A National Investment Infrastructure Bank {NIIB}
A Preferred Approach to Public Private Partnership [PPP] for
Small Developing CountriesEng. Winston Riley F.A.P.E. 02/11/11.
Involvement of Engineers
The Association of Professional Engineers of Trinidad and Tobago
as a body owes a duty to the public and shall act at all times with
fidelity to public needs. [Code of Ethics APETT]
In keeping with its code of ethics the Association of
Professional Engineers of Trinidad and Tobago as a body owes a duty
to the public and shall act at all times with fidelity to public
needs. In this regard it is the duty of our professional body to
harness its expertise for the benefit of the public. This is in
keeping with the mandate of the engineering profession
worldwide.
The United Kingdom - NIB
Institute of Civil Engineers - ICE
THE UNITED KINGDOM-[NIIB]In keeping with its fidelity to public
needs, the Institute of Civil Engineers (ICE) In the United Kingdom
as the voice of Infrastructure has made a strong case for the
establishment of a National Investment infrastructure Bank in the
United Kingdom.
Institute of Civil Engineers[ICE] - UK
ICE believes that there is consensus across the political
spectrum that investment in infrastructure must be maintained in
order to ensure the UK's future economic competitiveness,
deliver energy security and
underpin the transition to a low carbon economy
In addition, ICE believes that (1) there is consensus across the
political spectrum in the UK that investment in infrastructure must
be maintained in order to ensure the UK's future economic
competitiveness, deliver energy security and underpin the
transition to a low carbon economy
ICE UK
In the last year the ICE has been working with organisations
across industry and civil society to:- Examine how the UK can
improve processes for strategic planning and prioritisation and
co-ordination of infrastructure development.
Develop new thinking on the future funding and financing of UK
infrastructure
Unlock new sources of funds and ensure value for money from
investment
- (2) "the scope for direct government investment will be
constrained in the short to medium term. ..."In the last year the
ICE has therefore been working with organisations across industry
and civil society to develop new thinking on the future funding and
financing of UK infrastructure" ..."This work has also examined how
the UK can improve the process for strategic planning and the
prioritisation and co-ordination of infrastructure development" ICE
believes that this is central to unlocking new sources of funds and
ensuring value for money from investment.
The ICE Executive Summary concludes:
The UK needs robust and resilient infrastructure to underpin the
economy and society as a whole. In order to ensure resilient and
robust infrastructure the UK needs to increase the total
availability of long term funding available to support new and
upgraded infrastructure and reduce the cost of finance for
projects
Action identified in ICE report
Reduce perception of high risk by private investors
Identify clear and secure funding streams
Provide mechanisms to direct savings to infrastructure
investment
Provide a center of expertise accessible to the Public
Sector
Create a NIB to contribute to these policy goals
Action is required to: (1) "Reduce the perception of private
investors (both UK and International) that infrastructure projects
carry a high degree of political risk."
(2) Identify clear and secure funding streams to underpin
investment
(3) Provide improved mechanisms for investors to direct savings
towards infrastructure investment
(4) Provide a center of expertise, accessible to the public
sector, for infrastructure investment,
(5) Create a national Infrastructure Investment Bank (NIIB)..to
contribute to these policy goals.
CANADA - PPP
Association of Consulting Engineering Companies
(ACEC)
CANADA- [PPP]In Canada the Association of Consulting Engineering
Companies (ACEC) established a Task Force to explore Public Private
Partnership (PPP) and the implications for consulting engineers,
and to recommend strategies to support its membership. A report
titled Understanding Public Private Partnership in Canada was
commissioned by ACEC to synthesize the key information about P3s in
a single document.
Understanding Public Private Partnership in Canada - Some
conclusions
PPP is a valid form of project delivery when used in the
appropriate circumstances.
PPP is not a panacea
Properly executed, conventional delivery models can deliver many
of the benefits of PPP.
the greatest benefit for both the public owner and the private
sector PPP partner generally occurs when the asset is large and the
private sector is contracted to maintain and operate the asset for
25 to 35 or more years
The most important conclusions outlined in the ACEC report that
are of interest for our deliberations are:
(1) PPP is a valid form of project delivery when used in the
appropriate circumstances.
