Definition Public–private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP, P3 or P3. PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. In some types of PPP, the cost of using the service is borne exclusively by the users of the service and not by the taxpayer. In other types (notably the private finance initiative), capital investment is made by the private sector on the strength of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government. Government contributions to a PPP may also be in kind (notably the transfer of existing assets). In projects that are aimed at creating public goods like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors. In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by providing guaranteed annual revenues for a fixed period. Typically, a private sector consortium forms a special company called a "special purpose vehicle" (SPV) to develop, build, maintain and operate the asset for the contracted period. In cases where the government has invested in the project, it is typically (but not always) allotted an equity share in the SPV.[1] The consortium is usually made up of a building contractor, a maintenance company and bank lender(s). It is the SPV that signs the contract with the government and with subcontractors to build the facility and then maintain it. In the infrastructure sector, complex arrangements and contracts that guarantee and secure the cash flows and make PPP projects prime candidates for project financing. A typical PPP example would be a hospital building financed and constructed by a private developer and then leased to the hospital authority. The private developer then acts as landlord, providing housekeeping and other non-medical services while the hospital itself provides medical services. Contents [hide] 1 Origins 2 The importance of public–private partnerships 3 Controversy
7 See also 8 References 9 Further reading 10 External links Origins: Pressure to change the standard model of public procurement arose initially from concerns about the level of public debt, which grew rapidly during the macroeconomic dislocation of the 1970s and 1980s. Governments sought to encourage private investment in infrastructure, initially on the basis of accounting fallacies arising from the fact that public accounts did not distinguish between recurrent and capital expenditures. The idea that private provision of infrastructure represented a way of providing infrastructure at no cost to the public has now been generally abandoned; however, interest in alternatives to the standard model of public procurement persisted. In particular, it has been argued that models involving an enhanced role for the private sector, with a single private-sector organization taking responsibility for most aspects of service provisions for a given project, could yield an improved allocation of risk, while maintaining public accountability for essential aspects of service provision. Initially, most public–private partnerships were negotiated individually, as one-off deals, and much of this activity began in the 1990's. Britain: In 1992, the Conservative government of John Major in the United Kingdom introduced the private finance initiative (PFI),[2] the first systematic programme aimed at encouraging public–private partnerships. The 1992 programme focused on reducing the Public Sector Borrowing Requirement, although, as already noted, the effect on public accounts was largely illusory. The Labour government of Tony Blair, elected in 1997, persisted with the PFI but sought to shift the emphasis to the achievement of "value for money," mainly through an appropriate allocation of risk. Australia: A number of Australian state governments have adopted systematic programmes based on the PFI. The first, and the model for most others, is Partnerships Victoria. Canada: The federal Conservative Government under Stephen Harper in Canada solidified its committment to P3s with the creation of a crown corporation, P3 Canada Inc, this in 2009. The Canadian vanguards for P3s have been provincial organizations, supported by the Canadian Council for Public-Private Partnerships established in 1993 (a member-sponsored organization with representatives from both the public and the private sectors). As proponents of the concept of public-private partnerships (PPP's), The Council conducts research, publishes findings, facilitates forums for discussion and sponsors an Annual Conference on topics related to PPP's, both domestic and international. Each year the Council celebrates successful public-private partnerships through the National Awards Program held concurrently with the annual conference in November. The importance of public–private partnerships Over the past two decades more than 1400 PPP deals were signed in the European Union, which represent an estimated capital value of approximately €260 billion.[3] Since the onset of the financial crisis in 2008, estimates suggest that the number of PPP deals closed has fallen more than 40 percent.[ 4] These difficulties have placed significant strains on governments that have come to rely on PPPs as an important means for the delivery of long-term infrastructure assets and related services. [5] Moreover, this has occurred precisely at a time when investments in public-sector infrastructure are seen as an important means of maintaining economic activity during the crisis, as was highlighted in a European Commission communication on PPPs. [6] As a result of the importance of PPPs to economic activity, in addition to the complexity of such transactions, the European PPP Expertise Centre (EPEC) was established to support public-sector capacity to implement PPPs and share timely solutions to problems common across Europe in PPPs.