communications and secretarial resources. In January 1999, COCIM
decided to finalise a pre-feasibility study that would help municipalities decide whether to pursue PPP
projects, make larger direct contributions, and engage the private sector in the first round of negotiations.

UNDP Costa Rica will provide additional resources for further consultant inputs. Future technical assistance
will focus on the identification of potential private sector partners.

Future Prospects
The design and implementation of a mixed-capital company to manage solid waste in the San Jose
metropolitan area would provide an optimal solution to the solid waste collection and management problems
that have plagued the Costa Rican government and surrounding municipalities for the past seven years. The
PPP model under development, with the active participation of COCIM, should provide a sound model for
other municipalities to use to engage the private sector in participating in the solution of urban environmental
problems.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong initial support from the highest levels of the government; and
9 The PPP MSW initiative coincided with the government’s new approach to privatisation. At the highest
level of government the project is perceived as a timely and valuable example of how to move toward
private sector engagement in infrastructure and environmental activities.

Public Sector Partners

9 Automatic identification of interested public sector partners.

UNDP Country Office

9 Constant contact with the UNDP Country Office from the outset emphasised the compatibility of the
PPPUE with the country programme;
9 Played an important role in helping to select the project and the local consultants;
9 UNDP willing to take on a more “hands-on” role in the project design and development efforts; and
9 UNDP willing to finance additional support activities.

PPP Methodology
9 Dynamic local team was able to maintain an acceptable pace of project development through periods of
government change;
9 Sharing variable costs with the Costa Rican ESCO project reduced the overall project costs;
9 Signature of the MOU brought together a number of public and private institutions that had never before
worked together to solve a common problem;
9 High quality of the final proposal helped ensure the government and the Mayor’s acceptance and support
of the PPP approach and the project; and
9 Although delayed by the election process, the project was able to identify and garner the support of the
Mayor of San Jose. The Mayor served as the project’s “champion,” forging a political alliance with the
new government to undertake the project.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

OBSTACLES AND WEAKNESSES

Country
✘ The selection of a high visibility project at a time of major elections.

Public Sector Partners

✘ Some public sector partners were reluctant to put their full political weight behind the project in light of the
political elections.

Private Sector Partners

✘ Private sector partners provided minimal financial or in kind contributions to the project development
process; and
✘ Private sector participation came primarily from small businesses, which were unable to represent all
applicable private sector interests or to provide the necessary leadership on the project.

UNDP
✘ Uncertainty over long-term financing of the technical assistance programme.

PPP Methodology
✘ Lack of political commitment in time between the two presidencies undermined the work commitment,
which required the PPPUE team to assume a larger role than it normally would. The commitment proved
sufficient however to lay the groundwork for the political “push” made by the Mayor of San Jose in the
second half of 1998.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

NAMIBIA
Environmental Project Development Company to Address Water and Waste Problems in Windhoek

Region: Southern Africa

Reporting Period: January 1997 – August 1999
Project Status: Advanced Development
Location: Windhoek, Namibia
Project Type: Multi-Project Water and Waste Optimisation
Estimated Investment Range: To be defined on a project-by-project basis

I. Project Summary

Project Objective
To use the PPP methodology to identify and develop sustainable projects in the water and waste sectors
throughout Namibia.

Current Partners – Potential Shareholders

Public Sector
• City of Windhoek
• Ministry of Trade and Industry
• University of Namibia (UNAM)
• Ministry of Agriculture, Water Affairs and Rural Development, Department of Water Affairs

Private Sector
• Namibia Breweries
• ZERI
• Meatco (major South African meat producer)
• Hartlief (major Namibian meat processing company)
• Namibia Beverages (bottlers of Coca-Cola products)

Project Description
The project plans to use industrial water and waste as input materials for a range of downstream agro- and
aqua-businesses using a zero-emissions technology developed by ZERI at a water treatment site. It is
anticipated that the project will be expanded to respond to other water and waste management problems
faced by the City of Windhoek

II. Project Development Process

Introduction
Namibia is one of the most arid countries in the world and the driest in the Southern African region. Water is
scarce and often not of acceptable quality. The sustainable use of water cuts across many sectors of the
economy, and whatever decisions must be made concerning the country’s infrastructure, water is
indispensable for development.

Namibia’s population is estimated at close to 1.8 million people, growing at an average rate of 3.1 percent per
year. The Namibian government is following a policy of stimulating industrial growth to add more value to the
raw materials produced. Based on current trends, the urban population will be doubling within 15 years, while
water will be diminishing as reserves are used up more rapidly than they are replenished. This means that
sustainable economic development, especially in the urban centres, will be dependent on the ability of
Namibia to improve, protect and conserve its vulnerable and fragile water resources.

Public and private sector groups have worked together on water issues throughout Namibia. For example,
rural water consumers are working with the government to gain access to common water supplies and to
develop the capacity to manage them. However, prior to PPPUE involvement, Namibian counterparts were

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

not very familiar with the concept of public-private partnerships (PPPs), but they received the idea with
interest and enthusiasm.

PPPUE sent a mission to Namibia in January 1997. During this trip, PPPUE consultants initiated the process
to create a mixed-capital Environmental Project Development Company (EPDC), whose objective would be
to develop incentives for the optimisation and improved management of water, waste, and energy in
Windhoek, and through replication, all of Namibia. The company would, as its first initiative, set up an
operation to treat the effluent and solid wastes that are generated by Windhoek’s northern industries, which
the City’s existing Water Treatment Plant (UJAMS) is not equipped to handle. Specifically, PPPUE suggested
that the company develop a full-scale ZERI Integrated Bio System Facility at the UJAMS complex. The
objective would be to maximise reuse of the purified effluent through reclamation irrigation and to implement
integrated farming techniques, using all waste as production input resources.

Identification of Public Sector Partners and Engagement of Government Support

The PPPUE team has enjoyed the full support and co-operation of the Namibian government at the highest
levels. The Department of Water Affairs is particularly supportive of the project and the Ministry of Trade and
Industry is a founding member and co-sponsor of the PPP initiative. The City of Windhoek has facilitated the
initiative and provided major engineering support for the preparation of various studies.

