Introduction

Globally, over the last decade or so, public–private partnerships (PPPs) have become increasingly popular as a way of procuring and maintaining public-sector infrastructure, in sectors such as transportation, social infrastructure public utilities, government offices, and other specialized services.

PPP may be defined as:

A partnership carried out under a Public-Private Partnership Agreement between the public sector represented by an Agency and a private party for the provision of an infrastructure facility and / or service with a clear allocation of risks between the two parties.

In a typical PPP project, the Public Authority specifies its requirements in terms of outputs, but do not specify how these are to be provided. It is then left to the private sector to design, finance, build and operate the Facility to meet these long-term output specifications.

Structuring PPPs is complex because of the need to reconcile the aims of the large number of parties involved: on the private-sector side there are investors, lenders, and companies providing construction and operational services; on the public-sector side there are public authorities creating and implementing PPP policies as well as those actually procuring the PPP, not forgetting the general public who use the facilities that a PPP provides. A PPP is thus an alternative to conventional public-sector procurement.

The result of the PPP approach is that significant risks relating to the costs of design and construction of the Project, and market demand for the Project (usage), or service provided by the Project (including its availability for use), and its operation and maintenance costs are transferred from the Public Authority to the Project Company.