Analysis of Public Private Partnerships (PPPs) in Sri Lanka: Regulatory and Institutional Weaknesses and the Way Forward

Sri Lanka to Accelerate Public Private Partnerships for Infrastructure Development

In a bid to secure investments and expertise for much-needed public infrastructure projects, Sri Lanka has announced plans to accelerate Public Private Partnerships (PPPs) as revealed in the 2024 Budget Speech. This move comes as the country aims to address its current economic crisis, which was exacerbated by mismanagement of public finances and unsustainable levels of national debt.

PPPs involve collaboration between the government and private sector to share responsibilities, risks, resources, and expertise in delivering services efficiently while reducing the burden on public finances. Sri Lanka has a history of engaging in PPP infrastructure projects, with 81 projects worth $2,671 million implemented between 1990 and 2017, particularly in the energy, ports, and ICT sectors.

However, the current PPP framework in Sri Lanka is marred by regulatory and institutional weaknesses that need to be addressed for sustainable infrastructure investments. Weak compliance with project prioritization frameworks, lack of a clear legal framework for PPPs, and fragmented decision-making across ministries are some of the challenges that need to be overcome.

To move forward, reforms are needed in key areas such as legal and regulatory frameworks, capacity building, and improving the investment environment for PPPs. Accelerating the enactment of a new PPP law, empowering the National Agency for Public Private Partnerships (NAPPP), and enhancing technical expertise in public entities are crucial steps to strengthen the PPP ecosystem in Sri Lanka.

As the country looks towards leveraging PPPs for infrastructure development, addressing these regulatory and institutional weaknesses will be essential to ensure transparency, accountability, and sustainable investments in public infrastructure projects.