GICT World Bank The Role of Public Private Partnerships in e-Government Projects 25 June 2008...

GICT World BankThe Role of Public Private Partnershipsin e-Government Projects

25 June 2008

Presented by:

Hrishikesh Potey

Senior Business Analyst, Evalueserve

e-Government Public Private Partnerships

Slide 2

Example of an e-Government project and a way to execute it…

ContextContext→ A developing country in Asia, specifically its department related to company affairs, has

been handling millions of documents belonging to different corporate entities.

→ Physical presence of company executives is necessary for all transactions related to company affairs, e.g. incorporations of companies.

→ Lack of physical infrastructure and limited access points for service delivery lead to slow collection and verification processes, and chaotic situations during the peak filing season.

→ Cumbersome processes, including paper sorting, storage and retrieval, are time consuming and prone to error; they often result in data loss and customer dissatisfaction.

→ Complete automation of all processes related to the enforcement of and compliance with legal requirements for companies registered in the country.

SolutionSolution

Key Issues and ChallengesKey Issues and Challenges

Scarcity of financial resources Timely execution of critical projects Risk of running a capital intensive project

Scarcity of technical know-how and skills Risk involved with delayed implementation Efficient project management


Slide 3

Presentation Plan

…how public private partnerships (PPP) can help?…how public private partnerships (PPP) can help?

Successful PPP in e-Government – Project “Bhoomi”Successful PPP in e-Government – Project “Bhoomi”

Designing innovative business modelsDesigning innovative business models

When do such initiatives run the risk of failure?When do such initiatives run the risk of failure?

How to create a win-win situation?How to create a win-win situation?

Country assessment study for e-Government PPP (Funded by the World Bank)Country assessment study for e-Government PPP (Funded by the World Bank)

PPP models: Investment responsibility of the private sector PPP models: Investment responsibility of the private sector


Slide 4

…how public private partnerships (PPP) can help?

DefinitionDefinitionA public private partnership can be defined as an agreement between government and private entities for the purpose of delivering a project or service, by sharing of risks and rewards of the venture.

Why Public Private Partnerships in e-Government

Value PropositionsValue Propositions

Access to private finance

Access to private finance

Reduced operational risk for the public

sector

Reduced operational risk for the public

sector

Faster delivery of capital projects

Faster delivery of capital projects

Project management

skills

Project management

skills

Improved service delivery to citizens

Improved service delivery to citizens

Optimum utilization of government resources

Optimum utilization of government resources

Entrepreneurship and innovation

Entrepreneurship and innovation


Slide 5

Successful PPP in e-Government – Project “Bhoomi” (1/4)

ContextContext

Country: IndiaDomain: Land Records Model: PPP

→ There are more than 20 million land ownership records of 6.7 million farmers with the state of Karnataka. Traditionally, they were maintained by approximately 9,000 village accountants, each serving 3 – 4 villages.

→ Requests for updating land records, upon sale or inheritance of a land parcel, had to be filed with village accountants only. Typically, it took 1 – 2 years for land records to be updated.

→ Farmers were often troubled by delays and harassment from the village accountants. In some cases, the bribe could be as high as up to INR 10,000 (approx. US$250) for illegal manipulation of records.

SolutionSolution“Bhoomi” started in 2000 with the aim of establishing an accurate and genuine land record system built with an efficient database for periodic updating of land records.


Slide 6


Country: IndiaDomain: Land Records Model: PPP

Phase 1Phase 1→ 100% government funded – It included computerization of 20 million land records and

establishment of computerized land record kiosks (Bhoomi centers) in villages.

The pilot phase of Bhoomi was implemented in a controlled environment in 4 taluks of the state of Karnataka.

After initial success, the project was then rolled out simultaneously in the remaining 177 taluks in the state during 2000 – 03.

Phase 2Phase 2

→ PPP with 3i Infotech and Comat – All the taluk databases at the 177 kiosks were connected to a central, web-enabled database to facilitate online access to RTCs.

Tele-centers were set up in individual villages from where farmers can obtain the RTC certificates.

These tele-centers are connected to the Taluk-level kiosks through a VSAT network.

As on March 2007, 800 tele-centers are operational; plan to roll out total 5000 tele-centers by 2009.

ExecutionExecution


Slide 7

→ Farmers are charged INR 15 as fees for obtaining the printed copies of RTC certificates at the tele-centers

Phase I

→ 100% financed by the government – INR 185 million

→ Revenues shared between the government and the private consortium.


