Are public private partnerships (PPPs) common? Are they promoted or encouraged by the government?
In Angola, public-private partnerships (PPPs) are governed by Law No.11/19 of 14 May.
PPPs have been encouraged by the government, which aims that by 2017 10% of public investment is made through PPPs. However, the use of PPPs is still in its early stages.
The federal government defines a PPP as a procurement involving the use of private sector capital to wholly or partly fund an asset that would have otherwise been purchased directly by the public sector and which is used to deliver public sector outcomes. Australian Federal, State and Territory Governments will consider a PPP for any project with a capital cost in excess of A$50 million, in accordance with the National PPP Policy Framework.
PPP projects undertaken in the Australian market to date, the majority of which have been in New South Wales and Victoria, range from hospitals to courts to toll roads. In the case of toll roads, the government will usually hand over operation to the private sector participant for the period of the concession. In the case of social infrastructure such as hospitals and schools, the government will usually retain the obligation to provide the core services such as healthcare or education, although some projects have outsourced delivery of the core services to the private sector participant.
The Federal government (via Infrastructure Australia) has issued a set of National PPP Policy and Guidelines which now apply to all PPP projects released in the Australian market. . The various policies:
The current trend is towards harmonization and an increasingly standardized approach to risk allocation by state governments, which is likely to lead to commoditization of PPP project documentation in the medium term.
It is common in Belgium for significant infrastructure and/or building projects to be established through public-private partnerships (PPPs). Examples include the development of brownfield sites and the building of bridges and new roads, schools and sport infrastructure. The recent decade has seen an increase in PPPs, with the administration often seeking to act as a private party, before resorting to administrative acts (eg buying a plot of land before expropriating it).
In the Flanders Region, this form of co-operation is explicitly encouraged and the Decree dd. 18 July 2003 governs PPPs in Flanders. The decree contains the framework within which these partnerships are to be constructed.
In the Walloon and Brussels Capital Regions, there is no special legislation regarding PPPs, but such partnerships or forms of co-operation are however used in these regions.
PPPs are often governed by private (contract) law. If it qualifies as a public contract, the regulation regarding government contracts (see supra) is applicable.
The Law on Public Procurement in the Federation of Bosnia and Herzegovina provides that government bodies can be contracting parties in procurement procedures, hence, there is no particular set of rules which applies to government bodies that are different from rules applicable to private or public legal entities. The concept of the public private partnership (PPP) is still a relative novelty in this country and few PPP projects exist. However, efforts are being made in order to promote the significance and relevance of PPP projects in the country’s development.
The issue of PPPs in the Republic Srpska and Brčko District is regulated by the Law on Public-Private Partnerships in Republic Srpska from 2009 and the Law on Public-Private Partnerships in Brčko District from the same year, which is an indicator of the encouragement the government gives to these partnerships.
Public-Private Partnerships (P3s or PPPs) are a performance and merit based approach to procuring public infrastructure whereby the private sector assumes the majority of the risk associated with a project and is only paid on performance. This ensures that the project is completed effectively and secures long-term maintenance.
P3s gained prominence in the 2000s, supported by the Canadian Council for Public–Private Partnerships. There are dedicated agencies in certain jurisdictions in Canada that manage major infrastructure projects, including P3s.
Public private partnerships (PPPs) are very common for real estate developments and are encouraged by the government.
Public procurement is regulated by the Public Procurement Act (Official Gazette 120/16), whereas public-private partnerships (PPPs) are governed by the Act on Public-Private Partnerships (Official Gazette No. 78/12, 152/14).
PPP has been applied in Croatia since its independence and has had a significant role in the development of infrastructure projects and providing public services of a higher quality. In the beginning, the concession model of PPP was mostly applied for construction of roads and communal infrastructure. In the last few years, more complex PPP models have been implemented, especially in relation to education and science, technical-development centres, environmental protection, housing construction, sports and urban infrastructure, public administration buildings, development of healthcare and social care.