[7] Controversy A common problem with PPP projects is that private investors obtained a rate of return that was higher than the government’s bond rate, even though most or all of the income risk associated with the project was borne by the public sector. It is certainly the case that government debt is cheaper than the debt provided to finance PFI projects, and cheaper still than the overall cost of finance for PFI projects, i.e. the weighted average cost of capital (WACC). This is of course to attempt to compare incompatible and incomplete economic circumstances. It ignores the position of taxpayers who play the role of equity in this financing structure. Making a simple comparison, however, between the government’s cost of debt and the private-sector WACC implies that the government can sustainably fund projects at a cost of finance equal to its risk-free borrowing rate. This would be true only if existing borrowing levels were below prudent limits. The constraints on public borrowing suggest, nevertheless, that borrowing levels are not currently too low in most countries. These constraints exist because government borrowing must ultimately be funded by the taxpayer. A number of Australian studies of early initiatives to promote private investment in infrastructure concluded that, in most cases, the schemes being proposed were inferior to the standard model of public procurement based on competitively tendered construction of publicly owned assets (Economic Planning Advisory Commission (EPAC) 1995a,b; House of Representatives Standing Committee on Communications Transport and Microeconomic Reform 1997; Harris 1996; Industry Commission 1996; Quiggin 1996). One response to these negative findings was the development of formal procedures for the assessment of PPPs in which the focus was on "value for money," rather than reductions in debt. The underlying framework was one in which value for money was achieved by an appropriate allocation of risk. These assessment procedures were incorporated in the private finance initiative and its Australian counterparts from the late 1990s onwards.[citation needed] In 2009, the New Zealand Treasury, in response to inquiries by the new National Party government, released a report on PPP schemes that concluded that "there is little reliable empirical evidence about the costs and benefits of PPPs" and that there "are other ways of obtaining private sector finance", as well as that "the advantages of PPPs must be weighed against the contractual complexities and rigidities they entail".[8] Nowadays, a new model is also being discussed, called the Public–Private Community Partnership (PPCP) model, wherein both the government and private players work together for social welfare, eliminating the prime focus of private players on profit. This model is being applied more in developing nations such as India. Success is being achieved through this model too. it mainly helps to ramp up the development process as the focus is shifted towards target achievement rather than profit achievement. Privatisation of water After a wave of privatisation of many water services in the nineties of the previous century, mostly in developing countries, experiences show that global water corporation have not brought the promised improvements in public water utilities. Instead of lower prices, large volumes of investment and connecting the poor to water and sanitation water tariffs have increased out of reach of poor households. Water multinationals are withdrawing from developing countries and the World Bank is reluctant to provide support.[9] The privatisation of the water services of the city of Paris was proven to be unwanted and at the end of 2009 the city did not renew its contract with two of the French water corporations.[10][11][12] After one year of being controlled by the public the water tariff has been cut by 5 to 10% [13] Health Public-Private Partnerships A health services PPP can be described as a long-term contract (typically 15 to 30 years) between a public-sector authority and one or more private sector companies operating as a legal entity. The government provides the strength of its purchasing power, outlines goals for an optimal health system, and empowers private enterprise to innovate, build, maintain and/or manage delivery of agreed-upon services over the term of the contract. The private sector receives payment for its services and assumes substantial financial, technical and operational risk while benefiting from the upside potential of shared cost savings. The private entity is made up of any combination of participants who have a vested interested in working together to provide core competencies in operations, technology, funding and technical expertise. The opportunity for multi-sector market participants includes hospital providers and physician groups, technology companies, pharmaceutical and medical device companies, private health insurers, facilities managers and construction firms. Funding sources could include banks, private equity firms, philanthropists and pension fund managers. For more than two decades public-private partnerships have been used to finance health infrastructure. Now governments are increasingly looking to the PPP -model to solve larger problems in health care delivery. There is not a country in the world where health care is financed entirely by the government. While the provision of health is widely recognized as the responsibility of government, private capital and expertise are increasingly viewed as welcome sources to induce efficiency and innovation. As PPPs move from financing infrastructure to managing care delivery, there is an opportunity to reduce overall cost of health care. Market Potential for Health PPPs The larger scope of Health PPPs to manage and finance care delivery and infrastructure means a much larger potential market for private organizations. Spending on healthcare among the Organisation for Economic Cooperation and Development (OECD) and BRIC nations of Brazil, Russia, India and China will grow by 51 percent between 2010 and 2020, amounting to a cumulative total of more than $71 trillion.