Identification of Private Sector Partners

PPPUE and ZERI co-sponsored a workshop in July 1997 with identified public and private sector
organisations to launch the PPP EPDC project. Follow-up negotiations led to the signing of the memorandum
of understanding.

Memorandum of Understanding
The government, institutional and private sector partners signed the MOU in November 1997. The MOU
committed them to establish a mixed-capital company involving the city and private sector partners and to
explore the creation of an EPDC to identify projects and conduct feasibility studies to promote them. In the
MOU, PPPUE agreed to support the process, advising the Executive Committee on operational, financial,
and related project management issues.

Working Group
The MOU established an Executive Committee (EC) comprised of public and private sector partners and
chaired by PPPUE to advise on the project. The EC held monthly project meetings and employed a Project
Co-ordinator from the University of Namibia (UNAM). The EC commissioned a Pre- Feasibility Study
conducted by the Project Co-ordinator, with help from PPPUE. The study discusses the prospects of a
technically and commercially viable and sustainable business and recommends the establishment of an
operating company to introduce a total effluent treatment and solid waste management facility at UJAMS.
Based on reactions to the pre-feasibility study, PPPUE and the Project Co-ordinator developed a detailed
Business Prospectus, illustrating the scope and full potential of the proposed mixed-capital business. In
November 1998, the partners agreed on and signed an agreement to incorporate a small EPDC with the
initial objective of conducting a comprehensive Feasibility Study leading to a bankable document. Shortly
thereafter, the EC commissioned a Working Group (comprised of members of the EC and PPPUE team) to
conduct the detailed Feasibility Study.

Feasibility Study
The Feasibility Study, which includes a Business Plan, was completed by March 1999. Under the MOU, this
marked the completion of PPPUE’s contribution to the project. The study confirmed the potential of an
environmentally and commercially viable, profitable and sustainable business. It recommended conducting a
pilot project at Ujams for 2 years on 1:10 scale to test the Integrated Bio System and adapt the technology to
Namibian conditions while providing necessary training to the staff.

The financial projections (in USD) in the Feasibility Report are as follows:

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Pilot Phase (2 years) Full Production Phase (3 years)

Fixed Investments 322,000 2,765,000
Revenue from Operations 318,000 5,678,000
Cost of Operations (before interest) -372,000 -1,786,000
Income from Operations -54,000 3,892,000

Financial / In Kind Contributions of Respective Partners

The partner’s financial contribution to the pre-established budget and subsequent Feasibility Workshop is
U.S. $18,000. The City of Windhoek provided support to test water and soil profiles at UJAMS and the City
Water Engineer worked on the PPP project full-time for over six months at no charge to the Working Group.
The City also made its UJAMS Waste Water Treatment Complex available to the ERDC.

III. Project Status and Future Prospects

Current Status of Project Advancement

Project Implementation Committee chaired by the Interim Project Co-ordinator appointed by the EC has been
working on the final stages of the establishment of the EPDC as a limited liability company. UNDP CO,
Namibia, has made a grant of US$ 150,000 to UNAM earmarked as UNAM’s equity contribution to the
EPDC’s Ujams project. This amount constitutes half of the projected budget requirement for the pilot phase.
Since the partners are eager for the project to start delivering tangible results, the Project Co-ordinator is
planning to downsize the pilot phase and initiate the pilot using the above-mentioned funds from UNAM. The
Project Co-ordinator expects that the private partners will contribute once the pilot phase brings more
confidence in the viability of the technology.

Future Prospects
The partners have to formulate agreements on the co-ordination and structure of the EPDC, allocation of
shares, as well as organisation and management of the PPP with regard to the EPDC, e.g. establishment of
the Board of Directors of the EPDC. The Partners would also have to develop a Bankable Document in order
to attract additional investors which would require conducting market research for the project output as well
as re-evaluation of the private partners’ tariffs by the municipality.

The UJAMS Bio System Project is only the first initiative of the proposed ERDC. Once in operation, the
EPDC project can be replicated by other municipalities and will create opportunities for pursuing similar
ventures in water and waste management.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong initial support from the highest levels of the government;
9 This initiative successfully introduced the PPP concept to Namibia, and provided PPPUE with important
local contacts and experience to facilitate other projects; and
9 The City of Windhoek has provided valuable assistance to the project.

Public Sector Partners

9 Automatic identification of interested public sector partners;
9 Welcomed PPPUE’s close involvement in the feasibility phase of the project; and
9 The City Water Engineer has provided valuable assistance to the project.

Private Sector Partners

9 Welcomed PPPUE’s close involvement in the feasibility phase of the project.

PPP Methodology

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

9 Although PPPUE’s catalytic and facilitative role was crucial for the implementation of the partnership, this
initiative essentially is being driven and implemented by Namibian people.

OBSTACLES AND WEAKNESSES

Country
✘ Integrated Bio Systems technology is still relatively unknown in Africa. There are very few PPPs in
Namibia and the concept of PPP is not widely known in the country. Privatisation is widely opposed.

Public Sector Partners

✘ The Municipality needs to re-evaluate the tariff structure for the private partners as soon as possible to
ensure the progress of the project. Private partners’ involvement in the PPP is conditioned on the
reduction of their waste tariffs;
✘ UNAM has to increase its technical support for the project; and
✘ The Municipalities, including that of Windhoek, is legally prohibited from holding shares in a private
company. The legislation is being currently revised to abrogate the prohibition.

Private Sector Partners

✘ ZERI needs to improve its technical support for the project.

PPP Methodology
✘ More prompt establishment of EPDC would have offered a more formal and structured framework for
working out the apportionment of shares and management issues; and
✘ In order to seal the commitment of the private partners it would be preferable for them to contribute their
share of equity into EPDC to cover at the least the other half of the required budget for the pilot phase US
$ 150,000) instead of having to downsize the pilot project thus jeopardising the scientific reliability of the
tests.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

PHILIPPINES
Integrated Regional Waste Management Facility in Batangas Bay

Region: Southeast Asia

Reporting Period: May 1997 – April 1999
Project Status: Advanced Development
Location: Province of Batangas, Philippines
Project Type: Waste Management (municipal, medical, and hazardous)
Estimated Investment Range: To be determined

I. Project Summary

Project Objective
To form a mixed-capital company that will address the collection, transfer, recycling, treatment and disposal
of wastes in the Province of Batangas.

