THE DEVELOPMENT APPROACH TO THE

INTEGRATION OF PPPS INTO THE PIMS

BACKGROUND (JAMAICAN EXPERIENCE)
PPP activity in Jamaica is very much in its
nascent stage, PPP activity has been increasing
and prior to 2012 was being executed outside
of a comprehensive policy framework and
procedural guidelines
The absence of the comprehensive framework
has resulted in some projects being poorly
executed and increased fiscal exposure and
liabilities for the Government of Jamaica (GOJ)
BACKGROUND (JAMAICAN EXPERIENCE)

Since the 1980s, some of the PPP projects

implemented by the Government of Jamaica
(GOJ) include the Jamaica Private Power Co.
Ltds power plant, the sale of the GOJs 80%
interest in the JPSco Ltd; the privitization of the
Sangster International Airport and more
recently the construction of Highway 2000.
HISTORY
In 1992 GOJ established a special Airport Task Force (ATF to
develop a structure for the privatisation and expansion of SIA.

ATF pursued direct negotiations with several strategic partners and

suggested several transaction structures all of which failed to reach
conclusion

The ATF favoured mechanisms where Government would privatise

only the landside terminal operations, while retaining control of the
airside operations and possibly owning a golden share in the
operating company
PROJECT DEVELOPMENT SUMMARY
- National Investment Bank of Jamaica
In 1996, the Government appointed an Enterprise Team to assume
management of the transaction and NIBJ (Privatisation agency)was
named as the Secretariat to the Enterprise Team.

NIBJ procured experienced aviation consultants to advise the GOJ

and engaged a Financial Advisor, Legal Consultant, Coordinating
Consultant, Aviation Marketing Consultants, with the AAJ acting as
Technical Advisors.

The combined experience that existed with the Privatisation Agency

and the advisors resulted in a more systematic approach to due
diligence and good project development practices
PROJECT DEVELOPMENT SUMMARY
Two strategic changes were made in the proposed approach to
make the project more attractive to airport operators:
o The private sector would be required to manage the entire operations
(airside and landside), with access to all airport revenues

o The new concessionaire would establish an airport operating company

wholly under its control with no limitations on the extent of shareholding.

GOJ, through the AAJ, would retain ownership of the airport asset and
have regulatory oversight of the operations of the airport.
THE TRANSACTION
The Sangster International Airport (SIA) concession commenced
May 1998 and was concluded in April 2003.

The major issues which contributed most to the extended

privatisation period included:
o Developing and legislating an economic regulatory framework
to give investors confidence in projecting future earnings, and

o Developing and agreeing a satisfactory mechanism for the

collection of overdue aeronautical charges from SIAs largest
customer
PROJECT OUTPUTS
SIA is a world class Airport, and has won
the title of Caribbeans Leading Airport
by the World Travel Awards The
Americas for 2014 and for the previous
four years since 2009.
LESSONS LEARNED
1. The need for the GOJ to establish
clear guidelines and processes for the
development of PPP arrangements

2. The need for a central authority to

manage the project development
process, gain critical experience and
to build capacity for the public sector.
LESSONS LEARNED
3. Undertaking the necessary due
diligence and feasibility studies are
critical features of the early planning
and preparation work which is
needed prior to engaging with the
private sector

4. Critical to the success of the

privatisation is support of expert
advisors
 The experience of the privitization of the SIA
and other activities provided some impetus to
the development of a comprehensive
framework for PPPs
The Stand-by Agreement negotiated between
the IMF and Jamaica in 2008 required among
other things, that the GOJ commence the
privatization of several state-owned entities
PPP GOVERNANCE FRAME WORK

The Policy and Institutional Framework for the

Implementation of Public Private Partnerships
for the Government of Jamaica : The PPP Policy
was approved in 2012.
 The policy includes the definition of public-
private partnership (PPP) which is a long-term
procurement contract between the public and
private sectors, in which the proficiency of each
party is focused in the designing, financing,
building and operating an infrastructure project
or providing a service, through the appropriate
sharing of resources, risks and rewards.
 The GOJ is currently using the policy to
standardise how PPPs are implemented, attract
private investment, increase productivity and
limit fiscal exposure while providing public
services and infrastructure projects.
LINKS WITH OTHER GOVERNMENT POLICIES
AND PROGRAMMES
Long Term Economic Plan Vision 2030 Jamaica :
In 2009 the GOJ launched Jamaicas first long
term strategic plan, Vision 2030 Jamaica
National Development Plan. The plan explicitly
recognises the role of PPPs in the infrastructure,
construction and tourism industries and supports
the concept of Governement partnering with the
private sector as a means of developing
internationally competitive industry structures
LINKS WITH OTHER GOVERNMENT POLICIES
AND PROGRAMMES
Short and medium term growth strategy
The Government of Jamaica has identified PPPs
as a means of stimulating economic growth in
the Jamaican economy.
 PPPs play a significant role in the growth in the
Growth inducement strategy through its Asset
Mobilization initiatives.
FOUR OVERRIDING PRINCIPLES GUIDE THE PPP
PROGRAMME IN JAMAICA
Optimal risk transfer
Achieving value for money for the public

