PPP Support in Jamaica: Concept Note for PPIAF
1. Background and Context
Improved infrastructure is a key ingredient for growth and competitiveness in Jamaica. The GoJ
recognizes the need to invest in infrastructure—and in doing so, to leverage the resources, expertise
and innovation of the private sector. To that end, the Government of Jamaica (GoJ) has recently
approved a new Public-Private Partnership (PPP) policy, and intends to use the PPP modality to develop
infrastructure projects.
The PPP Policy assigned to the Development Bank of Jamaica (DBJ) the responsibility for coordinating
the implementation of the PPP program. Accordingly, the “PPP and Privatization Unit” of the DBJ is in
the process of building capacity in terms of staff and skills to execute its new remit 1. In addition, the GoJ
has established a “PPP Strategy Committee” to give policy-level direction to the PPP program, and a
“PPP Node” in the Ministry of Finance responsible for assessing and managing the Government’s fiscal
commitments under PPPs. Approval for PPP projects is required from Cabinet at several key stages,
facilitated by a Cabinet Sub-Committee for PPPs. Each individual project will be implemented by an
Enterprise Team, led by the responsible Ministry or Agency, supported by the DBJ, and with input from
other relevant Government entities.
Since the expansion of its mandate to include PPPs, the DBJ Privatization and PPP Unit has focused on
identifying PPP opportunities for the GoJ—many of which were already under consideration by
responsible Ministries and Agencies. PPIAF-supported technical assistance in August 2012 contributed to
this process, which has involved engaging with Ministries and Agencies to understand how PPPs may
factor into their plans, and gathering information on potential projects.
However there is still a lot of “upstream” work to be done to better define, assess, prioritize, and
develop these initial PPP pipeline project ideas to the point where they are ready to be approved and
implemented as PPP transactions. The status and amount of information available about each project
varies widely—in some cases the GoJ has previous project studies, and needs to determine whether
these are enough to demonstrate a solid “business case” for the proposed PPP; in most the PPP concept
needs to be better developed to decide whether and what to invest in detailed studies. There is a clear
need to build the capacity of the DBJ team, and of the relevant Ministries and Agencies, to carry out this
upstream work.
At the same time, the GoJ needs to work to ensure its PPP program is embedded in sound overall
infrastructure planning and prioritization. Bearing this in mind, a priority for “first-mover” projects will
be that they are central to the plans of the GoJ, and can be implemented confidently to enable the PPP
program to progress, while also working on the overall infrastructure planning process.
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Formerly the DBJ Privatization Unit. This unit has an existing staff with relevant capacity in running transactions,
but a clear need and appetite for capacity-building in developing, assessing and managing PPP projects
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2. Objectives and Audience
This activity has two, complementary objectives: (1) to build the capacity of the PPP Unit and other GoJ
entities to manage the PPP program; and (2) to support the “upstream” development, assessment, and
prioritization of first-mover PPP projects from among the existing PPP pipeline, in the context of the
GoJ’s overall priorities for improving infrastructure services and enabling growth.
The main counterpart for the work will be DBJ PPP Unit, and the audience will also include staff from the
MoF PPP Node, and from the Ministries and Agencies responsible for the PPP projects under
consideration.
3. Component Tasks and Outputs
The main thrust of this activity will be to accompany DBJ and the other relevant GoJ entities in doing the
“upstream” work needed to move the PPP program forward. This will involve sense-checking the
highest-priority projects in the PPP pipeline, and then working with the PPP Unit and responsible entities
to further develop, assess, and (if appropriate) make informed selections and plan for the
implementation of a subset of first-mover projects. This approach will both address immediate capacity
and pipeline development bottlenecks, and build capacity for the future – through on-the-job training,
and tailored training sessions.
The component tasks and their expected outcomes and outputs are described briefly in turn below.
Identifying priority projects
The first task will be to work with the DBJ and GoJ (including the cross-sector PPP Strategy Committee)
to review the current PPP pipeline, and identify the subset of PPP projects that hold most potential as
“first-mover” PPPs under the new policy. This will build on the “Rapid Assessment” of the PPP pipeline
carried out with PPIAF support, but also benefit from updated information, and from the decisionmaking authority of the PPP Strategy Committee.