(2) PPP is not a panacea. Owners must carefully assess each
project to determine whether a conventional delivery model like
'design bid build' will deliver greatest value for money.
(3) Properly executed, conventional delivery models can deliver
many of the benefits of PPP.
(4) Experience in Canada shows that the greatest benefit for
both the public owner and the private sector PPP partner generally
occurs when the asset is large and the private sector is contracted
to maintain and operate the asset for 25 to 35 or more years in
addition to designing, building and providing the financing for the
asset.
PPP IN THE CANADIAN CONTEXT
The Canadian Council for Public-Private Partnerships (CCPP)
defines PPP as follows:First, it relates to the provision of public
services or public infrastructure arrangements.
Second, it necessitates the transfer of risk between
partners.
Arrangements that do not include these two concepts are not
technically 'public-private partnerships'
PPP IN THE CANADIAN CONTEXTPublic-private partnership" carries a
specific meaning in the Canadian context. The Canadian Council for
Public-Private Partnerships (CCPP) defines PPP as follows:
First, it relates to the provision of public services or public
infrastructure arrangements.
Second, it necessitates the transfer of risk between
partners.
Arrangements that do not include these two concepts are not
technically "public-private partnerships"
The definition embraces a spectrum of models that progressively
engage the expertise or capital of the private sector. At one end,
there is straight contracting out as an alternative to
traditionally delivered public services.
At the other end, there are arrangements that are publicly
administered but within a framework that allows for private
finance, design, building, operation and possibly temporary
ownership of an asset Table 1 shows different contractual
arrangements (Delivery Systems) which may or may not be financed by
the contracted party.
NO FINANCING INVOLVEDFINANCING INVOLVED
Design-buildBuild-own-operate
Management contractJoint development agreement
Design-build-operate-maintain
Design-build-finance-operate
Build-operate-transfer
ConcessionAsset Sale
Table 1 Types of PPP Contractual ArrangementsContractual
Arrangements means for our deliberation Delivery Systems
NIIB & PPP
NIB &PPP In this paper PPP and NIIB are brought into focus
as institutional arrangements for mobilising private capital to
support the development and maintenance of public infrastructure in
Trinidad and Tobago.
THE MOBILISATION OF PRIVATE CAPITAL IS WAHT IS CENTRAL TO THIS
DELIBERATION not (THE BUNDLING of DESIGN, CONSTRUCTION FINANCING
and OPERATIONS INTO A SINGLE LONG TERM CONCESSION or ANY VARIATION
OF DELIVERY WHICH IS LINKED TO FINANCE UNDER ONE CONTRACT OR ONE
ENTITY.
PPP was the institutional form which initiated the mobilization
of private capital. In the traditional forms of PPP the
mobilisation of private capital is linked to a project delivery
system such as design-build.
Table 2 gives details of PPP projects by type funded worldwide
between 1985 and 2004.
Table 2
PPP Projects Funded 1985-2004 (AECOM)
PPP / NIB Experiences of Canada and UK PPP In Canada started in
the 1990's. During the 1990's and the early 2000's PPP in Canada
was not without problems. The failures during this period served as
a learning experience such that Canada is now considered one of the
leading players in the PPP market. Projects reaching financial
closure grew from 6 in 2005 with a capital value of US 3.4B to 15
in 2007 and 10 in 2010 with capital values of US 3.4b. The average
debt financing was 77% . nted Kingdom since 1992 the scale and
number of projects initiated under PPP is unprecedented, in fact
The United Kingdom initiated the bundling of design, construction,
financing, and operations into a single long term concession (DBFO)
which is now the most globally acceptable model for PPP.
The UK now has the most sophisticated institutional framework
for PPP in the world and has remained the most active partner in
the marketenditure of
Projects reaching financial closure in 2005 had a capital value
of US 7B. In 2007 capital value of projects reached US 21B and was
down to US 7.0B in 2010.
What Fuels PPP?
Lack of financial resources of Governments to maintain and
expand infrastructure networks vital to achieving economic
development and stability.
Heavily indebted governments perceive an opportunity to close
the infrastructure gap earlier.
The reluctance of Governments to raising taxes.