[14] Of this, $3.6 trillion is projected to be spent on health infrastructure and $68.1 trillion will be spent on non-infrastructure health spending cumulatively over the next decade. Annually, spending on health infrastructure among the OECD and BRIC nations will increase to $397 billion by 2020, up from $263 billion in 2010. The larger market for health PPPs will be in non-infrastructure spending, estimated to be more than $7.5 trillion annually, up from $5 trillion in 2010.[14] Health spending in the United States accounts for approximately half of all health spending among OECD nations, but the biggest growth will be outside of the U.S. According to PwC projections, the countries that are expected to have the highest health spending growth between 2010 and 2020 are China, where health spending is expected to increase by 166 percent, and India, which will see a 140 percent increase. As health spending increases it is putting pressure on governments and spurring them to look for private capital and expertise.[14] Product development partnerships Product development partnerships (PDPs) are a class of public–private partnerships that focus on pharmaceutical product development for diseases of the developing world. These include preventive medicines such as vaccines and micro-bicides, as well as treatments for otherwise neglected diseases. PDPs were first created in the 1990s to unite the public sector's commitment to international public goods for health with industry's intellectual property, expertise in product development, and marketing. International PDPs work to accelerate research and development of pharmaceutical products for under-served populations that are not profitable for private companies. They may also be involved in helping plan for access and availability of the products they develop to those in need in their target populations. Publicly financed, with intellectual property rights granted by pharmaceutical industry partners for specific markets, PDPs are able to focus on their missions rather than concerns about recouping development costs through the profitability of the products being developed. These not-for-profit organizations bridge public- and private-sector interests, with a view toward resolving the specific incentive and financial barriers to increased industry involvement in the development of safe and effective pharmaceutical products. International examples International product development partnerships and public–private partnerships include:
partners with research institutes and private pharmaceutical companies to develop faster-acting, novel treatments for tuberculosis that are affordable and accessible to the developing world.
include:
While some PPP projects have proceeded smoothly, others have been highly controversial. Australian examples include the Airport Link, the Cross City Tunnel,[15] and the Sydney Harbour Tunnel, all in Sydney; the Southern Cross Station redevelopment in [[MPartnerships BCelbourne]]; and the Robina hospital in Queensland. In India, public-private partnerships have been extremely successful in developing infrastructure, particularly road assets under the National Highway Authority of India. In Canada, public–private partnerships have become significant in both social and infrastructure development. PPP Canada Inc. was created as a Crown corporation with an independent Board of Directors reporting through the Minister of Finance to Parliament. Its mandate is to improve the delivery of public infrastructure by achieving better value, timeliness and accountability to taxpayers, through P3s. The Corporation became operational in February 2009 with the appointments of a Chair of the Board of Directors and a Chief Executive Officer. PPPs exist in a variety of forms in British Columbia through the focused efforts of Partnerships BC, a company registered under the Business Corporations Act, that is wholly owned by the Province of British Columbia and reports to its shareholder the Minister of Finance. Projects include the Canada Line rapid transit line, the Abbotsford Hospital and Cancer Centre and run of river hydro-electric projects in Toba River.[16] In Quebec, a number of notable PPPs include the McGill University Health Centre, the new western extension of Autoroute 30 and Université de Montréal's Hospital Research Center. In the UK, two-thirds of the London Underground PPP was taken back into public control in July 2007 after only 4 and a half years at an estimated cost of £2 billion and the remaining one-third was taken back into public control in May 2010 after 7 and a half years for a purchase price of £310m.[17] The Government had paid advisers £180m for structuring, negotiating and implementing the PPP and had reimbursed £275m of bid costs to the winning bidders.[18] The 30 year PPP contract for the refurbishment of the MOD Main Building in London was estimated to give a saving of only £100,000 as compared to the £746.2m cost of public procurement.[19] The refinancing of the Fazakerley Prison PFI contract following the completion of construction delivered an 81% gain to the private sector operator.[20] The NATS PPP saw 51% of the UK's air traffic control service transferred to the private sector, however following the decline in air traffic after the September 11 attacks, the Government and BAA Limited each invested £65m in the private sector operator in 2003. [21] In Newfoundland Robert Gillespie Reid contracted to operate the railways for 50 years from 1898, though originally they were to become his property at the end of the period. [22] See alsoEuropean PPP Expertise Centre
Global Development Alliance Global Partnership Initiative Global public-private partnership Health Public-Private Partnerships Public/social/private partnership (PSPP) Public-public partnership Public Works and Government Services Canada Private participation in railway share USAID The Canadian Council for Public Private Partnerships P3 Canada Inc. Partnerships BC References1.^ Moszoro M., Gasiorowski P. (2008), 'Optimal Capital Structure of Public-Private Partnerships', IMF Working Paper 1/2008.