The PPP market in the Czech Republic is promising but not yet very well developed. Only a small number of projects have actually been implemented or are even set for implementation. Currently, the proposed private-public implementation of the D3 motorway is very promising and the development of a sports complex has been successfully completed in Červený Kameň. Another recent project has been the revitalisation of Prague's main railway station and a few other railway stations in the Czech Republic. The positive factor in the otherwise adverse domestic PPP climate is the interest of the banks. Banks are in favour of the PPP concept because project funding is provided by the State, thereby minimising the risk for the credit institutions.
The main reason that the Czech Republic is a little behind in PPP projects when compared to other EU countries is that there is no political will and a lack of political continuity. Progress in the development of PPP projects is being supported by new legislation.
It should also be noted that interest in PPP projects increased sharply in the context of the economic crisis and consequent spending cuts, especially in highway construction.
The use of PPP in the Czech Republic is not widespread but can nonetheless be found in a broad range of sectors including:
Public-private partnerships (PPPs) are not that common in Denmark currently, but they are encouraged by the government and they appear to be becoming more popular.
The use of PPP in Denmark can primarily be found in the following sectors: public administration (buildings), healthcare, defence, education and transportation.
In France, public-private partnerships (Partenariat Public Privé or PPP), created in 2004, are defined as public contracts whereby a public entity pays an operator to design, build, finance and operate a public facility over the long term. Schemes whereby the operator collects fees from end-users (eg toll roads) are referred to as concessions or délégations de service public and have existed in France since the 16th century.
PPPs are encouraged by the government and since 2008/2009 they have become more common.
Although state and federal governments try to promote public private partnerships, the concept is not as common in Germany as for example in the United Kingdom. A number of public bodies have developed master documents for public private partnership schemes. There are quite a number of examples of public private partnership projects in Germany, for example schools and other public administrative buildings, but the concept is still not as widely spread as some of the larger construction companies would wish. Public perception is still influenced by the fact that a scheme for the imposition of a toll on lorries on motorways (Toll collect) was procured by the federal government in a manner which may or may not have been competent and effective.
An increase in pressure on government finances has made the HKSAR Government to explore other financing options, such as Public-Private Partnership (PPP) schemes, as part of its Private Sector Involvement ("PSI") initiative, for the delivery of public services and infrastructure. The construction industry, having suffered a downturn over the last few years, is also keen to explore with the Government the development of PPPs.
The Hong Kong International Exhibition Centre project is a landmark PPP, where the private sector contributed 15% of the investment.
The use of public-private partnerships (PPP) used to be widespread until 2010. The government and particularly municipalities did encourage PPP projects as such projects allowed them to focus on delivering the core services they are required to provide. Since 2010 virtually no new PPP projects have been started.
In the context of construction projects, public procurement rules are governed by a range of EU procurement Directives, transposed into Irish law by way of Regulations (ie Statutory Instruments).
The form of contract used varies. In recent years, many forms of public works contract have been issued by the Department of Finance to bring control to perceived cost overruns on government projects. On more complex public-private partnerships (ie PPPs) bespoke contract forms are generally used, given the complexities surrounding the design, construction, financing and operation inherent in PPPs.
Since the commencement of PPPs in Ireland in the late 1990s, almost €6 billion worth of public infrastructure projects have been delivered using PPPs, particularly in relation to motorway services and development of primary and secondary schools. The government’s investment in PPPs slowed down significantly from 2008 onwards due to the global economic crisis, however in 2012 the Government launched a new PPP programme involving €1.4 billion worth of projects which primarily related to development of schools, third-level education facilities, courts, primary care centres and roads. A €300 million second phase of the PPP programme was also announced in 2014 to deliver social housing consisting of 1,500 units across six sites.
In September 2015, the Irish government announced a six-year capital investment framework to investment in transport, education, health and enterprise between 2016 and 2021. Of the €42 billion worth of investiment set out in this programme, €27 billion of the investment will be through direct exchequer spending and the balance from the wider semi-state sector (€14.5 billion) and off-balance sheet mechanisms like PPPs (€500 million). A number of these projects are already underway including the N25 New Ross Bypass project which involves the construction of 13.6km of new dual carriageway and 1.2km of upgraded or new single carriageway to ease traffic congestion at New Ross.
