Sri Lanka is functioning as a unitary state with provincial council system with a limited power of devolution. But even under this system there are opportunities in entering into PPPs and they can be used as a tool to face the problem of funding shortages. The Government of Sri Lanka has accepted the PPP investment approach as a policy and opportunities have been given to the provincial councils also to follow the same.
In the guidelines issued for the year 2012 to the provincial Chief Secretaries by the Finance commission, it is emphasized the requirement of implementing the projects though PPP basis by using limited development grants. In addition to obtaining the private sector participation, they should take action to get beneficiary contribution and it is further described the importance of assigning the responsibility of maintaining capital assests by the community organizations.
When applying PPPs at provincial level projects, it is not necessary to enter into mega scale agreements as required at national level special projects. Since the projects to be implemented at provincial level are at middle or small scale, the investors should be selected accordingly. However, when entering into agreements with private sector, it is essential to maintain the transparency adherence to the accepted procurement procedures. The involvement of provincial level Chambers of Commers, provincial commercial and development banks and private companies should be ensured.
It seems that for the provincial level projects, the provinces are heavily dependent on government funds. Although, the central government funds are to be utilized for the essential public services, the private sector participation could be obtained for the projects that could be carried out on commercial basis.
From the government side the land owned by the state can be given as part of the equity capital and financial allocations could also make available, if necessary. The private sector, in addition to providing financial contribution could get involved in project activities, project implementation and management. Both parties have to equally agree to share the risk factor, if any, and also the both parties should properly adhere to the basic principles such as social responsibility, minimizing the cost, proper management increasing the working capacity, and efficient service providing etc.
In addition to this process, the responsibility of running and managing an asset built on government fund could be assigned to a private investor. However, the main principle is that the government or the provincial body should not directly involve or intervene in such ventures. The main reason is that the capability and the knowledge in handling commercial ventures is minimal in the government institutions and such a service cannot be expected from the government officials. But the responsibility in regulating the tasks assigned to private sector lies with the government institutions including provincial councils.
Despite the fact that the money is invested through government funds or the private funds, the government has the responsibility with regard to maintaining the required standards of the service and fair price for the service.