Current Partners – Potential Shareholders

Public Sector
• Governorate of the State of Batangas
• Ministry of Natural Resources
• Philippines Port Authority

Private Sector
• New Zealand Waste Management Limited (NZWML) Consortium.

Project Description
The project will bring together public and private sector partners to form a mixed capital company that will
develop a collection, transfer, recycling, treatment and disposal facility for municipal solid wastes, as well as
for medical and hazardous wastes in the Province of Batangas.

II. Project Development Process

Introduction
The Philippines does not have an approved facility to collect, treat, recycle and dispose of municipal waste,
hazardous waste and medical waste. These wastes are generally disposed of illegally in uncontrolled sites on
land and in marine or coastal waterways. Given the growing volume of waste that is accumulating, this
presents a growing risk to public health and the environment.

The Philippines has not engaged the private sector’s help in solving the country’s mounting waste problems.
Several attempts had been made, however, to involve the private sector in select projects using traditional
procurement methodologies such as pubic tender. The private sector has been reluctant to invest much time
in developing new business in the Philippines. This has created a serious problem for the public sector. Even
for viable projects it is very difficult garnering interest from the private sector.

UNDP New York identified the Philippines, specifically the GEF/UNDP/IMO Regional Programme for the
Prevention and Management of Marine Pollution in the East Asian Seas, as being of potential interest to the
PPPUE. UNDP suggested that PPPUE partner with the Regional Programme to implement a public-private
partnership (PPP) initiative in Batangas. A PPPUE mission went to Manila to pursue this idea in February
1998. The local UNDP office made all arrangements for the PPPUE team’s exploratory mission. The PPPUE
team held meetings with the Minister of Environment and Natural Resources, the Programme Manager of the
GEF/UNDP/IMO Regional Programme, the Governor of Batangas Province, the President of the League of
Mayors for Batangas Province, and the Mayor of Batangas.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

During the meetings, the Regional Programme presented four regional projects for consideration. The
PPPUE Project Team suggested that running two simultaneous projects would increase the chances for
success as well as offset variable costs such as travel and communications. The government agreed and two
projects were selected:

• Development of a collection, transfer, recycling, treatment and disposal facility for municipal solid wastes;
and
• Development of a collection, recycling, treatment and disposal facility for medical and hazardous wastes.

Identification of Public Sector Partners and Engagement of Government Support

Public sector parties interested in the project included the 32 municipalities of Batangas, the Province of
Batangas (Governor’s office), and the Mayors of the two chartered cities of Batangas, Lipa City and Batangas
City.

Government support of the project moved forward in somewhat distinct stages. From February to September
1998, the Regional Programme office met with the public sector on a regular basis to gather the necessary
data for future feasibility studies. Between October and December 1998, the PPPUE team helped the
Regional Programme office organise an Investors Roundtable, which would include private sector companies
from several international locations. The Roundtable provided an opportunity to present the two PPP projects
to potential private sector investors and contractors and to distribute Opportunity Briefs.

Identification of Private Sector Partners

At first, larger multinational firms were sceptical of the PPP process and of whether or not the PPPUE team
really had a commitment from the public sector. Furthermore, most of the firms considered investment in the
Philippines too risky. Several firms (specifically those from New Zealand), however, felt more confident
knowing that an international aid agency was directly involved. This international involvement, combined with
the PPPUE team’s knowledge base, proved sufficient to manage the concerns over political uncertainties.

Letter of Intent
Once it became clear that the public sector was willing to work inside the PPP framework, the parties began
to negotiate the terms of a preliminary Letter of Intent (LOI). The private sector agreed to finance the cost of
the feasibility study, securing their place in the partnership.

All the parties identified in the initial period signed the LOI for each of the Batangas waste management
projects, including the municipal waste management facility, the hazardous/medical waste management
facility, and two others. The parties at the Roundtable (see above) executed the LOI. The LOI ensured the
commitment of local parties to mobilise all necessary resources to carry the project development process
forward.

Working Group
The LOI established an Executive Committee (EC), which included the Regional Programme, the Batangas
Mayors, and the PPPUE Project team. The EC realised quickly that it was difficult to co-ordinate the
schedules of 34 mayors and municipalities. Ultimately, a smaller group representing the public sector and the
PPPUE Project Manager ran the work programme. The parties agreed that once a private sector contractor
was selected, they would establish a formal working group to manage the process.

At the Roundtable, the Technical Work Group (TWG) announced that any parties interested in the PPP
projects needed to submit an expression of interest (EOI). After a series of meetings, TWG selected two firms
to present their qualifications and technical approaches to the TWG and other public sector partners. Based
on this presentation, TWG unanimously elected to award the project to the New Zealand Management
Limited (NZWML) consortium. TWG ensured that the entire selection process remained transparent.

Memorandum of Agreement
Before beginning the feasibility study, the public and private sector parties had to sign a Memorandum of
Agreement (MOA). The NZWML consortium prepared the draft MOA, with the PPPUE team providing some
assistance. TWG met with NZWML and, barring some minor additions, agreed to the elements and structure

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

of the draft MOA. The parties agreed that the public sector would disclose any competing deals to the
NZMWL and that NZMWL would begin conducting the feasibility study immediately. The parties asked that
the PPPUE team continue to support the project through the completion of the feasibility study.

Financial / In Kind Contributions of Respective Partners

The private sector agreed to finance the costs of the feasibility study. The public sector did not make a
financial contribution to the PPP.

III. Project STATUS and Future Prospects

Current Status of Project Advancement

NZWML has agreed to complete the feasibility study by the end of the 1999. The parties are expected to sign
the MOA on May 18, 1999.

Future Prospects
New Zealand ODA provided $220,000 to cover the additional consulting costs through June 2000.