3.^ Public Private Partnerships in Europe. 4.^ PFI projects hit fresh low as few deals closed 5.^ Allen and Overy 6.^ European Commission Communication on PPP November 2009 7.^ European PPP Expertise Centre 8.^ "Brian Rudman: Promised electric trains derailed by misguided enthusiasm". The New Zealand Herald. 1 June 2009. http://www.nzherald.co.nz/nz/news/article.cfm? c_id=1&objectid=10575753. Retrieved 21 February 2010. 9.^ the Water Justice Project on Transnational Institute 10.^ Reversal of privatisation of Paris' water 11.^ Deputy Mayor of Paris Anne Le Strat tells how Paris put water services back into public hands 12.^ article on CEO 13.^ Water tariff cut 14.^ a b c PricewaterhouseCoopers' Health Research Institute, (2010). [Build and Beyond: The (r)evolution of healthcare PPPs] http://www.pwc.com/us/ppphealth, p9. 15.^ Moore, Matthew, "Open Secrets", Sydney Morning Herald, 31 October 2005. Accessed 7 January 2007. 16.^ An Introduction to Public Private Partnerships 17.^ "Tube maintenance back 'in house' as new deal is signed". BBC News. 8 May 2010. http://news.bbc.co.uk/1/hi/england/london/8669823.stm. Retrieved 10 May 2010. 18.^ "London Underground PPP: Were they good deals?". National Audit Office. 17 June 2004. http://www.nao.org.uk/publications/0304/london_underground_ppp.aspx? alreadysearchfor=yes. 19.^ "Ministry of Defence: Redevelopment of MOD Main Building". National Audit Office. 18 April 2002. http://www.nao.org. uk/publications/0102/redevelopment_of_mod_building.aspx. 20.^ "The Refinancing of the Fazakerley PFI Prison Contract". National Audit Office. 29 June 2000. http://www.nao.org.uk/publications/9900/the_refinancing_of_the_fazaker. aspx. 21.^ "Refinancing the Public Private Partnership for National Air Traffic Services". National Audit Office. 7 January 2004. http://www.nao.org. uk/publications/0304/refinancing_nats.aspx?alreadysearchfor=yes. 22.^ l [edit] Further readingBurnett, M. "PPP - A decision maker's guide", European Institute of Public Administration, 2007 Chinchilla, C. "El nuevo contrato de colaboración entre el setor público y el sector privado", Revista Española de Derecho Administrativo nº 132 (2006) Gonzalez Garcia, J. "El contrato de colaboración público privada", Revista de Administración Pública, nº 170 (2006). Linotte Didier, Un cadre juridique désormais sécurisé pour les contrats de partenariat, AJDA, n° 1/2005 du 10 janvier 2005. Monera Frédéric, Les financements innovants de services et de projets publics, Revue de la Recherche Juridique – Droit prospectif, PUAM, 2005-1, p. 337 & s. Moszoro M., Gasiorowski P. (2008), 'Optimal Capital Structure of Public-Private Partnerships', IMF Working Paper 1/2008. [2] Colman, J. (2002), ‘Mumbo jumbo…and other pitfalls:Evaluating PFI/PPP projects’, National Audit Office PFI / PPP Conference "Bringing about beneficial change, London, May. Economic Planning Advisory Commission (EPAC) (1995), ‘Final Report of the Private Infrastructure Task Force’, Australian Government Publishing Service, Canberra. Economic Planning Advisory Commission (EPAC) (1995), ‘Interim Report of the Private Infrastructure Task Force’, Australian Government Publishing Service, Canberra. Harris, A.C. (1996), ‘Financing infrastructure: private profits from public losses’, Audit Office of NSW, Public Accounts Committee, Parliament of NSW, Conference, Public/Private infrastructure financing: Still feasible?, Sydney, September. House of Representatives Standing Committee on Communications Transport and Microeconomic Reform, (1997), ‘Planning not Patching: An Inquiry Into Federal Road Funding’, The Parliament of the Commonwealth of Australia, Australian Government Publishing Service, Canberra. Industry Commission (1996), ‘Competitive Tendering and Contracting by Public Sector Agencies’, Australian Government Publishing Service, Canberra. Minnow, Martha and Jody Freeman (2009), Government By Contract: Outsourcing and American Democracy, Harvard U.P. Möric, K. (2009), 'Les partenariats public-privé - le choix du partenaire privé au regard du droit communautaire, Editions Larcier, 264 p. Quiggin, J. (1996), ‘Private sector involvement in infrastructure projects’, Australian Economic Review, 1st quarter, 51–64. Spackman, M. (2002), ‘Public-private