Minister of Enterprise Development and Investment Promotion Anura Priyadarshana Yapa said Sri Lanka will learn from its own mistakes when formulating policies with regard to much needed Public-Private Partnerships (PPPs), as the government is unable to finance the massive infrastructure development programme on its own.

"Experiences of other countries have shown that PPPs carried out hurriedly and in a shady manner have resulted in conflict against public interest. We have learned the mistakes from our past and those of other countries," Yapa said last morning addressing a conference aimed at creating awareness of PPPs amongst public officials and private sector personnel.

This conference was organised by the BOI and Commonwealth Secretariat and held in Colombo.

"Well designed policies and transparency is critical to making PPPs work," he said.

Yapa said the government has entered in to a "massive" infrastructure development programme so that all communities in Sri Lanka could someday benefit and reap the dividends of peace and economic development.

He said the three-decade long struggle with terrorism had destroyed the country’s capacity to develop its infrastructure and curtailed its growth.

"We have had to rely on the Treasury or donor funds to finance whatever infrastructure developments that had taken place. There are advantages and disadvantages of relying on these sources," Yapa said.

"We cannot rely on the budget either. We now have to reach out to the private sector if the government is to realise its ambitions," he said.

Yapa noted that Sri Lanka was far behind its regional neighbours in terms of formulation of policies and guidelines for PPPs and of identifying areas in which PPPs would be more beneficial. He praised India’s initiatives in this regard.

He highlighted the telecom sector as a success story for PPPs. The government is now reaching out to the private sector for investments for coal, hydro and LNG power generation, development of an international airport in the South and development of Sri Lanka’s ports.

"The expansion of Colombo port is underway with ADB assistance for the construction of the breakwater which will cost US$ 450 million. We need private sector investments and participation to design, build and operate four container terminals. A bid for one such terminal, estimated at US$ 500 million, has already been received," Yapa said.

This single bid however has caused some controversy. A conglomerate made up of Aitken Spence and China Merchant Holdings made the single bid and offered much less than what the Port Authority expected. Meanwhile, the authority had also raised some of its requirements (See Island Financial Review of 01 and 08 August).

Yapa said that people often mistook PPPs with privatisation.

In PPPs, the government would retain ownership of state assets such as land and private investors are allowed to recover their investments through fees etc, whereas in privatisation, public assets are sold outright to the private sector.

"PPPs will provide the mechanism for the government to achieve desired results in areas of development activity the government cannot manage on its own," Yapa said.

Yapa, however, said transparency was crucial for the success of PPPs. This is because public assets are still the focus of attention.

When the privatisation of Sri Lanka Insurance Corporation fell through after the Supreme Court nullified the deal on the grounds that the entire process had been marred with irregularities caused by ministers, public officials and businessmen, a judicial activist—instrumental in taking the case before the supreme court—said Sri Lanka would have to get its act together because PPPs would be crucial for development of the country.

Nihal Sri Ameresekere said privatisation in terms of public-private sector partnerships would be crucial if the country aspired to equitable economic growth.

"Privatisation has now become a dirty word and rightly so considering the manner in which politicians, public officials and businessmen have behaved in the past," he said.

The bulk of the privatisation deals have been done in an ad-hoc manner exploiting public property and failed to deliver results to consumers and employees; Ameresekere said it was an impediment to growth.

"Several years ago a COPE report to parliament highlighted several irregularities in the privatisation of SLIC and Sri Lanka Marine Services (LMS) but parliament did nothing about them. Had we not filed action against these deals before the Supreme Court, politicians would have continued to turn a blind eye to them," Ameresekere said.

The lengthy Supreme Court ruling could best be summed up in a single paragraph recorded on page 59 of the ruling: "It is sufficient to say this Court is shocked by the manner in which the senior public officers had handled the sale of a pivotal asset of the state which belongs to the people of this country."

Ameresekere and fellow activist President’s Advisor Vasudeva Nanayakkara said the case exposed how politicians, public officials and businessmen connived to fleece the public.

Also, a special report of fraud and mismanagement in 26 state-institutions compiled by the Committee on Public Enterprises (COPE) is virtually in the dust-bin according the former chairman of this parliamentary committee Wijeyadasa Rajapaksa.

"Minor offenders are given out serious penalties but offenses concerning millions (or billions) of rupees are taken lightly," Rajapaksa said.

"There is no point in trying to fight corruption at lower levels in society. This approach will always fail. The fight against corruption and the will to do so must come from the top. In the past, there have been attempts to implement reforms from the bottom but it never reached the top," he told a seminar recently.

Corruption in Sri Lanka has closely linked the public and private sector together. Any changes to the system will necessarily have to come from the top because the law offers no protection to those who expose corruption within their organisations, be it the public sector or private sector.