What Fuels PPPPPP is fuelled by
(1) the lack of financial resources of Governments to maintain
and expand infrastructure networks vital to achieving economic
development and stability. Heavily indebted governments through PPP
perceive an opportunity to close the infrastructure gap
earlier.
(2) Government's reluctance to raising taxes.
These two factors have led to the creation of an investment
climate for conglomerations of firms such as banks, construction
companies, consulting agencies and lawyers to mobilise in an
attempt to close the infrastructure gap through the financing and
commodification of public needs.
There is at present a large network of international firms
involved in infrastructure financing supported by a global network
of international PPP agencies. Private sector investment is
attracted to the DBFO model because of low risk, long asset life,
large investment scale, low operating cost, fixed term contracts
with inflation protection and monopoly control.
The UK as initiator, most active country, with the best
institutional infrastructure for PPP after 30 years of experience
in PPP arrangements is now the leading critic of PPP arrangements
in their present form because of performance issues. As a result,
the House of Commons through its Treasury Committee, commissioned a
review of PPP initiatives in the UK
Findings of The House of Commons Treasury Committee
Private financing organised by PPP project entities some (4%)
more expensive than government borrowings.
Savings from efficiencies using the variations of design-build
delivery systems no more than under traditional approaches.
Design innovation and quality of PPP projects sometimes poor
compared with projects under the traditional method.
The House of Commons Treasury Committee reported the
following:(1)"Private financing organised by PPP project entities
is in the order of (4%) more expensive than government
borrowings.
(2) efficiencies by using the variations of design-build
delivery systems is no more than that that under the traditional
approaches.
(3) From the point of view of design innovation and quality, PPP
projects in some instances performed poorly compared with projects
under the traditional method.
Findings of The House of Commons Treasury Committee
The remaining advantages of PPP which have nothing to do with
value for money are
PPP debt can be considered off balance sheet
Government departments use PPP to leverage up their budgets
Incentives unrelated to value for money need to be removed and
stricter rules and guidelines governing PPPs introduced.
PPPs only likely to be suitable where risk associated with
future demand and usage of an asset can be efficiently transferred
to the private sector.
(4) The remaining advantages of PPP which have nothing to do
with value for money are
(a) PPP debt can be considered off balance sheet (b)?Government
departments use PPP to leverage up their budgets
(5) The incentives unrelated to value for money need to be
removed and stricter rules and guidelines governing PPPs must be
introduced.PPPs are only likely to be suitable where the risk
associated with future demand and usage of an asset can be
efficiently transferred to the private sector.
Additional Concerns
Transparency issues leading to lack of community involvement
with its knock-on effect on Urban Planning and accessibility to
basic information.
The lack of flexibility in long term contracts created major
problems for Governments when demand changed.
In addition to the concerns expressed by the Treasury Committee
there are:
(1) Transparency issues leading to lack of community involvement
with its knock-on effect on Urban Planning and accessibility to
basic information. In the UK the courts were approached to get
basic information which should lead to changes in the Freedom of
Information Act. (UNISON report to House of Lords on Private
Financed Projects paragraphs 19 and 20)(2) Lack of flexibility
issues. Lack of flexibility in long term contracts which are demand
driven can created major problems for Governments when demand
changes. PPP locks the owner into inflexible contractual
arrangements with little room for variation. Once the contract is
signed the owner loses control of the project. The financial
arrangements, the design, construction, operation and maintenance
are now almost exclusively under the control of the PPP
operator.
INITIATIVES BY THE LOCAL ENGINEERING AND CONSTRUCTION
SECTOR
2010 The Case for a National Investment Infrastructure Bank for
Trinidad and Tobago (NIIB TT)
As part of the Joint Consultative Council for the Construction
Industry [JCC]s response to the 2010 2011budget presentation, a
paper The Case for a National Investment Infrastructure Bank for
Trinidad and Tobago (NIIB TT) was developed. The paper was
submitted to the JCC to be used as a working document for the
hosting of a two day conference in Trinidad and Tobago. The
Caribbean Development Bank [CDB} was approached and requested that
the theme be changed to A New Approach to Financing Infrastructure,
Critical and Necessary for the Caribbean. It is interesting to note
CDBs suggestion that we consider New Approach to Financing
Infrastructure, Critical and Necessary for the Caribbean.
