Lack of foreign investment in Pakistan has made our economy cash-starved and public-private partnership is the only way to attract and encourage foreign investment, Ghulam Murtaza Satti, head of Infrastructure Project Development Facility (IPDF) said while talking to Business Recorder here on Saturday.
Murtaza Satti said that leading international economists and research scholars have repeatedly called for replacement of the concept of privatisation with the public-private partnership (PPP) model where resources and risks are shared between the stakeholders to have better service delivery and value for money.
"It is the way we can help out our drowning economy", Satti emphasised. He added that the infrastructure needs are massive and government resources are limited. Not only is the fiscal space limited, there are also huge gaps in public sector capacity to build and operate infrastructure projects. Improved quality and service coverage in power and water supply, sewerage treatment, transport and logistics are vital for Pakistan's economy and the livelihood of its people. Tight fiscal constraints require innovative approaches, away from the traditional role of the government as service provider to ensure that massive investment needs are met with the assistance of private sector.
Public-private partnership (PPP) describes a government service or private business venture funded and operated through partnership of government and one or more private sector companies. The PPP involves a contract between public sector authority and a private party, in which the private party provides public service with substantial financial, technical and operational risk in the project. In some types of PPPs, the cost of using the service is borne exclusively by the users and not by the taxpayer.
Satti said that privatisation in Pakistan always had a negative impact on the overall growth of the economy. "Almost 12 years have lapsed but the ill-planned privatisation of three heritage hotels owned by Pakistan Tourism Development Corporation (PTDC) in Murree, Peshawar and Lahore are yet to be paid an amount of Rs 1.4 billion by the Privatisation Commission from the sale proceeds."
It has been estimated that less than half of the infrastructure investment needs can be covered by public funds under the Medium Term Development Framework. A combination of policy reforms, institutional support, incentives and financing modalities are required to encourage private-sector participation in financing, constructing and managing infrastructure projects. "It is the need of hour to focus on increasing infrastructure development projects in the country by inviting investments from abroad", Satti said.