Transcending Transnational Transportation and Energy Infrastructure PPP Project Constraints

The Context

I have recently had a number of discussions with PPP practitioners who have discussed the need to find ways to expedite transnational public-private-partnership infrastructure projects.

We agreed that the need to find a sustainable and feasible approach to transnational transportation and energy projects, is of particular interest to land-locked countries, especially in Africa and Central Asia which should not be held “hostage” to issues that could easily be negotiated between “equal” government partners who are interested in regional development efforts that include the development of transnational transportation corridors. As long as institutional and political barriers abound, regional development will be hamstrung and projects that have great merit will be delayed.

Unfortunately, many countries that grapple with transnational PPP infrastructure projects are captive to the geopolitical contexts that are often decades in the making.  Additionally, straightforward geographic constraints on transportation corridors become unmitigable because they remain subject to political, cultural, ideological, technological and perception barriers which transcend natural constraints in unpredictable ways.  As a result, the best and shortest route for transportation and power infrastructure is often not an option.  This results in unnecessary costly detours and lost opportunities that seem senseless to logical considerations.

What Can Be Done?

One needs to ask what constructive actions can be undertaken to mitigate “manmade” projects risks which needlessly result in critically important regional PPP projects becoming unfeasible?

Here are some suggestions. It is key to:

• Clearly and collaboratively identify projects of common strategic interest that are economically feasible and are not subject to regional rivalries or egos
• Take no shortcuts in feasibility studies (especially when it comes to environmental impact studies)
• Find ways to harmonize PPP enabling environments that provide a common legal framework for PPPs
• Find ways to balance collaborating state’s individual competing strategic interests in PPP project so that all state partners are comfortable with trans-state agreements (on a wide variety of issues including proportional debt, risk assumption and international mediation for example)
• Find ways to ensure that private sector partners are assured that potential political differences and risk will not “derail” projects (it might be necessary to get MIGA insurance)
• Make a good case for the project to all stakeholder
• Compete a Value for Money assessment
• Explore ways to identify impartial mediators who could step in should a disagreement arise between the different country partners
• Establish international treaties (or regional treaties) that provide a legal framework that protects all interested parties (including the private and public sector partners)
• Establish compatible technology and infrastructure standards that prevent design and construction problems
• Establish a code of conduct regarding intellectual property rights that might differ in each country
• Develop guidelines that are ethical and combat corrupt practices
• Adopt compatible internationally acceptable procurement standards that promote competitive and transparent procurements (these could be adopted from the World Bank, EU, or the African Development Bank for example)
• Depoliticize projects and only allow projects which have a sound economic rationale 
• Form (in the case of utility projects) a transnational regulatory body that is impartial and primarily focused on the revenue needs of the project
• Explore creative ways to creatively manage currency risk between countries that do not share a common currency (this might include the need to use a third sturdy currency for the project)
• Think strategically in the long term about project viability and project budgeting
• Form a joint commission that manages and monitors the project in a neutral manner 
• Create a common approach to “force majeure” events in one country which could impact the other country (e.g. hydroelectric projects such as the Kariba Dam which could be impacted by regional droughts)
• Align partnering countries’ Sustainable Development Goals (SDGs) so that only sustainable and resilient projects are considered

Conclusion

For transnational projects to be successful and sustainable, regional rivalries need to be bridged, with the intention of seeking common good.  This also should include the principle of People First PPPs which transcend national rivalries.  Transnational projects are not easy and are riskier than others, but with increasing globalization they are becoming more relevant.  There is no need for transnational projects to be difficult.  There should be no quandary.  Just common sense and a common purposed that is grounded in reality and avoids political dominance or rivalry.

It is important that both parties are willing parties and that clearly identified common objectives drive the project, not just the needs of one partner. If agreement cannot be reached on the suggestions listed above, don’t launch a transnational PPP project.