The use of a mixed capital company to manage solid waste in the Province of Batangas provides an optimal
solution to the critical waste collection and management problem that has confronted the Philippine
government and the municipalities for the past 20 years. The PPP model, under development with the active
participation of Batangas and associated municipal governments, will provide a workable model for other
municipalities to engage the private sector in solving urban environmental problems (waste and water).

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong initial support from the highest levels of the government;
9 Establishment of a formal channel of request for PPP technical assistance; and
9 The GEF Regional Programme laid solid groundwork for the PPP project.

Public Sector Partners

9 Automatic identification of interested public sector partners.

Public Sector Partners

9 Efficient and transparent process for selecting a private sector partner for the project; and
9 The experience and technological capabilities of the private sector ensure that the Working Group
maintained a sufficient momentum to keep the project moving forward.

Donors
9 NZODA support of the project and willingness to finance additional consultant services.

PPP Methodology
9 MOU discussions brought together a number of public and private institutions that had never worked
together to examine a common problem;
9 High quality of the final proposal/presentation to the Government ensured greater receptivity to the PPP
approach and contributed to the Government and the Mayors decision to promote the PPP approach as
the best solution to the problem;
9 Clear support from the highest level of the local UNDP office and NZODA to this high visibility, high-
priority project for the Philippine government;
9 The Working Group experience helped identify potential pitfalls early in the process; and
9 Working group served as an indirect means to build capacity at the institutional level.

Obstacles and Weaknesses

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Country
✘ Selection of a high visibility project with a multitude of political actors has inherent risks.

Public Sector Partners

✘ Reluctance of public sector partners to identify one person (a “champion”) to speak and act on their
behalf delayed the decision making process.

Private Sector Partners

✘ Virtually no financial or in-kind contribution to the project development process.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

POLAND
Waste Water Management in Siewierz

Region: Eastern Europe

Reporting Period: Late 1994 – April 1997
Project Status: Changed direction
Location: Siewierz, Upper Silesia, Poland
Project Type: Wastewater Management
Estimated Investment Range: U.S. $15 M

I. Project Summary

Project Objective
To establish a mixed-capital company to address wastewater problems in the Municipality of Siewierz.

Current Partners – Potential Shareholders

Public Sector
• Municipality of Siewierz

Private Sector
None

Project Description
Under the project, the Municipality of Siewierz would seek private sector partners to develop a PPP project
involving the construction of 105 km of a new sewer system, a wastewater collection system and two water
treatment plants.

II. Project Development Process

Introduction
Untreated wastewater has historically been discharged into rivers and lakes in the Upper Silesia region,
creating substantial water pollution problems that Poland is eager to address. Poland’s potential admission
into the European Union (EU) would put additional pressure on the government to adapt its environmental
legislation to EU standards, particularly in the areas of solid waste and wastewater management.

Poland has one of the most advanced privatisation programmes in Central Europe – its most common
approach being build-operate-transfer (BOT). Many Western companies are active in solid waste
management and wastewater treatment in large municipalities throughout the country. However, the PPP
approach has never been applied within Poland.

The PPPUE identified Poland, Kazakhstan, Uzbekistan, and Azerbaijan as potential project countries in June
1997. After visiting all of the countries, PPPUE selected Poland because of its stable political environment
and favourable legislation for the private sector. Following a series of meetings with key government and
environmental officials during the PPPUE exploratory mission, a wastewater management project for the
town of Siewierz was selected. Under the project, the Municipality of Siewierz would seek private sector
partners to develop a project involving the construction of 105 km of a new sewer system, a white water
collection system and two water treatment plants.

Identification of Public Sector Partners and Engagement of Government Support

Waste issues in Poland are not corporatised and are still included in the general municipal budgets, rendering
the selection of the Municipality of Siewierz automatic. The Municipality expressed a willingness to transform
its responsibilities into a separate company that would also be responsible for wastewater treatment.

Identification of Private Sector Partners

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

The Municipality launched a tender in July 1998 to select a private sector partner. Three out of 29 companies
requesting tender documents submitted proposals. Of these, two qualified for the final tender. Since the
municipality launched a public tender, the PPPUE did not identify additional private sector partners.

Memorandum of Understanding
The Town Council approved a Letter of Intent in November 1997, in which it agreed to co-fund the project
development costs. The municipality and the PPPUE signed a Memorandum of Understanding (MOU) in
March 1998, in which the municipality agreed to the PPP approach.

Working Group
While negotiating the MOU, the PPPUE commissioned a legal analysis to confirm that a PPP was in
accordance with Polish legislation and had the pre-feasibility technical study translated and distributed to
interested private sector partners.

The PPPUE Project Team then started developing a model for small-size municipalities to local companies
and or smaller Western companies in their wastewater programs. The PPPUE model separated sewer
systems and treatment plants, as sewers represent over two thirds of the total required investment. The
model held the municipality responsible for building and financing the sewer network in stages. Low interest
loans and grants from the Polish National Fund for Environmental Protection and Water Protection and the
Polish Ecofund would supplement municipal resources. Both institutions had already been approached. The
newly established PPP firm would finance the treatment plants and operate the sewer network.

III. Project Status and Future Prospects

Current Status of Project Advancement

While there is potential to create a PPP with the companies selected by the tender, the Municipality indicated
that it might pursue a more traditional build-operate-transfer (BOT) approach and abandon the PPP model.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Poland has one of the most advanced privatisation programmes in Central Europe and many Western
companies are active in solid waste management and wastewater treatment in large municipalities
throughout the country.

Public Sector Partners

9 Financially strong municipality;
9 Waste water management is the last major infrastructure project to be undertaken by the municipality;
9 Diversified industrial base in the municipality with all major companies already privatised with Western
companies; and
9 Municipal authorities are experiencing public pressure to develop wastewater management programmes
and facing upcoming municipal elections.

PPP Methodology
9 The Water Department of the Central Mining Institute was willing to work as a local consultant; and
9 Pre-feasibility technical study already completed and financed by the municipality.