Commitments Participation and Financing
ParticipationInternational Finance Corporation (IFC)
Caisse des Depots
Director, Metropolitan Infrastructure Initiative and present
Advisor to the Obama Administration on a NIB
The Institute of Civil Engineers (ICE), Great Britain
General Manager Inter-American Corporation for Infrastructure
Finance (CIFI)
Caribbean Financial Services Corporation (CFSC) Bdos.
FinancingCassie des Depots of France
First Citizen Bank
First Caribbean International Bank
The Caribbean Financial Services Corporation.
Commitments for participation through presentations were
received from the International Finance Corporation (IFC), Caisse
des Depots of France, Mr. Robert Puentes, Senior Fellow and
Director, Metropolitan infrastructure Initiative and present
Advisor to the Obama administration on a National Infrastructure
Bank, a representative from the Institute of Civil Engineers (ICE),
Great Britain, Mr. Roland Trujillo General Manager Inter-American
Corporation for Infrastructure Finance (CIFI), and Mr. Antony
Maughn, Caribbean Financial Services Corporation (CFSC).
Commitments for financing were received from Cassie des Depots of
France, First Citizen Bank, First Caribbean International Bank, and
The Caribbean Financial Services Corporation. This initiative
lapsed because of funding and timing arrangements of
presenters.
Why a NIB for T&T?
The budget 2011-2012 projects T&Ts third year of deficit
financing.
Funds are available both in the local and international markets
at extremely low interest rates.
The local financial Institutions are flush with funds with
little investment opportunities
A similar situation exists internationally
In the period 2009-2010 there existed a clear trend towards
implementing a PPP model in T&T
The question to be answered is, why a National Investment
Infrastructure Bank for Trinidad and Tobago?The answer is founded
on the following facts:
(1) The budget of 2010-2011 projected that Trinidad and Tobago
will experience its second year of deficit financing. The budget
2011-2012 projects our third year of deficit financing.
(2) Funds are available both in the local and international
markets at extremely low interest rates. The local financial
Institutions are flush with funds with little investment
opportunities. A similar situation exists internationally.
(3) In the period 2009-2010 there existed a clear trend towards
implementing a PPP model on a massive scale in Trinidad and Tobago.
The National Trunk Road Project was initially proposed to be
delivered under a design-bid-build delivery system with phasing
taking into account acquisition and utility location issues. This
approach allowed for the effective involvement of the local
construction and manufacturing sectors
This approach was changed drastically by the former Minister of
Works and Transport by:(a) Bundling projects and operational
components to attract large international construction firms and
financiers. (b)Changing the delivery system from the
design-bid-build to design-build. Designs, tender documents and
phasing plans were already in place when tendering on a
design-build basis was initiated.. (c)Requesting that the
contractor give an option to provide financing.,
Why a NIIB for T&T?
The lack of control over the foreign exchange component of
projects
The preference for Design- build coupled with finance provides
an efficient suction pump for foreign exchange to leave the
country
The institutional and organizational infrastructure for delivery
of physical infrastructure is in shambles
(4) The lack of control over the foreign exchange component of
projects. For example The Request for Proposals on the Trunk Roads
Projects stated The selected contractor for each package shall be
required to execute the works under its contract utilizing at least
30% local content, excluding materials but including labour and
services, engaged either directly or on a
sub-contractor/consultancy basis, in connection with both design
and construction. It is common knowledge that it will be difficult
for any contractor on a road project in Trinidad and Tobago to
achieve a local content of less than 60%(5) The preference for
Design- build coupled with finance provides an efficient suction
pump for foreign exchange to leave the country. The situation is
further exacerbated with Chinese firms. These Chinese firms come
with all the components of PPP and have the biggest suction pump
because of their predilection to bring in labour. In addition their
entry is facilitated by Government to Government Arrangements
aiding the bypassing of existing procurement legislation.
(6) The institutional and organizational infrastructure for
delivery of physical infrastructure is in shambles. In parts 1 and
2 o
The Politics of Procurement
1960s World Bank and IDB funding conditions privileged the
private sector resulting in the deterioration of public sector
organisations such MOW
1970s as a result of the oil bonanza procurement was outsourced
through a series of Govt to Govt arrangements
1990s inefficiencies in delivery by the public sector led to the
creation of several Governments owned organisations in the private
sector responsible for infrastructure delivery.
