The Sector Reform and Utility Commercialization (SRUC) Program was developed by the U.S. Agency for International Development (USAID) to support utility commercialization by enhancing the financial viability and long-term sustainability of global electrical utilities. The program aims to adopt private sector market models, long-term commercialization, and market-based approaches to decrease technical losses and improve human capital.
In 2010, international donors created the Caracol Industrial Park (CIP) in the Northeast Department, and USAID funded the construction of a 10 MW Diesel/Heavy Fuel Oil (HFO) generation facility and distribution infrastructure to provide electricity to the CIP and surrounding communes. The plant currently serves more than 7,250 customers.
Deloitte’s objectives in this statement of work were to provide transaction advisory services to the Government of Haiti (GOH) to assess the feasibility of and facilitate the establishment of a public-private partnership (PPP) for the management of the Caracol Power Utility (CPU). The purpose of this report is to provide leading practice procurement methodologies for establishing a PPP.
The identification of leading PPP procurement practices is an essential step in ensuring a successful procurement. The process must include a preparation phase prior to the inception of the tender process. The standard steps utilized by entities that have carried out successful, transparent tenders are described in this document. The Unité Centrale de Gestion des Partenariats Public-Privé (UCG-PPP) of the Haitian Ministry of Economy & Finance (MEF) has developed a PPP manual to assess, procure, and implement PPP projects. This report incorporates some of the lessons learned from the drafting of that manual to illustrate the best practice for procurement in Haiti.
The preparation phase involves seeking initial approval of the relevant public authorities of the project procurement plan. The approval of the main plan features is a crucial prerequisite as project procurement is a resource-intensive undertaking. Both the World Bank and the European PPP Expertise Centre (EPEC) describe best practices in assessing and developing PPP projects to help ensure that the PPP contractual scheme is the best option for the public authority.
The preparation phase includes several key steps, such as affordability assessment, PPP vs. public procurement comparative assessment, market assessment, project prioritization, determination of the required revenues, risk assessment and allocation, identification of the needs for expertise, and project team setup. The project plan and timetable are developed, and the procuring authority prepares draft PPP and management contracts, selects the procurement method, and drafts request for expressions of interest and proposals.
The PPP options assessment includes the identification and appraisal of projects suitable to be developed as PPPs, as well as the structuring and design of a draft PPP contract and soliciting the appropriate approvals. The World Bank Benchmarking PPP procurement report emphasizes the importance of identifying projects that could be developed as PPPs, conducting a feasibility study, assessing the allocation of risks, and conducting a market survey to evaluate the attractiveness of the project.
The European PPP Expertise Centre (EPEC) PPP Guide also emphasizes the critical role of a preparation phase, which is commonly performed poorly in emerging countries due to a lack of resources and technical capacity to structure and conduct the PPP process properly. The Haitian public procurement regulations governing concession or other contractual models do not provide clear guidelines for PPP procurement, and the GOH has not yet enacted the PPP bill and its application decrees.