June 19, 2019

The Cayman Islands: Public-Private Partnerships under Construction

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Panadès-Estruch, Laura. European Procurement & Public Private Partnership Law Review; Berlin Vol. 12, Iss. 2,  (2017): 211-212. :10.21552/epppl/2017/2/15

By Laura Panadès-Estruch*

The Cayman Islands is an offshore jurisdiction located in the Caribbean Sea, south of Cuba, west of Jamaica. Its small size of 102 square miles hosts the worldwide fifth largest financial centre. As a British Overseas Territory, Cayman falls under the jurisdiction of the UK but enjoys independent law and policy-making.

A GDP of CI$2.84 billion (€3.04 billion approximately), prospects of an infrastructure overhaul and an ongoing procurement modernisation aiming to shake off a reputation for corruption and politicalin fluence should spur the interest of potential bidders in Cayman.

II. Previous Regulation and Experience

PPPs have been discussed in Cayman over a decade for key transport infrastructures. Before 2016, soft law guidelines from administrative authorities were the main source of PPP regulation.

In 2010, the Government considered PPPs for the port and airport sectiors. The Miller-Shaw independent report on fiscal sustainability welcomed the recourse to private capitalinto public infrastructure finance, but recommended privatisation instead.

The UK’s sponsored Framework for Fiscal Responsibility entered into force in2012, implementing PPP friendly mechanisms and policy principles. These included limiting government expenditure, capping new borrowings and working in partnership with the private sector. It placed value for money and effective risk management at the core of decision-making.

In2014,the EY‘ Project Future’ report recommended PPPs again for port, airport, waste management and roads authorities. Other administrative units were recommended privatisation. In response, the Government has devised a Design-Build-Finance-Operate-Maintain (DBFOM) PPP for waste management and is considering PPPs for the , the renewal and expansion of the cruise berthing facilities at the port and the update and expansion of the airport terminal and runway.

III. Current Framework

The recent procurement reform introduced extensive PPP regulation by Law, scattered across the Procurement Law 2016, the Anti-Corruption Law (2016 Revision), the Public Management and Finance Law (2013 Revision) and the (2013 Revision).

Whilst the new regulation has changed from soft to hard law,it has not altered the use of PPPs as a last resort. Four requirements and a series of exclusions apply.

To start, PPPs require ‘a sound appraisal underpinning the proposed project before the financing means has been determined’, proving that the project is necessary. Additionally, a positive evaluation from the public sector comparator is required or that ‘a financial appraisal demonstrates improved value for money against a conventionally financed alternative’. PPPs should show better results than any other procurement method. A ‘long-term affordability case [which] has been assessed and agreed by the appropriate technical experts retained by the Cayman Islands Government’ is also required.This is inline with Cayman’s government policy to adopt private sector techniques into public management, such as introducing business cases, contract management ……..

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* Laura Panadès-Estruch, LLM Course Leader and Lecturer in International Finance Law at the Truman Bodden Law School of the Cayman Islands; PhD candidate in Law, University of Cambridge, United Kingdom. E-mail: laura.panades@gov.ky. DOI: 10.21552/epppl/2017/2/15

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