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OBSTACLES AND WEAKNESSES

Public Sector Partners

✘ Polish municipalities have been courted by numerous foreign companies and have become rather
cautious and are often afraid to commit themselves to a partner out of fear of foregoing a better deal in
the future; and
✘ Lack of understanding of market economy mechanisms.

Private Sector Partners

✘ Small size of the municipality makes it difficult for international investors.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

TUNISIA
Greater Tunis Packaging Waste Disposal and Recycling Project

Region: Northern Africa

Reporting Period: May 1997 – February 1999
Project Status: Changed Direction
Location: Tunis, Tunisia
Project Type: Municipal Packaging Waste Disposal and Recycling
Estimated Investment Range: To be determined

I. Project Summary

Project Objective
To form a mixed-capital company that will bring economically sustainable solutions to the issues of packaging
waste collection, transport, disposal and recycling in Tunis.

Current Partners – Potential Shareholders

Public Sector
• Municipality of Greater Tunis
• Ministry of the Environment
• Governorate of Greater Tunis

Private Sector
• Packaging/Bottling Sector
• Recycling Sector
• Cement Industry

Project Description
The scope of the project is to form a mixed-capital firm to address the collection, sorting and recycling of
packaging waste in Tunis, including paper, cardboard, glass, and aluminium, and to sell the recycled waste to
re-users and energy generators such as the cement industry.

II. Project Development Process

Introduction
Waste recycling is a clear priority for the Tunisian government. Current environmental legislation favours the
“polluter pays” approach, which puts pressure on the packaging industry to find economically viable solutions
to recycle and dispose of their products in an environmentally sound manner. Prior to PPPUE involvement,
Tunisia had not privatised any major public sector utility or infrastructure service, nor had it considered a
public-private partnership (PPP) approach to addressing its packaging waste problems. Numerous examples
of mixed-capital companies exist in the industrial sector, however, and there were no legal obstacles to the
public sector being a shareholder in a PPP project.

Working under the auspices of the METAP III PPP Regional Initiative, a PPPUE team visited Tunis in 1997 in
co-ordination with the local UNDP office. The Team met with many potential stakeholders including the
Ministry of Environment, Aménagement du Territoire, the National Waste Management Programme
(PRONAGDEC), and the Loi Cadre on Waste. Although the government agreed to public sector involvement
in the project, the Ministry of Environment insisted that the project address the operational and management
issues on a sustainable basis. After reviewing three of the Ministry’s candidate projects, the Team selected
the Recycling and Collection of Packaging Waste project, making it one of two projects selected for joint
UNDP/IBRD funding under the METAP III Regional Initiative.

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Identification of Public Sector Partners and Engagement of Government Support

The strong position of the central Tunisian government with regard to the private sector made the central
Ministry of Environment, acting through the National Agency for the Protection of the Environment (ANPE),
an obvious initial public sector partner. ANPE would control the implementation of the incoming legal
framework (ECOLEF) that would govern packaging waste, making it directly involved in the legislation’s
enforcement. The municipalities, particularly Greater Tunis and the Governorates, played a secondary role in
the PPP venture. ANPE organised a series of preliminary meetings in 1997, identifying potential private
sector partners and introducing them to the PPP concept.

Identification of Private Sector Partners

The preliminary meetings, organised by ANPE, welcomed companies from the waste generating sectors
(supermarkets, bottling companies, and soft drink manufacturers) as well as from the recycling sectors
(plastic waste and pulp and paper recyclers). The meetings gave the private sector firms an opportunity to air
their concerns and express their interests to the public sector officials, which facilitated a mutual
understanding of each sides’ priorities. A number of private firms, including a plastic waste recycler,
committed to participate in Working Group to develop the project further.

Memorandum of Understanding
The Director of Solid Waste at ANPE approved a draft MOU in May 1998. It spelled out the expected role and
contributions of the public and private sector partners, proposed the establishment of a public/private Project
Development Working Group, and presented a timeline of activities to be co-ordinated by the Working Group.
The draft MOU was however never taken any further. Following discussions between the UNDP office and
ANPE, the MOU was not submitted to the private sector and the World Bank’s preference for financing
studies with no private sector participation was adopted.

Working Group
The series of preliminary meetings in 1997 first stimulated a joint working group process, during which some
private sector stakeholders expressed their willingness to provide infrastructure (e.g., office space) and other
types of support to the process. As discussed above, the decision not to move the PPP venture forward
negated any further need for a formal working group.

III. Project Status and Future Prospects

Current Status of Project Advancement

After meeting with the World Bank, the Tunisian government is interested in completing the market studies
before initiating any real dialogue with the private sector. Potential private investors within Tunisia have
contacted PPPUE and ANPE regarding the project. PPPUE consultants have garnered interest from a
Franco-Swiss technology group, but the absence of a proper forum for a joint public-private working group
indicates that the project is likely to revert to a classic public tender scenario.

Future Prospects
The project’s future prospects are not completely predictable since the initial PPP methodology has
effectively been abandoned. It is very likely that the project will be completed through traditional tendering
with the support from the World Bank. Even though the partners decided against the joint-venture option, the
PPPUE work helped to initiate a process that will provide a sustainable solution to an urgent environmental
problem.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Supportive legislative environment to encourage private sector to seek economically viable solutions to
their waste problems;
9 Pre-existence of some mixed-capital companies in the industrial sector facilitated acceptance of the PPP
proposal;

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

9 Stable political environment in which to pursue the project; and

9 Waste recycling is a clear government priority.

Public Sector Partners

9 Public sector partner involved directly in the enforcement of environmental legislation;
9 Government took the initiative to engage the private sector;
9 Clear statement by the government of interest in developing local plastic waste recycling capacity; and
9 The co-ordinating role played by the government instilled a high level of confidence in the private sector.

UNDP
9 Local UNDP involvement lent credibility to the introduction of the PPP methodology in Tunisia.

