NASSAU, BAHAMAS: The government is moving to give private investors a greater role in financing and delivering commercially viable infrastructure projects as part of a major overhaul of its public-private partnership framework aimed at reducing the fiscal burden and risks carried by the public sector.
Economic Affairs Minister Michael Halkitis tabled an updated Public-Private Partnership Policy, PPP Assessment Framework and a proposed “Private Sector First” policy in Parliament, outlining an approach under which projects with commercial potential would be considered for private-sector delivery before the government commits public funds.
The proposed shift could significantly change how major infrastructure and public-service projects are assessed, financed and delivered, with the government seeking to focus more heavily on enabling, supervising and facilitating private investment rather than automatically providing infrastructure directly.
Halkitis said the government engaged United Kingdom-based Misca Advisors to review and strengthen the existing PPP policy without changing its fundamental purpose or overall structure.
The revised policy remains the government’s overarching framework for public-private partnerships and establishes the principles and processes through which projects are identified, developed, approved, procured and managed.
Halkitis said several areas have now been strengthened, including project development, fiscal oversight, contract management, transparency and reporting.
Each phase of a PPP project will be more clearly defined, with formal decision points separating project identification, preparation of the business case, the transaction process and eventual contract management.
The Ministry of Finance will also have an enhanced role in evaluating whether proposed projects are affordable and assessing their wider fiscal implications before approval is granted.
“Fiscal oversight has been enhanced, particularly the Ministry of Finance’s duty to evaluate affordability and broader fiscal consequences before a project receives approval,” Halkitis said.
Contract management obligations have also been reinforced, including requirements for continued performance monitoring and management of risks and changes throughout the life of a project.
Transparency and reporting standards are also being strengthened through requirements for disclosure of project, contractual and performance information.
Halkitis said the changes are intended to produce a more uniform and rigorous application of the government’s PPP policy across the public sector while reinforcing accountability and sound fiscal management.
The revised policy will be accompanied by a wider PPP Assessment Framework, including a policy manual and other guidance materials.
Halkitis stressed that the policy and assessment framework perform different functions.
The policy establishes the government’s main principles, responsibilities and requirements for identifying, developing, procuring and managing PPP and public projects.
The policy manual and supporting documents will provide more detailed instructions, standard assessment methods, templates and tools for implementing those requirements.
The assessment framework will also provide practical guidance for appraising proposed projects, including determining value for money, fiscal impact and project risk.
It will set out the documents required at the various stages of a PPP project’s lifecycle.
The structure, according to Halkitis, is intended to allow the overarching government policy to remain relatively stable while supporting guidelines can be adjusted as professional practices, market conditions and implementation requirements change.
Potentially the most significant policy shift outlined by Halkitis, however, is the proposed “Private Sector First” approach.
The minister said the public sector currently carries a substantial portion of the fiscal pressures associated with infrastructure delivery, including recurring operating costs and contingent liabilities.
Under the new approach, private-sector delivery would be favoured for infrastructure projects deemed commercially viable.
Direct public-sector involvement would instead be reserved for cases involving clear market failure or an established public-interest requirement.
“Under this model, the potential for private-sector participation would be considered from the earliest planning stages,” Halkitis said.
Projects with commercial potential would initially be directed toward private delivery, while public investment would proceed when a private-sector solution is impractical or when project structuring is unable to address a market failure.
“This would mark a more significant move away from direct government provision of infrastructure and services, with the government instead focusing on enabling, supervising and facilitating private investment,” Halkitis said.
The policy would therefore seek to determine at an early stage whether a project can attract private capital rather than first assuming that the government will finance and deliver it itself.
Halkitis said the Private Sector First policy is designed to operate alongside the revised PPP policy and broader assessment framework.
According to the minister, the approach reflects the government’s priorities of limiting fiscal exposure, attracting private capital and making greater use of private-sector expertise and capabilities.
The overhaul comes as the government also responds to observations from the Fiscal Responsibility Council regarding PPPs and the need for enhanced disclosure and reporting of PPP-related obligations.
Halkitis earlier told Parliament that the government agrees there is value in strengthening the policy and institutional framework surrounding PPPs and said the revised assessment framework will introduce internationally recognised value-for-money assessments, fiscal affordability analysis and enhanced fiscal-risk evaluation mechanisms.
The government maintains that PPP arrangements are already considered within its broader fiscal planning and risk-assessment processes and are subject to oversight under the Public Finance Management Act.
The new framework, however, is intended to strengthen those processes further, particularly around identifying potential financial exposure before projects receive approval.
That could be particularly important for PPPs because the financial implications for the government are not necessarily confined to the initial construction cost of a project. Halkitis specifically pointed to recurring operating expenses and contingent liabilities among the fiscal pressures currently associated with public-sector infrastructure delivery.
The revised framework therefore places greater emphasis on affordability, risk allocation and value-for-money analysis before projects proceed.
The policy changes have not yet reached their final form.
Halkitis said the revised PPP policy, assessment framework and Private Sector First policy are being released for public consultation, allowing businesses, investors, stakeholders and members of the public to review the documents and provide feedback before they are finalised.
“These important policy documents are being released for public consultation, giving stakeholders and members of the public an opportunity to review them and provide feedback before they are finalized,” he said.
Halkitis said the three initiatives are intended to work together: the revised PPP policy providing the governance structure, the assessment framework translating those requirements into practical procedures, and the Private Sector First approach expanding the circumstances in which private capital and expertise are considered.
“The revised PPP policy will underpin sound governance,” Halkitis said. “The assessment framework will translate that policy into practical action and the government will have a strategic means of broadening private-sector participation wherever it can add value.”
He said the overall objective is to create a more disciplined and transparent approach to infrastructure and public-service delivery while reducing unnecessary government exposure and creating greater opportunities for private investment.
“Together, these measures will support the responsible and transparent advancement of infrastructure and public services for the benefit of the Bahamian people,” Halkitis said.
