Difference between revisions of "Public–private partnership"
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A public–private partnership (PPP | A public–private partnership (PPP) is a long-term arrangement between a government and private sector institutions. PPPs have been implemented | ||
by central governments, local governments, and public enterprises 3 and have been used in sectors as diverse as transportation (roads, railways, bridges, and | by central governments, local governments, and public enterprises 3 and have been used in sectors as diverse as transportation (roads, railways, bridges, and | ||
tunnels), education (schools, museums, libraries), health (hospitals and clinics), water (sanitation plants, irrigation systems, pipelines), and public administration (courts, police stations, and prisons). <ref name="gerd20088">Gerd Schwartz, Ana Corbacho, Katja Funke (eds.), 2008, ''Public Investment and Public-Private Partnerships: Addressing Infrastructure Challenges and Managing Fiscal Risks'', Procyclicality of Financial Systems in Asia, Publisher: Palgrave Macmillan: UK</ref> | tunnels), education (schools, museums, libraries), health (hospitals and clinics), water (sanitation plants, irrigation systems, pipelines), and public administration (courts, police stations, and prisons). <ref name="gerd20088">Gerd Schwartz, Ana Corbacho, Katja Funke (eds.), 2008, ''Public Investment and Public-Private Partnerships: Addressing Infrastructure Challenges and Managing Fiscal Risks'', Procyclicality of Financial Systems in Asia, Publisher: Palgrave Macmillan: UK</ref> | ||
Latest revision as of 08:22, 7 October 2022
A public–private partnership (PPP) is a long-term arrangement between a government and private sector institutions. PPPs have been implemented by central governments, local governments, and public enterprises 3 and have been used in sectors as diverse as transportation (roads, railways, bridges, and tunnels), education (schools, museums, libraries), health (hospitals and clinics), water (sanitation plants, irrigation systems, pipelines), and public administration (courts, police stations, and prisons). [1]
Benefits
Risks
Like all projects, PPPs entail different types of risks. Some project-related risks encountered in PPPs include:[1]
- Construction risk. Design problems as well as cost and schedule overruns.
- Financial risk. The possibility that a project’s cash flow may fall short of the level needed to repay the project loans and capital invested, owing, for instance, to interest and exchange rate variability.
- Demand risk. The possibility that the demand for the services provided declines, reducing the cash-fl ow generating potential of the project.
- Availability risk. The possible lack of continuity and low quality of service provision.
- Political risk. Situations where government actions could impair the private sector’s earnings potential.
- Force majeure. Risks beyond the control of public and private partners (for example, natural disasters).
- Residual value risk. Uncertainty regarding the market price of the infrastructure asset at the end of the contract period.