PPP Methodology
9 The open forum of information meetings enabled the private sector to air its concerns and interests with
the government present, facilitating a better mutual understanding of each sides’ priorities;
9 The open forum process facilitated the identification not only of a lead operator but of potentially
interested shareholders (users or suppliers of plastic waste);
9 Experienced and well-informed local consultants were able to ensure the reliability of preliminary data,
prepare project models at low costs, and provide valuable insight into ANPE;
9 PPPUE has been able to stimulate potential local and international private sector interest in the project;
and
9 Relatively low cost of bringing private and public sector partners together to find solutions to common
environmental problems.

OBSTACLES AND WEAKNESSES

Donors
✘ Difficulty in conveying the merits of the PPP methodology to the World Bank;
✘ Consequent reluctance to involve private sector in critical path of the project’s development in which they
might be involved as investors; and
✘ Significant delays in advancement of the project.

PPP Methodology
✘ The decision not to press for the signature of the MOU and consequent postponement of any kind of joint
working forum, with the technical and financial evaluation of the project in effect conducted with little or no
participation (particularly of the potential private sector project operator) significantly reduced the inherent
value of the PPP methodology and prolonged the process;
✘ Absence of a joint working group has deprived potential investors of the PPP forum for dialogue and joint
problem solving on a shared risk/reward basis;
✘ The private sector has not been given any incentive to assume part of the project development costs; and
✘ The public sector has adopted the traditional mode of allowing external agencies to fund project
development costs (World Bank studies) instead of demonstrating a willingness to seek joint solutions
with the private sector.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

TURKEY
Integrated Waste Management Project in Bursa

Region: Eastern Europe

Reporting Period: May 1997 – December 1998
Project Status: Changed direction
Location: Bursa, Turkey
Project Type: Integrated Waste Management
Estimated Investment Range: To be determined

I. Project Summary

Project Objective
To build on the existing public-private collaboration in the area of packaging waste collection and recycling
between the Municipality of Bursa, the private sector CEVKO Packaging Producers Trust, and multinational
packaging companies.

Current Partners – Potential Shareholders

Public Sector
• Municipality of Bursa
• Ministry of the Environment

Private Sector
• CEVKO Packaging Producers Trust
• Local industrialists

Project Description
Building on an existing collaborative experiment conducted by CEVKO Packaging Producers Trust and the
Municipality of Bursa, the project partners will examine the potential for implementing the experimental model
on an economically viable basis, and for expanding project scope to include urban domestic waste, industrial
waste, toxic/hospital waste, materials recovery facilities, waste energy biogas, and other miscellaneous
wastes.

II. Project Development Process

Introduction
Turkey has a well developed and extremely dynamic private sector; however, transfer of state controlled
resources to the private sector, both national and international, has been slow.

PPPUE representatives went to Turkey in November 1996 in co-operation with the Ankara UNDP office and
the METAP focal point, working under the auspices of the METAP III PPP Regional Initiative. This trip
included meetings with the State Planning Organisation, the Ministry of the Environment, the Tuzla Leather
Industry Federation, and the CEVKO Packaging Waste Trust. The CEVKO proposal to address urban and
possibly industrial waste in the City of Bursa, in collaboration with the Municipality, was formally passed
through the local UNDP office and examined at a joint UNDP/IBRD/SPM meeting in Washington in late April
1997, which selected the CEVKO Packaging Waste Project as one of two projects for joint UNDP/IBRD
funding under the METAP III Regional Initiative.

With technical and project structuring assistance from the PPPUE Project Team, the Municipality and the
CEVKO Trust have been working to define the geographic, technical and economic scope of the project.
Preliminary meetings took place with the Bursa Chamber of Commerce and Industry to identify leading
private sector groups that would be prepared to play a primary role alongside CEVKO in the definition and
development of this project.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Identification of Public Sector Partners and Engagement of Government Support

CEVKO, which was already working with Bursa on an experimental domestic packaging waste project in the
Nilufar sub-municipality, first approached the Municipality with concept of forming a PPP mixed-capital
venture. The Mayor and other municipal officials supported the idea and confirmed their willingness to
consider using the PPP methodology to address their waste problems.

Early in the project development process, the Turkish Ministry of the Environment expressed its support for
the initiative at a meeting organised by CEVKO and the PPPUE Project Team. The strong commitment of the
Municipality coupled with the dynamic leadership of its Mayor has been instrumental in launching the project.

Identification of Private Sector Partners

From the outset, CEVKO provided the project initiative, serving as the main link to the Municipality and acting
as a driving force for steady progress. Upon reviewing the preliminary project evaluation, CEVKO, PPPUE,
and the Municipality agreed to formally engage the Bursa industrial sector in the project. The idea was to
identify an industrial zone on which to initiate an integrated waste management programme. The Project
Team held meetings with the Secretary General of the Bursa Chamber of Commerce and Industry to
determine the best way to bring leading industrialists together to identify additional project “champions” in the
local industrial sector.

The Chamber of Commerce and Industry hosted an open forum to present the PPP methodology and the
Municipality’s interest in working with local industries to address waste problems. Very few industries
attended the meeting, which made it difficult to reach consensus on moving forward. After the meeting, the
Municipality approached different sectors of Bursa’s industry with the help of a local consultant. The sectors
expressed little or no interest in taking an active role in identifying and developing a project with the
Municipality. This is due largely to the independence of private industry in the area and their relative immunity
to Municipal pressure on environmental issues, which stems from absence of economic and regulatory
pressures on industry to seek solutions.

Memorandum of Understanding
The absence of a meaningful dialogue with the private sector, other than CEVKO, rendered a Memorandum
of Understanding inapplicable.

Working Group
The Working Group included the Municipality of Bursa, CEVKO, and PPPUE. The Solid Waste Department of
the Greater Bursa Municipality hosted the project analysis working sessions, which took place from
September 1997 through February 1998. The meetings were characterised by a high level of commitment
and interest from the participants. The Municipality responded quickly in providing the necessary information
on the types and sources of waste in Bursa. The Working Group produced a joint plan for approaching the
industrial sector; however, for a number of reasons it failed to capture their interest (see above).

Financial / In Kind Contributions of Respective Partners

The Municipality committed significant human resources to provide the necessary background information
and identify potential project areas. CEVKO committed time by the Secretary General, who acted as a project
“champion” and ensured the appropriate meetings with the Mayor and the Municipality.

