Private Partnerships in Liberia Eveloping Public-Private Partnerships in Liberia Is Part of the World Bank Studies Series
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A WORLD BANK STUDY Developing Public-Private Partnerships in Liberia Partnerships Developing Public-Private eveloping Public-Private Partnerships in Liberia is part of the World Bank Studies series. These papers are published to communicate the results of the Bank’s ongoing research and to stim- D Public Disclosure Authorized ulate public discussion. Liberia is making great strides to recover from its recent era of confl ict and re-establish itself as a global competitor. Central to Liberia’s economic growth is its rich endowment of natural resources, such as iron ore and rubber. Liberia’s natural resources have defi ned, in large part, the country’s engagement with the private sector. However, the government of Liberia is now exploring new ways to partner with the private sector, with the objective of growing the economy. One method is by developing public-private partnerships (PPPs) in core infrastructure and social services. This World Bank Study examines Liberia’s experience with PPPs to date, as well as its experience with natural resource concessions, and builds on the lessons learned to map out a way forward. The study looks in depth at the legal and policy-enabling environment for PPPs to uncover areas that require strengthening. Likewise, the study analyzes existing PPPs and natural resource concessions in Libe- ria to tease out the most pressing obstacles to future PPP investment, culminating with a review of Public Disclosure Authorized possible PPP transactions that could be supported in Liberia’s next phase of recovery and growth. World Bank Studies are available individually or on standing order. The World Bank Studies series is also available online through the World Bank e-library (www.worldbank.org/elibrary). Public Disclosure Authorized Developing Public- Private Partnerships ISBN 978-0-8213-9480-9 Bank World The in Liberia Public Disclosure Authorized Zachary A. Kaplan, Peter Kyle, SKU 19480 Chris Shugart, and Alan Moody WORLD BANK STUDY Developing Public-Private Partnerships in Liberia Zachary A. Kaplan Peter Kyle Chris Shugart Alan Moody © 2012 International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org 1 2 3 4 15 14 13 12 World Bank Studies are published to communicate the results of the Bank’s work to the development community with the least possible delay. The manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally-edited texts. This volume is a product of the staff of The World Bank with external contributions. The fi ndings, interpretations, and conclusions expressed in this volume do not necessarily refl ect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2422; e-mail: [email protected]. ISBN (print): 978-0-8213-9480-9 ISBN (electronic): 978-0-8213-9481-6 DOI: 10.1596/978-0-8213-9480-9 Library of Congress Cataloging-in-Publication Data Developing public-private partnerships in Liberia / Zachary Kaplan ... [et al.]. p. cm. -- (World Bank studies) Includes bibliographical references. ISBN 978-0-8213-9480-9 (alk. paper) -- ISBN 978-0-8213-9481-6 1. Public-private sector cooperation--Liberia. 2. Concessions--Liberia. 3. Infrastructure (Economics)-- Liberia. 4. Liberia--Economic policy. I. Kaplan, Zachary. II. Series: World Bank studies. HD3872.L53D38 2012 338.8’7--dc23 2011052837 Contents Acknowledgments .....................................................................................................................v Acronyms and Abbreviations .................................................................................................vi Executive Summary ................................................................................................................ vii 1. Introduction .........................................................................................................................1 An Economic History Reliant on Natural Resource .......................................................1 Emerging from Confl ict ......................................................................................................1 Greater Private Sector Investment and Improved Infrastructure Help Generate Jobs ................................................................................................................2 Constraints to Infrastructure Limit Competitiveness and Job Growth .......................3 Objective ...............................................................................................................................4 Methodology ........................................................................................................................5 Structure of This Report .....................................................................................................5 2. Experience in PPP Transactions and Natural Resource Concessions in Liberia Since 2003 ...............................................................................................................7 Some Trends in PPP Experience in Post-Confl ict Countries .........................................7 Liberia’s PPP Experience ....................................................................................................8 3. Themes Useful in PPP Project Structuring Based on Experiences and Lessons Learned ................................................................................................................19 Phased Risk-Based Approach Preference from Private Sector toward the Development of PPPs ................................................................................................ 19 Preference by the Private Sector for Remuneration by User Charges ....................... 20 Need to Address Low Capacity to Develop, Monitor, and Evaluate ........................ 21 Avoidance of Additional Missed Opportunities for Joint Infrastructure Development by Natural Resource Concessionaires ............................................ 22 Establishment of Clear Principles for Selecting and Prioritizing PPPs in Liberia ... 24 4. Deepening PPP Development through Legal and Institutional Reform .............. 27 Overview of Legal and Institutional Enabling Environment ..................................... 27 Weaknesses to the Legal and Institutional Enabling Environment Detailed ........... 28 Legislative and Institutional Options to Deepen the Links between Natural Resource Concessions and PPPs and Expand PPP Development ...................... 37 Recommendations for Implementing Strengthened PPP Framework ...................... 39 Recommendations for Additional Framework Support .............................................. 41 5. Generating the Next Set of PPP Transactions in Liberia .......................................... 43 The PPP Short List .............................................................................................................43 Power Projects .................................................................................................................... 47 iii Projects That Are Tied to Natural Resource Concessions ........................................... 50 “Long List” of PPP Transactions ..................................................................................... 52 Next Steps in Pipeline Development .............................................................................. 54 6. Conclusion ......................................................................................................................... 57 Appendixes ................................................................................................................................ 59 Appendix 1: Existing Concession Contracts .................................................................. 61 Appendix 2: Potential Concession Contracts ................................................................ 63 Appendix 3: Recommendations to Strengthen PPCA and Proposed New PPP/NBC Act .............................................................................................................. 65 Appendix 4: Long List of Potential PPP Projects .......................................................... 68 Appendix 5: Liberia Country Map and Statistics ......................................................... 72 References .................................................................................................................................