Where does Private stop and Public start?: Dissection of PPPs

From PFM Blog here is some excerpts on their primer on PPPs.

Though by no means a holistic definition, the primer briefly outlines public-private partnerships as being “arrangements in which the private sector supplies infrastructure assets and services traditionally provided by governments. Some authors add that the presence of external financing as a necessary condition; others focus specifically on design-build-finance-operate arrangements.”

The recent and sudden rise of public-private partnerships in the US is deceptive, as this approach to major infrastructure and capital intensive projects have existed for the last two decades in other areas of the world — with the financing primarily coming from Europe.

Developing countries, in particular, try to develop PPPs to address economic infrastructure bottlenecks. However, the trend is universal: a recent study of PPPs in Europe found that between 1990 and 2005, more than a thousand partnerships had been signed in the European Union alone, representing an investment of almost 200 billion euros.

The primer continues to summarize a framework over how to oversee PPPs to ensure that public assets are not recklessly placed under the supervision of private actors.

  1. PPPs should be limited to projects delivering greater Value for Money (VFM) than other forms of procurement.
  2. the contractibility of the quality of service,
  3. the transfer of a significant share of risks to the private sector,
  4. the presence of competition or incentive-based regulations,
  5. a sound institutional and legal framework,
  6. a sufficient level of technical expertise in the government, and, last but not least,
  7. the proper disclosure of PPP commitments, along with government guarantees, in government financial statements (and in debt-sustainability-analyses)

For the entire article, go here.

One Response

  1. […] contracting mechanisms and other processes to offset these potential risks, and Vinay previously discussed a primer on […]

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