partnerships: lessons from the British approach’, Economic Systems, 26(3), 283–301. Strauch, L. (2009), ‘Public Private Partnership in European Road Infrastructure: PPP as Investment Asset Following the M6 Road Project in Hungary’,VDM. Monbiot, G. (2000), ‘Captive State, The Corporate Takeover of Britain’, Macmillan. Venkat Raman, A. and JW Bjorkman (2009), 'Public Private Partnerships in Health Care in India: Lessons for Developing Countries'. London. Routledge. PwC Health Research Institute (2010), 'Build and beyond: The (r)evolution of healthcare PPPs' http://www.pwc.com/us/ppphealth External links United Nations Foundation & Vodafone Foundation Technology Partnership European PPP Expertise Centre PPP in Infrastructure Resource Center for Contracts, Laws and Regulation Private Participation in Infrastructure database A Primer on Public-Private Partnerships Canadian Union of Public Employees on P3s What are Public Private Partnerships? BBC News CEE Bankwatch PPP study - Never mind the balance sheet - the dangers posed by public-private partnerships in central and eastern Europe Public Private Partnership in the Provision of Health Care Services to the Poor D+C article 09/2010: Green for Growth Fund Southeast Europe by KfW Entwicklungsbank and the European Investment Bank Build and Beyond: The (r)evolution of healthcare PPPs Public-Private Partnership in Uzbekistan: Problems, Opportunities and Ways of Introduction IFC Advisory Services in Public-Private Partnerships Retrieved from "http://en.wikipedia.org/wiki/Public%E2%80%93private_partnership" Categories: Public–private partnership | Government finances | Public economics | Government procurement Hidden categories: All articles with unsourced statements | Articles with unsourced statements from January 2010Personal tools Log in / create account Name spaces Article Discussion Variants Views Read Edit View history Actions Search Navigation Main page. Contents Featured content. Current events. Random article. Donate to Wikipedia Interaction. Help About Wikipedia Community portal. Recent changes Contact Wikipedia Toolbox. What links here. Related changes. Upload file. Special pages. Permanent link. Cite this page Print/exportCreate a book. Download as PDFPrintable version Languages: Dansk, Deutsch,Español, Français, Hrvatski Magyar Nederlands Norsk (bokmål)Polski Português Русский Suomi SvenskaУкраїнськаThis page was last modified on 18 May 2011 at 01:53. Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. See Terms of Use for details. Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization. Contact us Privacy policyAbout WikipediaDisclaimers |
CPI The Lebanese Center for Public Information
PARTICIPATIVE
GOVERNANCE
GOVERNANCE
| PARTICIPATIVE GOVERNANCE |
| 51. PPP Public Private Participation (Overview and references) |
This program is oriented towards Professionals & Managers entrusted with Privatization Project Visualizing, Feasibility Analysis, Formulating Project, Strategy Development, Proposal Preparation & Evaluation, Agreement Terms, Implementation and Management. The program provides a clear understanding of the Issues at each stage and the good and best practices to be followed. Program will follow the process approach – so you can directly implement in your work what is discussed and check-listed during the program. This Program is intended for… The program is directed at Government, Regulatory Organizations, Owners, Financing Agencies and Operators. Who should attend: Government Departments, Development Agencies, Infrastructure Developers, Investment Banks, Private Equity Funds, Infrastructure Funds, Construction Companies, Investment Authorities, Law Firms and Consulting Firms.
1. Understanding the Logic of PPP 2. Public Partnership Projects – the Happy Stories 3. Public Private Projects - Disasters 4. The Legal & Regulatory Issues 5. The Political & Social Issues 6. Economic Aspects & Project Attractiveness Issues 7. Visualizing PPP Projects 8. Feasibility Analysis of PPP Proposals 9. Formulating PPP Projects 10. PPP Strategy Development 11. PPP Project Proposal Preparation & Evaluation 12. Bid Processes and Transaction Documents |
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