04 September 2023
As part of our ‘‘WEC Mondays-Guest Speaker Series’’ we hosted Mark Moseley, Principal of Moseley Infrastructure Advisory Services.
In Mark’s presentation on ‘‘Just Transitions for Coal Mine and Coal Power Plant Closures-The Opportunities for Private Investment’’, Mark highlighted:
· How we carry out Just Transition is more important than the transition itself. Making the transition more equitable and fairer such that there will be more opportunities for workers to transition to new jobs that are decent and secure. Furthermore, Just Transition should promote social dialogue and active participation from all stakeholders so that the transition is inclusive, and decisions are made through stakeholders’ engagement.
· Traditionally Just Transitions are performed by short term interaction with the private sector, while the government is in charge, Mark proposes Public-Private-Partnership (PPP) approach where it is a long-term contract in which private sector is contracted to deliver the ‘‘value for money’’ by meeting the output specification that was set by the government. In the case of private sector cannot meet the output specification, they don’t get paid.
· Output specification is derived from the ‘‘Logic Model’’, which works by evaluating the long-term impact of the project first, such as ‘’what do the authorities wish to accomplish as a result of this project?’’. Once the long-term impact is established, output specification is set between the contracting authorities agreeing to carry out the project in order to meet the long-term outcome. According to the output specification private sector then selects which input to use in the form of resources and project design. Hence, Output specification is of vital importance in PPP approach.
· Risk allocation is at the heart of every PPP transaction. In a Traditional Infrastructure Procurement project, all risks are assumed by the public sector (except for some short-term construction risks which may be transferred to a private sector contractor). In contrast, a PPP project involves the sharing of risks between the public and private sector, not total risk transfer. With a proper risk allocation, the additional financing costs associated with PPPs can be more than offset by the value of the risks assumed by the private sector.
· Contract Management is of critical importance for governments to monitor the quality of the actual results that are delivered by their private partners to guarantee that the private sectors are adhering to the output specifications.
· One of the best examples of PPP model practices is in Türkiye where an abandoned coal mine in Yeniköy, Istanbul was transformed into World’s largest airport in just three and a half years. More and more public and private entities are now willing to adopt the PPP approach for the efficiency and quality this model has to offer.