In July 2016, Minister for Housing, Planning, Community and Local Government, Simon Coveney T.D., announced a PPP programme for the construction of 450 new social housing units across eight designated sites around the country. In the announcement, the Minister noted that Ireland has a significant shortage of housing supply and PPP provides an effective mechanism to fund and deliver the additional housing units. The funding is part of a programme of investment totalling €300 million in social housing through the PPP model.
In October 2017, the Minister for Education and Skills and the Minister for State for Higher Education announced 11 projects for inclusion in the PPP Programme. The projects, which are located around the country, will assist with regional development. The PPP Programme is being rolled-out alongside €367 million in funding fro the Department of Education and Skills for investment in higher education over the period 2018–2021. Some of the institutions involved include Galway Mayo Institute of Technology, IT Carlow, IT Tallgaht, Institute of Art, Design and Technology, Dun Laoghaire.
Public-private partnerships (PPPs) are a common form of collaboration between the government and the business sector in order to realize a project jointly. They divide the duties and risks and they each retain their own responsibilities. They are commonly used in Italy.
The main forms of PPP include:
In general, PPP (in its different forms) is expressly regulated by the law on public contracts (Legislative Decree no. 50/2016).
Yes. Public-private partnerships (PPPs) are a common form of collaboration between the government and the private sector for real estate developments. The Act on Promotion of Private Finance Initiative (PFI) was enacted in July, 1999 in order to realize the PPPs and to promote the development of public infrastructure by utilizing private funds.
In the Netherlands, public-private partnerships (PPPs) are a common form of collaboration between the government and the business sector in order to realize a project jointly. They divide the duties and risks and they each retain their own responsibilities. Public-private partnerships are generally encouraged in the Netherlands.
In Nigeria, there is an increased focus in the area of Public-Private Partnership (PPP) in public infrastructure development. The Infrastructure Concession and Regulatory Commission (ICRC) Act 2005 established the Commission responsible for regulating PPP processes in Nigeria and provides for the government of any of its agencies to enter into a contract or grant concession to private entities for the financing, construction, operation or maintenance of any infrastructure in the Country. The Bureau of Public Procurement established under the Public Procurement Act encourages private sector participation in infrastructure development by ensuring open competitive bidding, which in turn encourages competition, economy and efficiency. Many states have also enacted their own PPP laws towards public infrastructure development.
The notable PPP projects in Nigeria have been in areas of development of roads, bridges and power infrastructure under various PPP models.
The Government often pays private contractors to build roads, government offices, schools, hospitals and prisons out of tax revenues. A Public-Private Partnership (the Norwegian term for which is OPS) has however only been used in limited circumstances.
In 2015, the government launched a new platform for the transport sector. One aim with the reform was to expand the use of OPS agreements in road constructions. In their reform, the government instructed the Directorate of Public Roads to increase the use of OPS agreements in road projects. Following the reform, the Directorate of Public Roads has completed four OPS projects, in addition to two ongoing OPS projects.
At present, there is no Norwegian standard document that applies to OPS agreements. Normally, the employer and the contractor apply NS 8407, with necessary amendments and alterations.
In Poland, public-private partnership (PPP) is quite a new concept and not commonly used (according to data published by the Polish Ministry of Investments and Development, the number of PPP proposals in 2020 was 31, and there were 13 concluded agreements. The number of PPP projects has gradually decreased since 2015. This is probably attributable to the fact that approximately only 25% of PPP proposals (166 out of 628 in the years from 2009 until first quarter of 2022) were successfully converted into PPP projects. The effects of the COVID-19 pandemic were still visible on the PPP market in Poland. Economic uncertainty significantly reduces the level of investment in the private sector, which also has a negative effect on interest in public investment. In 2021, ten PPP contracts worth PLN 172 million were signed whereas in the first quarter of 2022, two PPP contracts worth PLN 3,9 million were signed and four new PPP proceeding worth PLN 295 million were initiated.