III. Project Status and Future Prospects

Current Status of Project Advancement

Failure to engage the Bursa industrial sector on a broad basis led to a change of strategy in June 1998. The
Working Group decided instead to focus on a prototype project that would entail a recycling company
handling industrial waste from the Bursa Organised Industrial Park (BOIP). The project would involve two or
three key industrialists, the BOIP Environmental Department, and the Municipality, with CEVKO as a start-up
partner. PPPUE and CEVKO, with help from the Municipality, would conduct a small pre-feasibility study and
build a preliminary financial model. The objective of the PPP initiative would be to use the project as a “test-
bed” for joint public-private project design and implementation.

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PPPUE and CEVKO submitted the proposal to the Municipality in June 1998. In September, the Municipality
responded that time constraints associated with their plans for tendering the project, coupled with the
difficulties and delays in obtaining government approval for the Municipality to be a shareholder in the
venture, rendered their involvement impossible.

Future Prospects
Given the legal constraints, the Municipality of Bursa has chosen not to opt for the PPP approach but to
follow instead the traditional BOT route to solve the waste problem of the municipality.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Government interest in developing the PPP approach to municipal waste solutions;
9 Existence of some mixed-capital companies in the industrial sector; and
9 Dynamic and powerful private sector with a strong independent entrepreneurial sense.

Public Sector Partners

9 Committed municipality, under the leadership of a dynamic Mayor, was active in environmental projects;
and
9 Motivated municipal team with access to reliable data.

UNDP
9 Involvement of UNDP Country Office lent credibility to the introduction of the PPP methodology in Turkey.

PPP Methodology
9 Dynamic private sector group (CEVKO) already active with the Municipality; and
9 Experienced and well-informed local consultant was able to ensure reliability of work undertaken with the
Municipality. Personal credibility and experience in advisory work with the public and private sectors
enabled the Consultant to operate as effective “on-site” representative of PPPUE in all dealings with
CEVKO, the Municipality, and the industry sectors.

OBSTACLES AND WEAKNESSES

Country
✘ Independence of private industry and relative immunity to municipal pressure on environmental issues;
✘ Absence of economic or regulatory incentives for industry to seek solutions to waste problems;
✘ Private sector considers environmental issues to be of secondary importance; and
✘ Some distance between the decision-making process at the municipal and central government levels.

PPP Methodology
✘ The broad consensual approach to waste project identification and execution failed to secure a tangible
response from the Bursa private sector other than CEVKO. A highly specific, pre-evaluated project would
have been more likely to capture the attention of the private sector;
✘ The example provided by other PPP projects regarding the motivation and engagement of the local
private sector was not applicable in this case; and
✘ The decision to change to the approach based on a pre-identified project (industrial waste recycling)
came too late in the process.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

ZIMBABWE
Energy and Environment Management Enterprise at Willowvale Industrial Park, Harare

Region: Southern Africa

Reporting Period: 1994 – 1998
Project Status: Advanced Development, but on hold
Location: Harare, Zimbabwe
Project Type: Energy, Water and Waste Optimisation
Estimated Investment Range: U.S. $10 M

I. Project Summary

Project Objective
To establish a mixed-capital company to optimise the use of energy, water, and waste on an established
industrial area in Willowvale.

Current Partners – Potential Shareholders

Public Sector
• Ministry of the Environment
• City of Harare, Water and Waste Management Authority
• Zimbabwe Electricity Supply Authority (ZESA)
• Industrial Development Corporation (IDC)

Private Sector
• Almin Metals Industries
• Asea Brown Boveri
• Olivine Pty (Subsidiary of the Heinz Corporation)
• Cochrane Engineering
• W.M.M.I. (Mazda Motors)
• Confederation of Zimbabwean Industry (CZI)
• Integrated Energy Systems Zimbabwe (IESZ)

Project Description
The public and private sector partners will form a mixed-capital company to buy bulk electricity and manage
its distribution within Willowvale Industrial Park. The project will include demand side management and the
provision of technical advice and services to customers in the Park. Based on the results of the energy
venture, the project scope may expand to address water and waste issues.

II. Project Development Process

Introduction
The growth of Zimbabwe’s industrial base and heavily industrialised areas has placed increasing strains on
the nation’s energy and water resources and the government is eager to find solutions. Prior to PPPUE
involvement, neither the central government nor the municipalities were considering a PPP response to urban
waste, water and energy problems. The PPPUE was essentially breaking new ground in this respect, which
slowed the initial progress.

PPPUE selected Zimbabwe for initial investigation because of its political stability, established infrastructure,
active private sector, and its willingness to consider PPP solutions. The PPPUE undertook several
exploratory missions in 1994 and 1995, during which time the team met with central government and
municipal officials to present the PPP approach and gather advice on potential projects. Consultation with the
Public Works Department of the City of Harare, the Ministry of Transport, the Energy Power Utility ZESA, and
selected private sector businesses suggested a common interest in a pilot project to optimise the use of
energy, water, and waste on an established industrial area in Willowvale (located 5 miles Southwest of

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Harare). Public sector stakeholders were motivated by hopes of an improved energy demand pattern, lower
water off-take, and less need for pollution treatment. The potential for lower energy bills and reduced
penalties motivated the potential private sector partners. Possible replication on a local, national, and regional
scale served as an additional motivating factor for the national government.

Identification of Public and Private Sector Partners

The public and private sector partners came together easily for this project. Public sector partners included
the providers of power, water and waste disposal services; private sector partners included the industrial
users of these services in Willowvale. PPPUE undertook a pre-feasibility study of the project in 1995 that
included workshops involving the utilities, participating industries and a local non-governmental organisation.
The study indicated that a viable business could be created to respond to the energy, water, and waste
issues of the industrial area and was sufficiently positive for the public and private sector groups to come
together to move the project forward.

Engagement of Government Support

PPPUE discussed the proposed project from the outset with senior officials from the involved Ministries –
Energy and Transport, Local Government, and Environment. The Ministries expressed strong support for the
project with the Secretary for the Environment confirming government backing at the signing of the
Memorandum of Understanding (MOU).

