Indecon Consulting

Public-Private Partnership (PPP)

Public-Private Partnerships (PPPs) are forms of cooperation between public authorities and private economic operators. These cooperation-arrangements range from loose and rather informal nature, to strategic partnerships and formal joint venture companies. PPPs aim at funding, constructing, renovating and/or operating an infrastructur eand thereby providing a service that traditionally is provided by the public sector alone. PPPs exist in sectors such as transportation, energy, water, waste, public health and also education and national security.

Major reasons for the emergence of PPP-schemes are budgetary constraints of public authorities. Through PPPs, public authorities can benefit from private sector know-how. It allows governments to provide modern, high-quality public infrastructure and services for its citizens. PPPs generate more financial means for relevant investments and infrastructure is more efficiently constructed, operated and maintained. PPP is also a sign for the changing role of the State in the economy, moving from being the direct operator towards the role of organiser, regulator and controller.
PPPs differ in several aspects from each other:

Duration of arrangement;
Method of funding;
Distribution of risks; and
Role of the partners in defining objectives, design, completion, implementation and funding.

The following lists a few examples of models for PPPs:

Operation & Maintenance Contract (O&M): A private operator, under contract, operates a publicly-owned asset for a specified term. Ownership remains with the public entity.

Design-Build-Finance-Operate (DBFO): The private sector designs, finances and constructs and operates a new facility under along-term lease. At the end of the lease term the facility is transferred to the public sector.

Buy-Build-Operate (BBO): Transfer of a public asset to aprivate or quasi-public entity usually under contract that stipulates that the assets are to be upgraded and operated for a specified period of time. Public control is exercised through the contract at the time of transfer.

Operation License: A private operator receives a license or rights to operate a public service, usually for a specified term.

Our services include:

- PPP strategy development (public and private partners)
- Contract negotiation
- Prefeasibility and feasibility studies
- PPP project management, incl. M&E
- Risk management
- Procurement
- PPP funding & due diligence
- PPP capacity development