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2011/FMP/CON/003 Session 3

PPP in Thailand: Policy Development and Challenges - Enabling Finance for Private Finance of Infrastructure Submitted by: Thailand

Conference on the Framework and Options for Public and Private Financing of Infrastructure Washington, D.C., United States 22-23 June 2011

PPP in Thailand:  P li D l Policy Development & Challenges  t & Ch ll (Enabling Finance for Private Finance of Infrastructure) APEC Finance Ministers’ Process Workshop, The World Bank 22‐23 June 2011

DR. SSEREE NONTHASOOT Legal Counsel, State Enterprise Policy Office Ministry of Finance, Thailand

Current PPP Framework

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single legislation called ‘Private Participation in State Undertakings Act’ in use since  1992 ain rationale is to prevent corruption by transferring  project approval to the  Cabinet and create  ex‐ante check and balance procedures, curbing discretion of  the project agency the project agency

 Applicable on ‘big’  projects valued  over 1 billion Baht over 1 billion Baht  PROJECT INITIATION  Broad scope of law  Approve  covering  all types  principle of PPPs concession,  licensing asset licensing, asset  lease) Draft TOR  &  contract  Linear process with  three steps: project  PARTY SELECTION initiation party initiation, party   selection and  Final  project Approval monitoring Sign  Contract

PROJECT MONIToring

Dr. Seree Nonthasoot (June 2011)

Project Agency Line Ministry

Advisor

Feasibility  Study

NESDB

‘New’ Project

MOF

Project with ‘existing’ assets

Cabinet

Project Agency

Selection  Committee

• Approve TOR &  draft contract • Fix guarantee • Select party

Line Ministryy Cabinet

Project Agency

AG Office

Monitoring  Committee

Scrutinise & approve contract • Monitor  Monitor compliance • Review  amendment*

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Issues & Drivers for Change  No systematic planning for PPP  Lack of clarity on project valuation  Lengthy process (no time limit for  line ministry decision‐making)  No provision for contract  amendment/renewal  Non‐compatibility with PPP concept  (no formal  mechanism for risk allocation)

 Small amount of provisions (25  sections) but numerous cases  (over 100 requests for Council of  S State opinions) i i )  Limited number of successful  projects/ unknown number of  non‐PPSU projects   Agencies preferring  conventional procurement  procedures to PPSU process Dr. Seree Nonthasoot (June 2011)

 PPP as an instrument  for balanced  budget  Need to increase  investments  Development of  y necessary  economic  infrastructure  (especially logistics)

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Proposed New Framework

Replacing the PPSU Act

Adding PPP‐Compatible  Measures

Incorporation of  ‘established’ PPSU  Measures

Dr. Seree Nonthasoot (June 2011)

Repeal the PPSU Act 1992 and enact a new PPP-conducive law  New bill contains 10 chapters, p , 65 sections  Transitory provisions put in place to support ongoing existing projects/contracts  Establish a central PPP agency  Preparation P ti off PPP ‘M ‘Master t Pl Plan’’  Establish ‘Project Development Fund’  Criteria for contract amendment and renewal  Requirement for project agencies to consider PPP alternative and justify non-PPP option  Transparency measures

 Definitional structures  Three-step procedures with appropriate modifications

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Challenges Ahead Intermediate

Medium

• Getting the new  Getting the new law passed • Political/policy  changes post  July3rd election • Substantive  changes by the  Council of State  & Parliament

• Establishment of  Establishment of PPP Unit & Passing  by‐laws • Personnel sufficiency • Hiring of advisors/  Hiring of advisors/ consultants • Preparation of  ‘PPP Master Plan’ • Preparation of by‐ laws (drafting/  public hearings)  • Streamlining PPP  process among  relevant agencies relevant agencies

Long term

• Implementation I l t ti • Social PPP  (conventional focus  on economic PPP/ novelty of social PPP/  clarity of framework) • Project selection  • Project Development  Fund sufficiency/ management  • Handling of  contracts concluded  under previous  framework

Capacity‐building/PPP familiarization for Regulators (SEPO), Line Ministries, Project  Agencies, Lawmakers

Inter‐agency/ International Cooperation & PPP Promotion  Dr. Seree Nonthasoot (June 2011)

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