Being fiscally responsible

Maintaining probity and transparency

ADMINISTRATION

The administration of the PPP process is

captured in two broad institution structures
Strategic

Operational
The strategic responsibilities include:
the approval of policies and strategies for
the implementation of PPPs
and take into consideration the alignment of
the PPP policy with the other broad
economic strategies of the Government.
 The operational responsibilities include:
the day-to-day administration of the programme
implementation
management of all elements of the
transactions and
providing advisory support to the teams
charged with strategic oversight of the
programme.
 The bodies with The operating units are:
strategic oversight of
the PPP programme the PPP Unit in the
are: Privatisation Division of
the Cabinet and the Development Bank of
Jamaica (DBJ) and,
the Privatisation a PPP Node located in
Committee of Cabinet; the Ministry of Finance
and the Public Service.
 As part of the transformation
of the public sector and
revitalization of the national
economy, the Government is
continuously considering
innovative mechanisms for
delivery of those services or
activities in which the
Government has continuing
interest (must ensure is
done) but need not do itself.

PUBLIC SECTOR TRANSFORMATION

 the Government seeks to achieve greater value
for money with respect to these activities and
services through the use of PPPs
 There are eight main ways in which PPPs may
be able to offer better value for money:
 Risk Transfer
Whole-of-life costing
Innovation
Asset Utilization
Focus on service delivery
Predictability of costs and funding
Mobilization of additional funding
Accountability
 The PPP Policy is intended to ensure that these
benefits accrue when establishing PPP
contracts.
PPP DEVELOPMENT PROCESS

The development process consist of four

stages:
Project Identification

Business Case

Transaction

Contract Management
PPPS MEET THE PUBLIC INVESTMENT
MANAGEMENT SYSTEM
PPPS AND THE PUBLIC INVESTMENT
MANAGEMENT SYSTEM
The Jamaica Public Investment Management
System (PIMS) is the common framework for
the preparation, appraisal, approval and
management of all public investments in
Jamaica, irrespective of the source of funding
or procurement and implementation
modalities.
- Financial Administration and Audit Act, Section 48J,
March 2014
PPPS AND THE PUBLIC INVESTMENT
MANAGEMENT SYSTEM
The PIMS was brought into law through Part VII
of the Fiscal Administration and Audit Act (FAA
Act) with a new section 48J and a Fourth
Schedule that set out all the facets of the
system, including the Public Investment
Management Secretariat (PIMSEC), and the
relevant definitions.
PPPS AND THE PUBLIC INVESTMENT
MANAGEMENT SYSTEM
These legislative changes were also made, in
parallel, in the Public Bodies Management and
Accountability (PBMA) Act.
PPPS AND THE PUBLIC INVESTMENT
MANAGEMENT SYSTEM
The objective of the PIMS is to :
Promote growth and sustainable development
and encourage capital formation for future investment.
Maximize efficiency of public investment through better
project selection and management of investment
expenditure.
Improve the quality of social and economic infrastructure
in the country.
COMPONENTS OF PIMS

Public Sector Investment Programme (PSIP)

Public Investment Management Committee
(PIMC)
Public Investment Management Secretariat
(PIMSEC)
Public Investment Management Information
System (PIMIS)
Annual PSIP Policy Paper
SCOPE OF THE PIMS

Based on Section 48 of the FAA Act the PIMS is

the Central point of entry for all public
investment projects
 Phase 1 Phase 2 Cabinet
Approval

DBJ Appraises PCS DBJ facilitates Business Case if it is a PPP

Submission
to Cabinet

PIMC Approval

Review

Preparation
& Appraisal
PIMC Approval
to proceed with
No Objection

Pre-screening Review

Develop and Submit

a Project Idea
through PIMSEC
TREATMENT OF PUBLIC-PRIVATE
PARTNERSHIPS WITHIN THE PIMS
MDA submits Project Concept Summary to
PIMSEC with options review completed.

PIMSEC determines it could be developed as a

PPP and refers to DBJ/MOFP for further
assessment.

