Global Report: Enhancing Government Effectiveness and Transparency - The Fight Against Corruption

PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS

CHAPTER 2 PUBLIC INFRASTRUCTURE

FIGURE 2.7 Causes of Renegotiation, based on 48 Projects that experienced Renegotiation

Delay in interface projects 4%

Change in tariff/tariff regulation 16%

Project company unable to raise finance 3%

Wrong demand forecasts 7%

Modification of payment mechanism 2% Other 5%

Other incorrect forecasts 9%

Project company surplus profit 2%

Increased construction costs 21%

Government policy change 19%

Increased operation costs 9%

Increased design costs 3%

Source: Global Infrastructure Hub, PPP Reference Tool, Renegotiation, Chapter 4, 2018

These findings for Latin America in the GIH study correspond to an earlier landmark study on PPP renegotiation, which also showed per vasive renegotiation of PPPs in Latin American countries, particularly ones where the PPP model is that of user-pays rather than government-pays PPPs. 57 Of a sample of over 1,000 concessions granted in the Latin America and Caribbean region between 1985 and 2000, Guasch found that 10 percent of electricity concessions, 55 percent of transport concessions, and 75 percent of water concessions were renegotiated. These renegotiations took place an average of 2.2 years after the concessions were awarded. Guasch suggested the high rate of renegotiation so soon after concession award may reflect poorly designed tender processes, weak regulation, or opportunism on the part of the government or the private sponsors. Most

renegotiations were favorable to the operator—for example, resulting in increased tariffs, or reduced or delayed investment obligations. In Figure 2.7, the GIH report shows that the reasons cited for renegotiation vary, with the most frequent cause being increased construction costs (21%) followed by government policy change (19%) and change in tariff or tariff regulation (16%). The reasons given in the figure below for a renegotiation may be legitimate. While not feasible within the scope of this paper to analyze individual contracts, it is reasonable to suggest that at least some of the reasons given for renegotiation may mask more opportunistic behavior by the private sector and their government counterparts to obtain an additional benefit not envisioned in the original contract approved by government.

Global Report: Enhancing Government Effectiveness and Transparency - The Fight Against Corruption

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Box 13.6 Trade of Influence in the Judiciary

Box 13.5 Court User and Multi-Stakeholder Justice Surveys

Box 13.3 Specialized Anti-Corruption Courts in the Philippines and Indonesia

Box 13.4 International Cooperation and Mutual Legal Assistance (MLA

Box 13.2 Specialized Anti-Corruption Courts: Political Commitment or Implementation Gaps

Box 10.1 The Extent of Corruption

Box 13.1 Romania’s National Anti-Corruption Directorate (DNA

Box 9.2 The Beneficial Ownership Data Standard (BODS

Box 9.3 Key Data Questions for Policy Makers to Consider

Table 7.4 AP’s Transformational Technologies

Box 9.1 What is a Beneficial Owner?

Figure 8.2 Final Findings of ANI Reports between 2008 and 2019

Table 7.2 Major Technology Trends for Public Sector Fraud and Corruption

Box 6.2 The Extractive Industries Transparency Initiative (EITI

Table 7.3 Navigating GovTech for Public Sector Fraud and Corruption

Box 7.2 Singapore’s SkillsFuture Program and Fraud Detection

Box 7.1 Brazil’s Tribunal of Accounts Robots

Box 6.1 What Does Open Data Have to Do with Open Government?

Figure 6.1 Unpacking Open Government

Table 5.1 Corruption in Public Services: Estimating the Magnitude of the Problem

Box 4.1 Standard Operating Procedures and Internal Audit Capacities in Latin America

Figure 4.3 ACD Presence and Main Transit Trade Routes

Box 4.3 Donor Support to Afghanistan Customs Department

Box 2.5 Transparency in Renegotiation for Public-Private Partnerships

Box 3.1 About Empresas Públicas de Medellin

Box 3.3 The Impact of Operation Car Wash across Latin America

Figure 2.7 Causes of Renegotiation, based on 48 Projects that experienced Renegotiation

Figure 1.2 Change in Corruption Risk Indicators as a result of the e-GP Intervention

Box 2.4 The Open Contracting for Infrastructure Data Standard (OC4IDS

Box 2.1 IFC’s Integrity Due Diligence (IDD

Figure 2.6 Making Infrastructure Data Useful for Planners, Implementers and Policy Makers

Figure 2.5 Multi-Stakeholder Working at the Project Level

Box 2.2 The Evolution of Multi-Stakeholder Approaches to Accountability in Infrastructure

Box 2.3 The Role of the CoST Secretariat

Box 1.1 Timeline on Somali National Army Rations Re-tendering