The Politics of Procurement, papers I have authored on
procurement practices, they show that the breakdown is rooted in
the mode of funding utilised in procurement. In small countries the
mode of funding can have transformational effect on the countrys
institutional and organisational arrangements for delivering
infrastructure.
In the 1960s the funding conditions of the World Bank and the
IDB privileged the private sector. This led to trained and
experienced personnel leaving the public sector for the private
sector. The deterioration of public sectors organisations such as
the Ministry of Works and Transport was the end result.
In the 1970s as a result of the oil bonanza procurement was
outsourced through a series of Government to Government
Arrangements. The National Insurance Property Development was
formed to manage the process.
In the 1990s because of inefficiencies in delivery by the public
sector the government created several Governments owned
organisations in the private sector to be responsible for These
organisations also served as agents for off balance borrowings.
There has been no improvement in delivery of infrastructure
facilities.
(7) There is no national plan in the Transportation sectors.
There is no prioritisation of projects. Congestion on roads is now
nationwide. Flooding is also nationwide and responses only have
temporary effect
Proposals of Professional Bodies
The JCC promoted since 2000, the setting up of a National Roads
Authority
APETT has made repeated calls for the setting up of a Transit
Authority and a Drainage Authority
The JCC for the past 8 years has been active in the promotion of
procurement reform - procurement legislation if enacted as proposed
by the JCC will go a long way in providing a foundation for the
regulatory framework necessary for the setting up of the NIB.
The JCC has through seminars papers and meetings promoted since
2000 the setting up of a National Roads Authority in Trinidad and
Tobago.
The Association of Professional Engineers has made repeated
calls for the setting up of a Transit Authority and a Drainage
Authority to facilitate the planning process. Implementation to
date has been poor.
The JCC for the past 8 years has been active in the promotion of
procurement reform in Trinidad and Tobago. The legislation is not
yet in place. The procurement legislation if enacted in the manner
proposed by the JCC and other private sector bodies will go a long
way in providing a foundation for the regulatory framework
necessary for the setting up of the NIIB.
Table 3 shows Trinidad and Tobago readiness for PPP.
Table 3Economic Intelligence Unit (2009)
Evaluating The Environment for PPP In Latin America and The
Caribbean
Trinidad &
TobagoOverallLawsInstitutionalOperationalInvestmentFinancial
IndexRegulationsFrameworkMaturityClimateFacilities
Ranking128 (tied)9 (tied)1965 (tied)
Score22.925254.364.358.3
Table 3 shows Trinidad and Tobago readiness for PPP.
The table shows that Trinidad and Tobago is ranked 12th out of
19 countries surveyed. What is revealing is that on Operational
Maturity Trinidad and Tobago came 19th with an index of 4.3
Operational Maturity reflects the countrys track record for project
implementation.
The history of public procurement has shown that funding has
played a transformational role in procurement which to date has had
negative effects on our institutions and organisations response to
delivery. In this regard, now is the time for a NIIB for it is
indeed possible for funding to play a positive transformational
role.
The inability of governments in small countries to fund the
infrastructure gap without the support of the private sector
remains persuasive.
The issue now becomes how can the private sector remain involved
in funding public infrastructure without the experience of the
negatives outlined by the UK parliament.
A NIIB for Trinidad and Tobago is of emended value in this
regard. In fact funding the infrastructure gap on a long term basis
naturally leads to the setting up of infrastructure funds. An
independent entity that would use government funding to attract
major private investment in public infrastructure projects is what
an NIIB can do by leveraging both on the local and international
markets. Capital expenditure ca be leveraged and turned into
current expenditure on the National Accounts. The NIIB can take up
the responsibility of raising bonds and the international banks can
become equity holders in addition to lenders lending credibility to
the bank. China can become equity holders in the bank, support the
raising of loans for the bank. .