As such, DBJ/MOFP is not involved at the entry

point to the PIMS and should not be consulted
until the PIMSEC raises the possibility of a PPP.
 DBJ/MOFPshall independently evaluate the
value added of a project being implemented as
a PPP as opposed to the traditional
procurement modality.

DBJ/MOFP then makes a recommendation to

PIMSEC on whether pre-feasibility study or
business case is to be developed.
 Thereafter, based on consultation among the
PIMSEC and the DBJ/MOFP, PIMSEC
recommends to the PIMC that approval be
given for preparation of a full Business Case to
determine if the project is feasible.
The DBJ may require a pre-feasibility study prior to
the preparation of the full Business Case.
 The project returns to the PIMSEC after the
Business Case has been completed and goes
through a second round of review by the
Technical Review Committee (TRC) prior to
going back to the PIMC for a decision as to:
 Depending on the results of a pre-feasibility
study:
Approve for preparation of Business Case, or
Defer preparation of a Business Case, or

Reject the PPP modality and proceed to traditional

procurement.
 In the case of a business case:
A recommendation to Cabinet for inclusion in the PSIP
A recommendation for addition to the PPP List

An advisory that the total value of the PPP is to be

recorded in the PSIP.
PIMS PROCESS FLOW PRIOR TO DECISION AS TO TRADITIONAL PROCUREMENT OR PUBLIC-
PRIVATE PARTNERSHIPS

(what the MDA PROJECT IDEA*

would like to do)

Template provided for MDA PROJECT CONCEPT

to complete, with PIMSEC
SUMMARY
assistance as needed
(Submitted by the MDA)
RECONFIGURE
PROJECT AND
Project Concept Stage:
REENTER PROJECT
Project Concept
CYCLE AT LATER DATE
Screening Analysis INITIAL APPRAISAL
Main Inputs:
(Phase 1: PIMSEC)
- PIM Guidelines REJECT
- PSIP Policy Paper
Appraisal by wider No further action is
group within PIOJ contemplated
PRE-PIMC TECHNICAL
depending on type of
REVIEW COMMITTEE
project NEPA, UDC

DEFER

NO OBJECTION
PIM COMMITTEE Approve Bilateral or Multilateral
Project. Permission to proceed to
development of full project appraisal.

Potential PPP Traditional Procurement

Proceed to prepare Business Cases Proceed to prepare full project proposal for resubmission
(DBJ & MoFP PPP Units) to PIMSEC (prefeasibility or feasibility study to be
completed) with NCC evaluation where applicable

* Pursuant to an Unsolicited Proposal (USP), Unsolicited Expressions of Interest can

only enter PIMS through MDA and PIMC triggers preparation of USP. If there is
more than one UEoI on the same project, a Technical Review Committee comprised of
PIMSEC, DBJ and other relevant stakeholders, including the beneficiary entity, will
evaluate proposals so as to be able to make a recommendation to PIMC.
 PIM COMMITTEE No objection

Phase II: Composition of project team depends
Business Case Stage
Prefeasibility analysis *
Project appraisal and
fiscal assessment *
Implementation
Approach
Main Inputs:
- PIM Guidelines
- PPP Policy
- Donor requirements
MDA, Supported
by project team
BUSINESS CASE
on implementation approach
DBJ to provide Candidate
Submission Form to MDA
PIMSEC, DBJ & MOFP PPP Units REVIEW
REJECT RECONFIGURE
PROJECT AND
Appraisal by wider
REENTER PROJECT
group within PIOJ PRE-PIMC TECHNICAL CYCLE AT LATER DATE
depending on type of
REVIEW COMMITTEE
project NEPA, UDC

DEFER

PIM COMMITTEE No objection

Recommend to Cabinet
CABINET for inclusion in the PSIP
and addition to PPP list

PPP Business Case is subject to review of PPP structure, fiscal impact and Value for
Money assessment, as per PPP Policy 2012
REVIEWS AND APPROVALS

The Development process of the PPPs which

includes the intervention of the PIMS is subject
to continuous review at all levels and approvals
by Cabinet up to the Transaction stage where
contracts are awarded and financials finalized.
REVIEWS AND APPROVALS

The Objective of the reviews and approvals of

candidate projects is to:
Ensure that the PPP Principles are effectively
and consistently applied;
Ensure government resources available to
develop and implement PPP projects are used
efficiently, by implementing first the highest
priority projects that will deliver the most value;
REVIEWS AND APPROVALS

Ensuring that these projects are properly

developed and evaluated, and meet the criteria
set out in the PPP Policy and Procedures
Manual.
FINALLY THE TWAIN WILL MEET
Promote growth and sustainable development and
encourage capital formation for future investment.