Phase II

→ 3i Infotech made all the initial investment – INR 250,000 per tele-center

→ Comat bears all the recurring costs – INR 7,000 per month per tele-center

→ Cost of operating 60 n-Logue kiosks is INR 4,500 per month

Revenue ModelProject Finances

Business Model


Slide 8

Human Resources


Operational

→ Farmers can now get a printed copy of the RTC certificates in 5 – 30 minutes from a land record kiosk at the village level

→ Reduction in corruption – INR 700 million in bribes

→ Nearly 1,500 officials, including the supervisors to village accountants (Deputy Tehsildars), were trained at the state and district headquarters

→ Twelve state-level information seminars and four division-level workshops were organized for over 2,000 officials to allay the fears related to change in their job descriptions

Impact


Slide 9

Increasing investment responsibility of the private sector

PPP models: Investment responsibility of the private sector

Design and Build

Design and Build

Build, Operate and Transfer

(BOT)

Build, Operate and Transfer

(BOT)

Special Purpose Vehicle (Joint

Venture)

Special Purpose Vehicle (Joint

Venture)

Build, Own and

Operate (BOO)

Build, Own and

Operate (BOO)

Contract License (Operate and

Maintain)

Contract License (Operate and

Maintain)

Lease Agreements

Lease Agreements

Build, Own, Operate and Transfer

(BOOT)

Build, Own, Operate and Transfer

(BOOT)

Fully Government

Venture

Fully Government

Venture

Complete Private Sector

Initiative

Complete Private Sector

Initiative

Type of PPP Model Design and

BuildContract License

BOTLease

AgreementsJoint

VentureBOOT BOO

Degree of Risk X X X X X X X X X X X X X X X X X

Degree of Reward

Risks vs RewardsRisks vs Rewards


Slide 10

Designing innovative business models (1/2)

Private partner ensures financing and running the project and as a result earns the project revenues and keeps additional gains

1

Private PartnerPrivate PartnerBusiness Venture

Business Venture GovernmentGovernment

Government and the private parties set up a special purpose vehicle and both invest in the venture2

Either fixed or a variable pay off

Business Venture

Business Venture

Private PartnerPrivate Partner

GovernmentGovernment

Returns shared as per the capital investment ratio


Slide 11

Designing innovative business models (2/2)

e-Government Domain Project Financing Mechanism Returns to the Private Partner

1 2

Tax and CustomsFees charged from citizens and businesses for service enhancement

% share of the fees, per transaction

% share of additional revenues made possible by improved audit and collection programs

e-Procurement

Fees charged from participating government agencies and subscription fees from prospective suppliers for service enhancement

% share of the amount of bid (with an upper cap on

the total amount)

% share of the subscription amount

Certification and Licensing

Fees charged from citizens and businesses (in addition to the usual fees charged for issuing certificates and licenses) for service enhancement

% share of the service enhancement fees

Providing other private sector services through the information kiosks

Social BenefitsFees charged from citizens for service enhancement

% share of the service enhancement fees, per

distribution


Health and Education Fees charged from citizens for service enhancement

% share of the service enhancement fees, per

distribution



Slide 12

When do such initiatives run the risk of failure?

When governments tend to micro-manage things – getting more involved in execution than in planning

An overly technology-centric approach may cost dearly; overreliance on technology or driving an initiative with technology at its center stage

When investment in training government employees on new systems is neglected; it is crucial to allay fears related to change in their job descriptions

Absence of a competitive, transparent and credible bidding process for e-Government projects

Faulty or incorrect business/revenue models – estimation of growth in transactions can be tricky

Absence of a legal and policy framework that encourages PPP


Slide 13

How to create a win-win situation?

Focus on areas of primary and strategic importance, and leave execution to the private sector

Manage projects from a regulatory or enforcement point of view, rather than an implementation angle

Follow a customer-focused approach while delivering e-Government services

Invite the private sector to invest heavily in the venture and design economically viable business models and self-sustaining schemes for delivery of e-services

Alleviate fears of the private sector — regarding corruption and other concerns associated with government projects — by promoting a transparent and credible competitive bidding procedure for e-Government projects

Conduct regular citizen satisfaction surveys and incorporate citizens’ feedback in the electronic delivery of government services.


Slide 14

To assess the potential of developing countries in implementing e-Government projects through public private partnerships.

Country assessment study for e-Government PPP

ObjectiveObjective

Phase 1Phase 1

Phase 2Phase 2

→ A composite index was developed to rank countries on the basis of their potential for PPP in e-Government.

→ A three-dimensional country assessment matrix was developed to compare the countries’ need for e-Government and PPP against their potential for PPP in e-Government.

→ An in-depth analysis of 20 high potential developing countries was carried out to ascertain gaps in the countries’ infrastructure, policies, strategies, etc., for e-Government development.

→ The ultimate objective of phase II was to identify e-Government opportunities in these countries, which can be implemented through PPP.


Slide 15

Thank You!

GICT World Bank The Role of Public Private Partnerships in e-Government Projects 25 June 2008...

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