NIIB The Way to Promote Public Private Partnership
It allows the private sector to be involved in funding public
sector projects and is an improvement on relying on current modes
of Public Private Partnership (PPP) arrangements as it delinks the
financing from the contractual arrangements. Once the contractual
arrangements are linked to the financing under design build
delivery systems the owner loses control of the project on signing
of the contract.
The NIB approach itself is a Public Private Partnership and in
the view of JCC is a preferred option to financing infrastructure
private and public money for the following reasons:
1.It allows the private sector to be involved in funding public
sector projects and is an improvement on relying on current modes
of Public Private Partnership (PPP) arrangements as it delinks the
financing from the contractual arrangements. Once the contractual
arrangements are linked to the financing under design build
delivery systems the owner loses control of the project on signing
of the contract. The recent reviews coming out of the United
Kingdom and Europe on current forms of PPP arrangements demonstrate
that the negatives associated with PPP arrangements arise from the
linkage between financial and contractual arrangements under design
build delivery systems. .
POSITIVE EFFECTS OF A NIIB
Greater owner control over the process during the design,
construction and operating stages of the project
Better management of risk transfer mechanisms.
The existence of a NIIB promotes long term planning of
infrastructure on a sector basis.
Plays a defining role in improving the Operational Maturity of
the country
Financial institutions can now play a more defining role in the
development process
With this delinking through a NIB, the positive effects are:
(1) Greater owner control over the process during the design,
construction and operating stages of the project which should lead
to increased confidence in the NIIB procurement and delivery
processes. (2) Better management of risk transfer mechanisms. The
underlying principle of PPP is that risk is transfered to the
private sector. With a NIIB in place the issue of risk transfer is
now the NIIB's concern and not the Governments. Risk can now be
more efficiently transferred because of the inherent controls
outlined at (a) above not sure what this is
(3)The existence of a NIIB promotes long term planning of
infrastructure on a sector basis.
(4) Operational Maturity of Trinidad and Tobago is the single
biggest negative for private sector financing. A NIIB set up by
statute and invested with decision making authority over all
processes delivery as well as financing gives the opportunity to be
insulated from issues that negatively affect Operational
Maturity.
(5) The financial institutions can now play a more defining role
in the development process leading to improvement in the local
capital market
POSITIVE EFFECTS OF A NIIB (cont.)
Reduction of political risk.
Greater control over the use and monitoring of foreign funds for
investment in infrastructure
Promoting of planning through existing organisations and the
setting up of organisations
A more organized and sustainable construction sector by
ameliorating the boom and bust scenario
A stable labour market
Maintenance of a skilled labour force
Standardisation and industrialisation of design, construction
and maintenance processes.
With a NIIB in place it allows for the setting up of a tighter
institutional framework necessary for the reduction of political
risk.4.It also allows for greater control over the use and
monitoring of foreign funds for investment in infrastructure. With
the development of the local capital market, foreign funding could
be limited to the foreign exchange requirements of projects.5. A
natural outcome of a NIIB is the promoting of planning through
existing organisations and the setting up of organisations such as
a Roads Authority. Projects available for funding in each sector
will have to be prioritised based on some scientific criteria and
must meet the NIIB conditions for funding. This will facilitate the
shift away from the proliferation of state owned project management
organisations incorporated under the Companies Act. An
infrastructure bank also keeps politics out of the equation.
Careful procedures will be established to ensure that projects that
receive loans or loan guarantees are based on merit and are of
national significance. 6.Such long term and medium term planning
will lead naturally to a more organized and sustainable
construction sector. The boom and bust scenario of the construction
industry could be ameliorated. The outcomes will be a stable labour
market, the maintenance of a skilled labour force, the
standardisation and industrialisation of design, construction and
maintenance processes.
