In accordance with the addition of Article 9 -1 (Private Finance Initiative, PFI) of the “Act for Promotion of Private Participation in Infrastructure Projects (PPIP Act)” on December 21, 2022, the Ministry of Finance (MOF) has drafted the "Regulations for Policy Evaluation of Government Acquisition of Public Services with Compensation", which has been posted on Executive Yuan Gazette and is available for preview on the Public Policy Online Participation Platform. The period of notice will end on May 22, 2023.
Private Finance Initiative (PFI) authorizes private institutions to build and operate the infrastructure project(s), so as to provide public service for citizens. Governments pay the service fee when the service performance and quality of the infrastructure project(s) meet the requirement of the concession agreement. As PFI involves the preparation of government budget, not every case is suitable for PFI. A rigorous evaluation procedure is required before adopting PFI. First, the MOF or the central authorities in charge of the relevant industries should conduct the policy evaluation according to the type of infrastructure project. After passing the policy evaluation, the authority-in-charge will approve the PFI case and conduct the feasibility assessment, preliminary planning, and other preceding procedures.
The draft of the "Regulations for Policy Evaluation of Government Acquisition of Public Services with Compensation" is mainly about policy evaluation procedure of PFI. There are two stages for policy evaluation procedure. The first stage (qualitative evaluation) confirms whether an infrastructure project is considered a necessary, prioritized, and urgent project; the second stage (quantitative evaluation) calculates the value of service quality, the effect of enhancing the asset maintenance level, the impact of the early delivery of facilities and services, and the risk value of authorizing private institution. These evaluations will confirm whether it is more efficient that the project is conducted in accordance with the PPIP Act or be constructed or operated by the government on its own.
In Taiwan, PFI has been conducted in many of the current concession agreements of Public Private Partnership (PPP), such as the concession agreements of sewage treatment facilities, garbage incineration plants, and electronic toll collection on highways. When conducting policy evaluation of these cases, their quantitative evaluation analyzes the efficacy, efficiency, effectiveness enhancement, and risk sharing compared to the performance result.
To ensure that policy evaluation results are rigorous and fair, the competent authority (MOF) invites 7 to 9 members from the industry, government, and academia to form an expert committee to conduct policy evaluation. If the members have different opinions during the review process of policy evaluation, they may request that their opinions be included in or attached to the meeting minutes. In addition, for the authority-in-charge’s needs, the authority-in-charge may conduct policy evaluation on its own after being approved by the MOF, so as to accelerate policy evaluation progress of PFI.
After the implementation of the "Regulations for Policy Evaluation of Government Acquisition of Public Services with Compensation", the authority-in-charge will have more diversified and flexible options when conducting PPP according to the PPIP Act, and will offer higher quality public service. The implementation of the regulations will also be an important milestone for realizing PPP 2.0.