In the light of the IV International Conference on Public-Private Partnership (PPPs) in Bishkek, Hugh Riddell, the World Bank Group Country Manager for the Kyrgyz Republic, told about PPP projects and the opportunities such partnerships present in the Kyrgyz Republic.

1. Could you please give us a brief overview of PPPs?

Public-Private Partnerships (PPPs) represent a collaborative framework where governments join forces with the private sector to deliver public services or infrastructure. In this arrangement, the government defines the project’s objectives, while the private sector assumes responsibility for achieving them. Unlike traditional procurement methods, where all project costs are incurred upfront during construction, PPPs often tie payments to the successful delivery of services. This approach fosters accountability and ensures that risks are distributed between both parties, encouraging the private partner to remain focused on delivering high-quality services aligned with national development priorities.

PPPs are inherently flexible and adaptable, taking on various forms and structures to suit the unique needs of different countries and sectors. There is no universal model for PPPs; instead, tailored strategies are required to address specific challenges and opportunities within each context.

Two fundamental principles underpin the success of PPPs. The first is risk-sharing, where risks are allocated between the public and private sectors based on their respective capabilities to manage them effectively. This ensures that each party handles the aspects of the project they are best equipped to complete. The second principle is true partnership. Unlike privatization or simple contractual agreements, PPPs demand a collaborative relationship between governments and private sector partners, often spanning decades. This long-term cooperation is essential for achieving the project’s objectives and delivering sustainable, impactful outcomes.

By leveraging the complementary strengths of the public and private sectors, PPPs serve as a powerful mechanism to enhance the delivery of services and infrastructure, ultimately benefiting the public and advancing national development goals.

2. What are the benefits and challenges of PPPs?

PPPs offer significant benefits. They help free up fiscal space by tapping into diverse sources of financing for large-scale infrastructure projects, both traditional and social. They also bring private sector efficiencies across the project lifecycle—from development and construction to operation—while introducing innovation and industry best practices. By linking payments directly to performance, PPPs improve quality and service standards, ensuring better outcomes for the public.

Additionally, PPPs help generate jobs by driving large-scale infrastructure and development projects that require labor across various stages, including in design, construction, operation, and maintenance. They also stimulate economic activity by attracting private investment, fostering innovation, and creating opportunities in related industries.

However, for PPPs to succeed, certain conditions must be in place. The private sector values predictability and long-term visibility, which means governments must invest time in properly preparing, structuring, and implementing PPP projects. This includes creating a supportive legal framework, fostering an attractive investment environment, and proposing balanced terms that work for both public and private stakeholders.

Competition is particularly critical—greater competition among investors leads to better deals for governments and improved outcomes for countries. A fair, transparent procurement process and balanced risk allocation are essential to ensure governments achieve the best value for money while building investor confidence.

3. What is the difference between competitive tendering and direct negotiation?

Competitive tendering and direct negotiation are two distinct approaches to sourcing the private partner under for PPP projects, each with its own strengths and challenges. Competitively selecting through tendering is often preferred for its transparency, fairness, and ability to drive cost-effectiveness and innovation by inviting multiple bidders to compete. The procurement approach should be clearly articulated to provide predictable, transparent signals to the market. Clear guidance on whether projects will be pursued via open, competitive tenders or through negotiated/direct deals is essential to avoid uncertainty and encourage broader bidder participation. While it is sometimes perceived as time-consuming and complicated, a well-structured project that is subjected to an equally well structured competitive tender process can deliver significant value without unnecessary delays.

The choice between these methods depends on factors like project attractiveness, transaction capacity, and the need for transparency. Competitive tendering is ideal for projects with strong investor interest, as it ensures the best value through competition. Direct negotiation, while appropriate in certain cases such as unsolicited proposals, requires careful oversight to ensure favoritism and efficiency. Regardless of the approach, transparency, sound planning, and adequate capacity are essential to achieving fair and effective outcomes.

4. What is the PPP context of the Kyrgyz Republic?

The Kyrgyz Republic faces significant infrastructure financing needs, estimated at approximately $5 billion over the medium to long term. Key priorities include national highways, railways, bridges, renewable energy development including solar, hydropower and wind power, and regional connectivity. Using PPPs could play a transformative role in mobilizing resources for infrastructure development.

Despite this potential, only a limited number of PPPs have been successfully closed, primarily in the health and ICT sectors. This underscores the need to improve the quality and integrity of PPP project preparation, particularly through the development of high-quality feasibility studies.

While the legal framework for PPPs is evolving, the Kyrgyz Republic continues to face challenges in project initiation, design, and implementation. In addition, ensuring stakeholder alignment is crucial, as PPPs involve multiple parties that need to reach a common understanding. Equally important is the monitoring of fiscal commitments and contingent liabilities to ensure they align with the country’s financial capacity and sustainability. Addressing these issues is crucial to enhance the country’s ability to effectively attract private investment and drive infrastructure development.

5. How does IFC support the Kyrgyz Republic’s PPP program?

IFC has played a key advisory role in advancing the Kyrgyz Republic’s PPP program. In 2018, IFC helped the government prepare and deliver the country’s first PPP for hemodialysis centers, covering about 75 percent of the population across four cities. Government partnered with Fresenius Medical Care, an experienced German private partner, under a 10-year PPP contract to finance and deliver services to international standard. The PPP has significantly improved hemodialysis services, with over 2,000 people in remote regions benefiting from improved services to date.

Currently, IFC is working with the government to develop the country’s first renewable energy PPP, a pilot utility-scale solar plant in the Naryn region, expected to provide 132 megawatts of solar power to the grid. With a total investment amount estimated to be in the $100 million range, the tender has closed and is in post-bid finalization stage, with an award expected by end 2025. As the country’s first PPP project in the renewable energy sector, it will set a benchmark for tariffs, establish a balanced risk allocation structure, and pave the way for further similar projects across the nation. IFC has also started developing a second round of solar projects, which is expected to focus on two new power plants of up to 150 MW each, that will also include battery storage.

This is an approach that we know yields successful results. In Uzbekistan, for example, we’ve supported the government with three rounds of solar tenders over the past seven years. In 2018, IFC acted as lead transaction advisor for the country’s first competitively tendered IPP project—a 100MW project under the Scaling Solar Program. The project demonstrated that well-structured tender documents, balanced risk allocation, transparency and competition yield impressive results.

Building on this success, IFC has helped Uzbekistan structure and tender an additional 2.6 GW of generating capacity over the last three years, with active mandates for another 1.5 GW. None of this would have been possible without the government’s full support and commitment to leverage the private sector’s expertise and resources.

For the Kyrgyz Republic, the increasing number of competitively tendered PPPs is expected to position the country as an attractive destination for international investors and financing. Going forward, IFC will continue working with the government and partners to lay a solid foundation for PPPs to help build on this momentum and create new social and economic opportunities for its citizens.