Criteria for this identification will be developed and agreed with the GoJ, with the priority of enabling
early “success stories” for the PPP program, as well as ensuring that the first-mover projects are central
to GoJ priorities and plans in infrastructure development (as described above). The criteria will therefore
include the readiness of the project, complexity and likelihood of success; and robustness and centrality
to GoJ plans.
[Add initial list of projects to be considered in this process: expected to include wastewater network rollout; port concession; railway concession; school building program; waste-to-energy plant]
The outcome of this process will be an agreed set of first-mover PPP projects for further assessment,
which will be the focus of the remainder of this activity.
Developing selected projects
The new PPP policy sets out a two-stage process of PPP development, before approval is given to
prepare and implement a transaction:
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Initial concept development and screening—this includes “pre-feasibility” level assessment of
the likely economic and financial viability of a project; identifying major risks such as technical,
legal, or environmental issues; and sketching a possible PPP structure, with the level of detail
and resources invested depending on the level of complexity of the project in question. At this
stage Cabinet approval informs the decision to invest more resources in preparing the project
Development of a “Business Case” for the proposed PPP—that is, a well-founded assessment of
whether the project is viable, and whether a PPP would provide value for money, be
marketable, and be fiscally responsible (with clear requirements set out in the Policy for
demonstrating compliance with these criteria). This “Business Case” is the basis of a Cabinet
decision to proceed to the transaction stage.
The work under this second task will be to accompany the DBJ in progressing the selected first-mover
PPPs through this development and assessment process. The PPP program currently has one project
that has already proceeded to business case stage: a proposed concession for part of the Jamaica
Railway network. In this case, the work will consist of drawing together existing studies and information
into an initial PPP Business Case—and as appropriate, identifying any further detailed due diligence
necessary to finalize the Business Case and inform the Cabinet’s decision as to whether and how to
implement the proposed PPP.
The remaining projects in the “pipeline” are all at a very early stage: for these, the “next step” is to
develop a working PPP concept. This is likely to include considering the centrality of the project to sector
and overall GoJ plans and priorities; using existing information and the ministry/agency and/or
experienced consultant’s input to come to an initial view on viability (economic, financial, fiscal); and
accordingly setting out likely PPP structures that could be marketable. The aim will be to equip the GoJ
with enough information to take an informed decision on whether to move each project forward to the
Business Case stage (or where this is not possible, to identify exactly what further work is needed to
make that decision).
The outputs of this task will be a set of specific project reports: initial Business Case(s) and/or PPP
Project Concepts. In each case, if the assessment of the PPP is positive, the report will set out clear next
steps and an action plan to take the PPP to the next stage (to prepare and implement a transaction, or
to proceed to develop a detailed Business Case, respectively).
Training
Much of the capacity-building from this activity will take place “on-the-job” in the course of working
with the DBJ team and other responsible GoJ agencies on the above tasks. To entrench this on-the-job
training, the activity will also include a series of tailored training sessions drawing on project
identification, development, and assessment, using the selected potential PPPs as examples. Topics will
depend on the particular challenges of the selected projects, but are likely to include: PPP economic and
financial appraisal; and initial PPP structuring and risk allocation.
The output of this task will be a set of training workshops delivered to the relevant GoJ staff.
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4. Activity Cost and Management
This activity will be managed by a team in LCSSD Economics Unit, in coordination with the IFC C3P
Advisory team, and sector experts from the WB LAC region as appropriate. The WBG team will focus on
supporting the GoJ in the first task of identifying priority projects; and subsequently will closely
supervise and quality-control the work of sector-specialist consultants to be engaged for each selected
potential PPP project. The activity will be managed in close collaboration with the DBJ team, led by Ms.
Denise Arana (General Manager, Privatization and PPP Unit).
The total cost of this activity is estimated as $250,000. $40,000 has already been provided by the CMU in
support of this activity; PPIAF support is therefore requested to the tune of $210,000. This amount is
estimated to enable support to up to 5 specific projects.
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