UNUnited Nations Economic Commission for Europe


UNECE Forum on Good Governance in Public-Private Partnerships

Geneva, 17-18 November 2003

Statement by Mrs. Brigita Schmögnerová,
Executive Secretary

Ladies and gentlemen,

I would like to welcome you to the UNECE Forum on Good Governance in Public Private Partnerships for Infrastructure development. This Forum opens the Fifty-First session of the Working Party on International Legal and Commercial Practices (WP 5). Its purpose is to define the key building blocks of good governance in PPPs and to consider the development of guidelines and standards of best practice in good governance for public and private bodies involved in developing infrastructure projects.

Why good governance? Does it really matter? Are not the real issues to simply find the finance for large infrastructure projects? Is good governance an optional extra? PPPs are complicated enough, it might be argued, with the challenge to distribute risk between the public and private sectors, the difficulties in establishing legal and regulatory regimes, and so on. Is thus a focus on governance in PPPs not simply adding to the complexity and in fact making them more difficult to achieve in the first place?

The answer to this line of argument is no. Governance does matter. The evidence shows the existence of a close connection between economic growth and good governance. Good governance is far more than just stopping corruption by public and private sectors. Governance is about making projects accountable, it is about the rule of law, achieving effective mechanism for resolving disputes. It is about employment and fairness and giving assurances to employees that their pensions and jobs will not be put at threat. It is, as one of our speakers will tell us shortly, about the other 'P' in PPPs that is ‘People’. How governance matters is illustrated in detail in case-studies by speakers to this Forum later on. Let me emphasize just a few points on governance:

Good governance is firstly, about ‘clear communication of the rules of the game’, transparency and accountability; In tendering for projects this means open and transparent competitive tendering. You cannot blame people for thinking there is a difference unless the governments can show emphatically, through clear communication, that there are tender procedures for projects that are won on clear criteria in an open way.

Secondly, good governance is also about ‘commercial success with social progress’. Let me illustrate it: Many of our poor regions in countries have little heat and power. Homes suffer from blackouts; winters are hard for families in bad living conditions. In Tajikistan, however, one of the poorest countries in UNECE, a PPP power project has given heat to homes in poor regions for people who cannot afford the heating themselves. It is a scheme, which builds energy capacity, provides hope and services, which the state by itself, cannot provide. Another example is - as we shall hear from a speaker from Scotland – of PPP that have brought computers into schools in Glasgow in many deprived areas. As a result, all the children have been given an email address; by providing computers, you make sure that the workforce is computer literate and more likely to be employed.

Another building block of good governance in PPP is ‘achieving effective resolution of disputes’. A case study of the London Underground shows the role of PPP Arbiter in determining disputes on key commercial aspects of the PPP agreements.

Finally, good governance is about ensuring safety and security in our infrastructures, which is what citizens, most demand. The private sector has shown that in tragic accidents where security has been lax, the insurance industry, when threatened by massive damages and litigation, has the motivation to ensure that safety and security standards are improved. But, while the market can move in this positive way, it still needs the public sector to set standards and to enforce these through the courts and through independent expert bodies. It is effective partnership, between public and private sectors, that give people the confidence to use transport and other infrastructure, in safety.

It is encouraging to notice that the EU, which represents 15 and soon 25 UNECE member States, is promoting a new initiative for growth through increasing PPP in the transport and energy infrastructures and by giving PPPs a new emphasis. We welcome this very much. It is also important not to see this simply as finance. Investment capital will not go into regions where public and private sectors are not operating in a transparent way, and where local officials do not take account of the interests of citizens. We need PPPs that are open and accountable with an emphasis on the P (people) for the successful financing of our infrastructure networks.

Let me recall that in 2000, 192 of the world’s leaders who signed up to the United Nations Millennium Development Goals recognized the importance of good governance for economic development. This was reiterated two years later in Monterrey. This meeting should not therefore just deliberate: we need to consider the outcomes and follow-up as well. Let us first congratulate the intergovernmental body of WP 5, which promote international commercial and legal practices, for taking a lead in this matter. We hope that WP 5 is going to be taking this forward in a number of ways:

1. We need clear guidelines on good governance in PPPs. The UNECE secretariat has drafted guidelines on good governance in PPPs to be discussed by this meeting. We hope that this meeting will give us a mandate to enlarge on the scope of the case studies and to use others to show what needs to be achieved.

2. We need evidence of governments and private sector working together to enforce governance, i.e. we need implementation. I therefore hope that in your deliberations today and tomorrow you can determine ways and means for both the public and private sectors to show the implementation of new standards in good governance. I expect you to discuss whether the UNECE PPP Alliance can act as body which gives a certification to new PPP Units in our region for good governance. Among others the benefit would be giving investors confidence and as a result give incentives to governments to make efforts to implement new benchmarks and standards.

Ladies and gentlemen, this Forum is an important start to a deep, and I hope, productive discussion. Thank you for coming to be with us for the next two and a half days. Let us look forward to a lively and stimulating discussion and to concrete results.