Public-private partnerships (PPPs) are common in Portugal. They have been promoted and encouraged by the state for more than 20 years. According to the 2012 Report of the Treasury and Finance General Directorate, the public expense in PPP between 2008 and 2011 increased four times more. The main areas in which PPPs operate are transport infrastructures and health. Since 2011, there has been a slowdown of new PPPs. PPPs are governed by the Public Contracts Code and by Decree-Law No. 111/2012, of 23 May 2012, amended by Decree-Law No. 84/2019, of 28 June 2019, and Decree-Law No. 170/2019, of 4 December 2019.
Public-private partnership (PPP) refers to forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of infrastructure or the provision of services. Public authorities, at all levels, are increasingly interested in co-operating with private investors, in order to benefit from the know-how of the private sector and to overcome public budget constraints. The legal regime of PPPs was previously set out by Law no. 233/2016, which was repealed on 18 May 2018. On 18 May 2018, a new emergency ordinance regulating public-private partnerships has entered into force, ie GEO no. 39/2018. PPPs are generally encouraged by the Government although no landmark contracts were concluded yet. As the PPP is a rather new option for investment, the authorities have a certain level of reluctance in using this structure.
The Slovak Government encourages municipalities as well as the private sector to use public-private partnerships (PPPs) as a way of procuring public services. Government support for PPPs is particularly strong in relation to public infrastructure projects.
The Ministry of Finance of the Slovak Republic has initiated, and intends to further initiate, several studies for the application of the PPP procurement procedure under Slovak laws. One of the first and largest pilot projects relates to the D1 highway, which has been supported by the Slovak Government during its realisation phase. Recently, a PPP project for maintenance and operation of Intermodal Transport terminal in Žilina valued at €86.4 million was signed by the Railways of Slovak Republic.
Spain has a long and successful tradition of implementing public private partnerships (PPPs), in particular in the form of public works concessions, which are suitable in situations where third party users pay a fee for the use of a public facility (eg toll motorways). To provide a more modern framework, a Public Contracts Act was enacted in 2017 which laid down a definition of PPP and introduced a standard form of PPP contract which provides for service output specifications (inspired by PPP in the UK PPP).
Although a lack of funding is holding back the PPP market, the Spanish government continues to support PPP as a way of spending on infrastructure and stimulating the economy. Regional governments are also active in the PPP market, in particular through Private Finance Initiatives in the healthcare sector.
Public private partnerships (PPPs) are not very common. They are not promoted nor encouraged by the government at this time.
Public-private partnerships (PPPs) are a common form of collaboration between the public sector and the private sector in Thailand. The public and private entities will jointly operate a project, for instance, infrastructure, energy or telecommunication projects, in a mutually beneficial collaboration. Public sector entities are sometimes subject to various limitations, such as lack of funds for investment, technical knowledge or the capacity to carry out operations efficiently. A private sector entity may be able to offer greater resources to overcome these limitations, while lacking the capacity to oversee and operate the services that the project offers. The main forms of PPP include, but are not limited to, concessions and joint-ventures. The process of collaboration in PPPs is subject to the Public Private Partnership Act B.E. 2562 (2019).
The Abu Dhabi Government has historically paid private or government contractors to build roads, government offices, schools and hospitals, funded by oil revenues. They would pay to have buildings built, then pay to have them run. As such, PPPs have been uncommon in Abu Dhabi, and generally limited to government procurement programmes for water and power projects.
Following the rise of PPP in Europe and PFI in the UK, the Abu Dhabi Government introduced the PPP model into the domestic market and has since closed numerous PPP deals where the Abu Dhabi Government has provided land and infrastructure and private firms have invested capital. For example, the developments of ICAD, Paris-Sorbonne University, New York University and Cleveland Clinic.
