Can public private partnerships help Libya improving the infrastructure services.

Introduction :

The quality of physical infrastructure in Libya is poor and significantly below regional standards both with respect to the requirements of the economy and the needs of Libyan citizens see figure (1).

Figure (1) Global Competitiveness index.

This reflect insufficient levels of public investment and luck of private investment in physical infrastructure over the last decade .Furthermore the efficiency of the public procurement is low due to many reasons including poor planning, coordination and projects selection, ineffective delivery and inadequate maintenance ,and corruption, this lead to increasing cost and reducing benefits.

For the water sector the current supply is far below the demand (see table 1) .Moreover as the northern shores continue to develop, there will be further increases of supply of fresh water .in many cases, the most cost-effective and sustainable way to supply these coastal locations with water could be desalination.

Table (1)Projected overall water supply, Demand and balance in Mm3

Desalination plants project:

The Libyan government have a plan to construct eight desalination plants at the major cities along the coastal area, the largest two are with a capacity of 500,000 and 400,000 meter M3/day at both Tripoli and Benghazi respectively .This is a part of overall strategy to increase the supply and decrease the waste to cover the current and future demand . Currently , there are 8 small to medium desalination plants of different scale in Libya .Their capacity is over 100 million m3/year .However, due to problems of management,maintenance and operation, the productive capacity is limited to less than half of the design capacity .Table (2)shows the eight plants and their capacities.

Capacity (m3/day)

Desalination plantSerial no.

40,000Tubruq130,000Kaleg elbomba240,000Darnah350,000Susah440,000Abu traba530,000Zlitan680,000Az Zawiah780,000Zuwarah8390,000Total

Table (2) the existing desalination plant and their capacities.

All the projects in Libya have been procured through public sector , and most are suffering from problems as described above, resulting in poor services .

Libya cannot improve the infrastructure and bridge the gap without the participation of PPP.

How can PPP improve the infrastructure service in Libya:

Libya is required to supplement the limited public sector capacities by introducing an effective public- private partnerships(PPP) as a way of introducing private sector financial funding , technology and innovation in providing better public service through improved efficiency. This will contribute to bridge the current huge gab and meet the growing demand for infrastructure needed .

In order for the PPP to successes it would be required to create the right environment that shall include Setting the right framework and follow the proven best practices along the project life cycle.

A well prepared framework will help to ensure a strong private sector response. The main component s are: Policy, legal framework ,processes and institutional responsibilities ,public financial management approach and broader governance arrangements.

Procurement of the desalination project through PPP:

The project is a priority and it will participate to help bridging the gap for water requirement and in order to evaluate whether this project is well suited for PPP .the following steps need to be done:

To carry out detailed feasibility report and demonstrate to the potential partners that the project is commercially viable. This is very important to attract good quality partners .

The study will cover as well the evolution of risks involved , and plan for mitigation and allocation of the risks(risk matrix).

To carry out analysis to compare the value for money and / or economic cost – benefit analysis of procuring the project using PPP or public procurement or other forms of PPP.

If the result of the analysis is in favor of PPP then it would be recommended to adapt the user- free PPPs contract where the private sector will be allocated the risks related to finance ,design ,construction and operation and demand . however the public sector manage risks related to land acquisition , exchange rate , change in regulation and low. Other risks will may be share.

Recommendations:In order for Libya to improve the infrastructure it would be required to encourage the participation of PPP to procure part of the infrastructure projects. the government support and commitment is very important for the succeed of PPP program. A strong and centralized body should be established to support PPPs.

Secure a mix of global and local expertise. The quality of the teams is important given the complexities inherent in PPPs. Global experts can bring critical knowledge and best practices.

References:

1- Libyan national economic strategy. 2- National spatial policy 2006-2030.3- General desalination company report.4- The global competitiveness report 2014-2015.5- PPP course reading documents.