Memorandum of Understanding
The original public and private sector partners and the Industrial Development Corporation (IDC), the
principal national industrial investment bank, signed the MOU in September 1997 to form the Energy-
Environment Management Enterprise (E-EME). IDC joined the venture for three reasons: (1) it had a number
of investments in Willowvale; (2) it identified possible new investment opportunities in E-EME; and (3) it saw
the potential for replication in a greenfield industrial park it was planning east of Harare in Ventersburg.

The MOU triggered the German Investment and Development Company (DEG) to express interest in the
project and to finance a full feasibility study, which was undertaken by the consulting firm Lahmeyer
International. The feasibility study confirmed the project’s validity and suggested that the company’s starting
point should be energy management. Under this scenario, ESCO, a mixed capital company involving ZESA,
IDC, private industries in Willowvale, and an operator, would buy bulk electricity and manage its distribution
within Willowvale. ESCO would also undertake demand side management, providing technical and upgrade
advice to its customers in the Park.

Working Group
The MOU provided for an Executive Committee (EC) to manage the project, comprised of the public and
private sector partners. PPPUE assumed an advisory role within the EC. The EC met regularly and made all
major decisions regarding the project. A Technical and Economic Working Group, under the leadership of the
Southern Centre for Energy and Environment (a local NGO), contributed to the development of a Business
Plan and Bankable Document against which the partners could make their investment decisions.

Financial / In Kind Contributions of Respective Partners

The partners have not made any financial contributions to the project evaluation process – the private sector
claimed it is beyond their remit to do so and the private sector said it was unwilling to contribute without a
corresponding public sector commitment. Both the public and private sector partners have however
contributed time and engineering capacity to the Working Group and feasibility analyses.

III. Project STATUS and Future Prospects

Current Status of Project Advancement

The Lahmeyer International feasibility study highlighted the need for an operator with energy management
skills to play a key role in project development and ultimately manage the resulting business. Since none of
the partners had the necessary qualifications, PPPUE identified Integrated Energy Systems Zimbabwe
(IESZ) as a possible operator and shareholder. IESZ signed a Letter of Intent with the EC in 1997 in which it
undertook development of the Business Plan and in return would become the operator and a major

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

shareholder in the newly formed ESCO. The EC terminated its relationship with IESZ shortly thereafter when
IESZ introduced conditions into the Business Plan that were incompatible with the PPP model. Another
credible operator based in South Africa has been identified and is ready to start discussions with the EC.

Future Prospects
Zimbabwe encountered major economic difficulties in 1998. The currency collapsed, interest rates escalated,
business confidence fell, and new investment became stagnant. ZESA, the power utility, is reportedly
insolvent with politically unacceptable tariff increases their only option. The City of Harare is also
experiencing some difficulties and showing signs of political fragility and unrest. Under these conditions, the
partners have had difficulties focusing on this project or any other business opportunity. It seems likely that
PPPUE will have to wait for less turbulent times in Zimbabwe before reviving this project.

Assuming that Zimbabwe returns to some political and economic stability in the near future and the partners
continue to support the project, realisation of ESCO could be achieved in a period of about six months. This
would require some additional support through PPPUE.

Beyond this, there is the option of expanding the geographical area of the pilot project and of progressing, as
originally planned, into water and waste optimisation. Replication on a local, national, or regional basis
appears feasible once the pilot activity in Willowvale has confirmed the validity of the concept. An extension
of the logic is the development of the eco-efficient industrial park in association with IDC, which would
combine the experience learned in Willowvale with other sustainable concepts.

IV. Lessons Learned

KEYS TO SUCCESS

Country
9 Strong initial support from the highest levels of the government;
9 At a time when Zimbabwe is contemplating increased private sector involvement in a number of key
public organisations, the project has provided a useful experience to the public sector in terms of
understanding the opportunities in public-private collaboration.

Public Sector Partners

9 Automatic identification of interested public sector partners.

Private Sector Partners

9 The private sector partners developed an understanding that sustainable solutions to eco-efficiency
problems can be profitable; and
9 Automatic identification of interested private sector partners.

PPP Methodology
9 Public and private partners worked together, creatively and in a business mode, on common eco-
efficiency problems;
9 Public and private sector partners worked together from the project’s outset; and
9 Any early and well-developed feasibility study strengthened the commitment of the public and private
sector partners.

OBSTACLES AND WEAKNESSES

Country
✘ The central government was not aware of the PPP model, slowing the project’s initial progress; and
✘ Zimbabwe experienced significant economic hardship during the project development process,
essentially bringing the project to a halt.

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UNDP/PPPUE Joint Venture Public-Private Partnerships for Urban Environmental Services

Public Sector Partners

✘ Tendering for services is still the accepted means of working with the private sector. Direct negotiations,
which may be more appropriate for certain PPP projects, are still considered unacceptable by most
municipalities and public utilities; and
✘ Not able to contribute financially to the project.

Private Sector Partners

✘ Unwilling to make financial contributions to the project in the absence of a corresponding public sector
commitment.

PPP Methodology
✘ In the absence of a local champion or active local project co-ordinator to drive the process forward,
progress has been slow. The partners do not have the necessary operating skills and as a result have
tended to be passive in this regard.

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Public-Private Partnerships for the Urban Environment
United Nations Development Programme
Bureau for Development Policy
One United Nations Plaza
New York, New York
10017 USA

Telephone: +1 (212) 906-5367

Fax: +1 (212) 906-5896

Email: [email protected]

http://www.undp.org/pppue

The United Nations Development Programme (UNDP) helps people in 174 countries and territories to help
themselves, focusing on poverty eradication and democratic governance. In support of these goals, UNDP is
frequently asked to help create and implement policies that are more responsive to the needs of ordinary
people, and to help societies rebuild in the aftermath of war and humanitarian emergencies. UNDP is also an
advocate for increased development assistance and a more inclusive global economy.

The views expressed in this publication are those of the author and do not necessarily represent those of the
United Nations or UNDP.