Important Metrics
The return on investment (ROI)
A cost benefit analysis (COBA)
The social return on investment (SROI)
In the paper The Case for a National Infrastructure Bank for
Trinidad and Tobago [2010}, the mechanism for funding a five (5)
billon dollar highway project was outlined. In that paper the
essential criteria for determining prudent investment in public
sector infrastructure projects through a NIB was not stated and did
not reveal the fundamental difference in priorities between the
private and public sectors. These differences will be taken into
account through the metrics of the project evaluation system.The
important metrics are:1 The return on investment (ROI) = (Gain from
Investment - Cost of Investment)/ Cost of Investment The ROI is the
measure that is of primary concerned to the private investor.2
ThedCost benefit analysis (COBA) is a technique for assessing the
monetary social costs and benefits of a capital investment project
over a given time period. The principles of cost-benefit
analysisOBACBA) are simpleefined by dividing the projected benefits
of a program by the projected costs. This is one of the primary
concerns of the st.te.3 The social return on investment SROI is
informed by a set of principles that are designed to ensure that
process is robust, transparent, and informed by stakeholders. The
principles inform a six-step methCost
SIX STEP METHODOLOGY
Establishing scope and identifying key stakeholders.
Mapping outcomes
Evidencing outcomes and giving them a value.
Establishing impact.
Calculating the SROI.
Reporting, using and embedding.
Establishing scope and identifying key stakeholders. Clear
boundaries about what the SROI will cover, and who the will be
involved are determined in this first step.Mapping outcomes.
Through engaging with stakeholders, an impact map, or theory of
change, which shows the relationship between inputs, outputs and
outcomes is developed.Evidencing outcomes and giving them a value.
This step first involves finding data to show whether outcomes have
happened. Then outcomes are monetised this means putting a
financial value on the outcomes, including those that dont have a
price attached to them.. Establishing impact. Having collected
evidence on outcomes and monetised them, isolate those aspects of
change that would not have happened anyway (deadweight) or are not
as a result of other factors (attribution).Calculating the SROI.
This step involves adding up all the benefits, subtracting any
negatives and comparing them to the investment..Reporting, using
and embedding. Easily forgotten, this vital last step involves
sharing findings and recommendations with stakeholders, and
embedding good outcomes processes within the organisation. This
metric taken from the New Economic Foundation is of primary use to
the State. When one looks at the set of metrics together, it
becomes clear that the State has interests other than that
expressed by the ROI. The difference in benefits can be used to
reflect the type of shares held by the public sector relative to
the private sector
TAX AS A MECHANISM FOR FUNDING A NIIB
More Productive use of Government Subsidies . It will be
imprudent to remove subsidies and at the same time impose fuel
taxes.
Examine how subsidies can be reduced e.g some of the funds that
go to Petrotrin be placed as assets in the NIIB to go towards road
infrastructure projects
TAX AS A MECHANISM FOR FUNDING A NIIB The paper The Case for a
National Infrastructure Bank for Trinidad and Tobago proposed the
reinstating of The Road Improvement Tax as a mechanism for funding
through the NIIB. The present position is that our fuel subsidy for
the year 2011-2012 is $4.1B. We are in effect subsidizing deportee
vehicles, increases in our carbon footprint, increased traffic
congestion which has a direct effect on prices of goods and
services and increased road maintenance cost, negative driver
behaviour and crime. The negative fallout from well-intentioned
policies has run its course and now must stop and give way to more
productive use of government subsidies. It will be imprudent to
remove subsidies and at the same time impose fuel taxes. The
challenge therefore is how can the subsidy be reduced and some of
the funds that go to Petrotrin, for example, be placed as assets in
the NIB to go towards road infrastructure projects In addition the
Government owes Petrotrin large sums of money. A NIB, if in place,
could take on the responsibility of discounting Government
receivables to Petrotrin at better rates than the commercial banks
and using the discounted amount to fund road projects.
SUMMARY
Favourable environment for developing a unique model of a
NIIIB
Encourages medium and long term planning
Supports job security in the construction sector
Greater transparency
Builds trust with the private sector and strengthens their
involvement in the society
Promotes the engagement of local professionals
SUMMARY
Therefore against the background of other countries our own
historical and social imperatives, we are in a favourable position
to develop a NIIB model tailored to our needs that:-
(1) Brings medium to long term planning back to national
development in a manner that minimizes political interference when
there is regime change
(2) Reduces boom and bust cycles and ensures job security in the
construction sector
(3) Affords greater transparency and accountability in project
financing and greater efficiency in project delivery
(4) Builds the trust of the local private sector and strengthens
their involvement with their society
(5) Promotes the engagement of local professionals in all
aspects of sustainable growth and development as funding is
generated not only for infrastructure projects but for the
development and application of green technology
Thank You
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