Law No. 22 of 2015 (the ‘PPP Law’) was introduced in August 2015 and aims to encourage further private sector investment in local development projects, and the Department of Municipal Affairs announced in 2016 that the Abu Dhabi Government is encouraging the use of further PPPs by offering one hundred development projects valuing Dh15 billion to private investors in the next four years. These measures are likely to lead to an increase in the use of PPPs in the future.
The Dubai Government has historically paid private or government contractors to build roads, government offices, schools and hospitals, funded by oil revenues. They would pay to have buildings built, then in addition pay an operator to run them. However, the Dubai Government is now looking for opportunities to utilise the public-private partnership (PPP) model in the domestic market.
PPPs in the UK have to be considered in the context of the historical Private Finance Initiative, or PFI as it was known.
The PFI was born in the early 1990s; government procurement was changed so that it no longer involved simply the construction of a building, but also the design, construction, financing and subsequent operation of the asset – often for terms of between 20 and 30 years. Subsequent governments developed more comprehensive policies which led to the model being used across a range of sectors including healthcare, education, transport, defence and waste.
In 2011, as part of its general spending review, the last UK Government began to streamline the PFI; the new approach being taken was generally referred to as ‘PF2’. PF2 was introduced to address concerns that the PFI did not deliver value for money, was inflexible, lacked transparency, provided excessive gains for private sector equity providers, and took too long to reach financial close. Despite these concerns, it was acknowledged that aspects of the existing PFI approach worked well, such as delivering innovation and offering a reasonable level of risk allocation. Whilst the reforms were significant, many of the existing PFI principles were retained.
In the October 2018 Budget, the government announced that it would no longer be using PF2 for new projects, but would continue to work on improving the value of existing PFI contracts. It also confirmed that it would continue to support private investment in infrastructure via other established tools, such as Contracts for Difference, the Regulated Asset Base Model and the UK Guarantee Scheme.
Governments have always paid private contractors to build roads, government offices, schools, hospitals and prisons out of tax revenues. They would pay to have buildings built, then pay to have them operated and maintained. In 1992, the right of centre Conservative government created the Private Finance Initiative (PFI) which saw government procurement in the UK evolve from delivery of an asset into the long term delivery of a service, ie no longer just the construction of a building, but the design, construction, financing and subsequent operation of the asset – often for terms of 20, 25 or 30 years (and a few are even longer).
When the left of centre Labour party came to power in 1997, PFI was further developed under the rubric of public-private partnerships (PPPs) and the scheme was continued by the Labour/Liberal Democrat coalition Scottish Executive (now known as the Scottish Government) in the newly‑constituted devolved administration.
The continued use of PFI/PPP as a means of financing capital expenditure infrastructure and construction projects came under review as a result of the Scottish Nationalist Party's election in the 2007 Scottish parliamentary elections. As part of its election manifesto the SNP set out its proposal for the Scottish Futures Trust as an alternative to PPP/PFI. The Scottish Futures Trust was established in 2008 (an executive non-departmental public body of the Scottish Government) and given primary responsibility for increasing the efficiency and effectiveness of infrastructure investment in Scotland.
Non-Profit Distribution (NPD) was developed by the Scottish Government as an alternative to, and has since superseded, the traditional PFI model in Scotland and is now the preferred method of procuring projects on PPP. In essence, the NPD model limits the internal rate of return (IRR) that the private sector investors in the PPP project can make (as the historically high level of returns for investors when unrestricted, particularly where PPP projects were re-financed or where shareholdings in project companies were disposed of, was considered politically unacceptable). The Scottish Futures Trust is considering whether the Welsh Government’s Mutual Investment Model (MIM) could be adopted in Scotland (under this investment model the public sector would act as a co-investor and co-owner of up to 20% of the issued share capital of the special purpose company established for a project).
Public-private partnerships (PPPs) are not common in Ukraine. Relations between state/local bodies and developers are usually formalized by other legal instruments (eg investment agreements or joint activity agreements).
In 2010, the Ukrainian Parliament adopted the Law of Ukraine ‘On PublicPrivate Partnerships’ which sets out a list of activities for which PPP structures may be used, the main functions and forms of a PPP etc. However, in practice PPPs are rarely used in Ukraine (this form of collaboration was used in the construction of projects related to the EURO 2012 Football Championship and is currently used in complex infrastructure projects).
