DMO MENA June2003 ter

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Slide1: 

Better Institutions for Private Sector-Led Growth in the MENA Region: An Operator’s Perspective D. MANGIN D’OUINCE June 3rd, 2003 – Washington, DC

OUTLINE : 

OUTLINE Vision of emerging markets: More constraints since early 2003 Vision of MENA region Lessons from experience and role of the IFIs: Capitalize on existing dialogue Capitalize on existing experience Example: MENA and Management Contracts Relation to the Private Sector Lead Advocacy Role Conclusions

Slide3: 

VISION OF EMERGING MARKETS TODAY

RECENT CHANGE IN PERSPECTIVES : 

RECENT CHANGE IN PERSPECTIVES SUEZ’s Action Plan 2003-2004 New perspectives on 2 aspects: Reliability of partners and well balanced PPP contracts Real commitments of partners/stakeholders Allocation of risks Management of expectations of each partner Financing requirements Currency risk is not acceptable in the framework of a PPP Guarantees on governments’ commitments are necessary ; contracts alone have not proven to be sufficient. Limited investment on SUEZ’s own account ; temporary limited exposure in emerging countries. This does not mean a withdrawal from emerging markets, but more thorough analysis and conditions, now learned from experience.

VISION OF MENA REGION : 

VISION OF MENA REGION MENA region vs. other regions: Except for Morocco (Casablanca), SUEZ in only involved through Management Contracts MENA is the only region where SUEZ has Management Contracts (except Johannesburg) High interest remains for the region: Real need to improve water systems under PPPs Local administrations are open to PPPs (this is relatively recent) The region needs the intervention of IFIs (mostly for financial resources)

Slide6: 

LESSONS FROM EXPERIENCE & ROLE OF THE IFIs

1. CAPITALIZE ON EXISTING DIALOGUE: 

1. CAPITALIZE ON EXISTING DIALOGUE World Bank Group / Operator Working Groups (since November 2001, on Water & Sanitation issues and PSP): Developed listening capacities and dialogue on both sides “General” work needs to continue Agreement on diagnostic and main types of approaches that could be implemented Moving to the operational level ASAP: To keep the dialogue alive To generate new projects, with all stakeholders

2. CAPITALIZE ON PRIVATE SECTOR EXPERIENCE : 

2. CAPITALIZE ON PRIVATE SECTOR EXPERIENCE SUEZ can now draw real lessons: International presence over the past 17 years Real and historical data now available Knows what works and what does not work Some lessons: Significant results achieved BUT Contractual conditions accepted in the past will not be accepted today Competitors are not numerous, new comers have not survived Involvement of IFIs and their experience is needed

3. MANAGEMENT CONTRACTS IN MENA: STRENGHTS AND WEAKNESSES : 

3. MANAGEMENT CONTRACTS IN MENA: STRENGHTS AND WEAKNESSES Management Contracts (MC) were at the time the only business model that could be implemented (low tariffs) Pro’s and Con’s: + Allowed the involvement of the Private Sector without it to have to invest + MC can be performance based (obligation of results) - No control over local staff / no management control - No possibility to have enough operator’s staff - Contractual environment is often too rigid and not adapted to the local environment The underlying philosophy of MC still remains good for the region (mainly because of low tariffs), but concept needs major improvements

4. RELATION TO THE PRIVATE SECTOR : 

4. RELATION TO THE PRIVATE SECTOR Position of the Private Sector: Willing to bring lessons learned from experience, share ideas and find way for increased dialogue and collaboration under transparent and fair conditions Private Sector has its own agenda (returns, control of risk, …) Position of the WB/IFIs: More involvement of the Private Sector, as a source of growth Even if the Bank’s clients are public entities, the Bank must remain on the side of the partnership for it to be successful -> Need for pragmatism More dialogue is needed to avoid suspicion towards the private sector Equilibrium can be found between extreme transparency rules with consultant made “take it or leave it” contracts and direct ties with the private sector

5. LEAD ADVOCACY ROLE : 

5. LEAD ADVOCACY ROLE WB to be a “wise” facilitator: Create conditions prone to dialogue between all stakeholders, including the private sector Explanations about some basic “rules” and what can be expected from PPPs Example: Mexico On new and existing projects

Slide12: 

CONCLUSIONS

CONCLUSIONS : 

CONCLUSIONS Development of infrastructure / public services essential to growth Message today not focused on reforms of institutions, but on the way to carry out things to deal with 2 critical issues for PPPs: Reliability of partners / well balanced contracts Financing requirements More specific aspects (like institutional issues) need to be dealt with on a country by country, project by project basis The IFIs must be a “wise” facilitator in this preparation process, and engage in active advocacy.

Slide14: 

Dominique Mangin d’Ouince Sr. Executive Vice President SUEZ ENVIRONNEMENT Dominique.d’[email protected]

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