The prospect of implementing pf2 in Sri Lanka

Abstract

The Private Finance Initiative (PFI) as a sub-set of broader procurement approach of Public Private Partnerships (PPP), uses private sector capacity and public resources in order to deliver public sector infrastructure and/or services. In 2012, the UK Government publicly launched the new model, called “Private Finance 2 (PF2)” with some significant reforms to the PFI model, which are particularly aimed at tackling inefficiency, increasing transparency, shortening procurement periods and attracting new sources of finance. PF2 can be used as an instrument for producing new and more effective ways of bringing public services. While other countries are moving from PFI model to PF2 and other variants of PFI model, in Sri Lanka, there is a dearth of PFI type projects. However, there is a considerable number of researches on PFI model in Sri Lanka, but there is no evidence for researches on PF2 model. Accordingly, this is an initial study aimed to determine the prospect of implementing PF2 model in Sri Lanka. Applicability of PF2 model in the Sri Lankan context was defined using the collected through expert interviews and suitable sectors to implement PF2 model were ranked based on Relative Importance Index (RII) value. Construction industry advisors of the government and construction organizations who are either familiar and knowledgeable with the model were selected for data collection. Results show that the PF2 model is generally applicable in Sri Lanka compared to PFI features. Transportation, provision of electricity and water, and health care were recognized as the most suitable sectors to apply PF2 model in Sri Lanka. On the other hand, real estate and educational sectors have been recognized as sectors which are not suitable to carry out under the PF2 model.