However, on 24 May 2016 the Law of Ukraine ‘On Amendments to Certain Laws of Ukraine regarding Lifting of the Regulatory Barriers for Development of Public Private Partnership and Stimulation of Investments in Ukraine’ entered into force. The aforesaid law broadened the list of privileges and guarantees for private partners (eg now the private partners can acquire into their ownership the objects created by them in course of PPP; the objects of PPP can also be in joint ownership of the public and private partners; disputes arising out of agreements on PPP concluded with participation of non-residents can be resolved by an international arbitral tribunal; in case of early termination of an agreement on PPP through fault of the public partner, the public partner is obliged to compensate to the private partner investments, non-reimbursed within the term of such agreement and damages, occurred due to early termination of the agreement on PPP).
Infrastructure projects can be delivered through the traditional design-bid-build delivery system or by other delivery methods more commonly used in the private sector; however, because of funding shortfalls and long-term objectives, methods used for private projects are not always viable or efficient in the public sector. Consequently, the public sector sometimes turns to more innovative approaches for the delivery of infrastructure projects, this often takes the form of public-private partnerships, sometimes referred to as ‘PPP’ or ‘P3s’.
Some of the first canals and commuter rail lines in the United States are examples of the private sector delivering infrastructure projects. Nonetheless, the P3 approach has been slow to catch on in the United States, and the US presents somewhat of an emerging market for public-private partnerships. P3 transactions are difficult to assemble and implement in the United States, even under the most favourable of circumstances. Moreover, P3 transactions are more common for major public improvement projects, which often:
In order to encourage the use of P3 transactions in the United States, the federal government has established programs to encourage the use of P3 transactions by making low-cost financing available for such transactions. Some of the more commonly used initiatives are:
Finally, although a collaborative endeavour with the private sector, a P3 transaction is a public-sector procurement. Therefore, another consideration is that the P3 remains subject to whatever rules govern the public entity in its procurement of improvements. A public entity cannot proceed with a P3 transaction unless the applicable statutory or legal framework allow procurement of a project by such a method. At this time, 36 states in the US, the District of Columbia, and Puerto Rico have enacted some sort of legislation to allow public-private partnerships. While initially limited to toll roads, P3 transactions now include power, water, light rail, airport, and government building projects.
Public-private partnerships (PPPs) are encouraged by the government and have been identified as the key driver to infrastructural development in the governments various work programmes. The recently enacted Zimbabwe Investment Development Agency Act [Chapter 14:37] (ZIDA Act) which repealed the Joint Ventures Act [Chapter 22:22] (JV Act) has provided a structure to regulate the growing concept of public-private partnerships in Zimbabwe.
The legislation has now aligned Zimbabwe to the regional trends of the African continent where regulation of Public-private partnerships has already been implemented. In its essence, the ZIDA Act regulates the agreements between public entities and the private sector in so far as it relates to the ‘design, construction, development, operation or delivery of a new infrastructure, asset, facility or service or the rehabilitation, modernization, expansion, operation, delivery or management of an existing infrastructure, asset, facility or service.’
The ZIDA Act clearly defines the types of PPP projects that would be regulated by it, namely: Build and Transfer (BOT), Build, Lease and Transfer (BLT), Build, Operate and Transfer (BOT), Build, Own and Operate (BOO), Build, Own Operate and Transfer (BOOT), Build, Transfer and Operate (BTO), Contract, Add and Operate (CAO), Develop, Operate and Transfer (DOT), Rehabilitate, Own and Transfer (ROT), Rehabilitate, Own and Operate (ROO), Build, Own, Operate and Maintain, Lease Management Contract, Management Contract, Service Contract, Contract for Services, Supply, Operate and Transfer.
In terms of the ZIDA Act, a public entity intending on entering a PPP needs to comply with the following steps:
Cabinet approves or rejects the proposal, fully or provisionally.