Last Updated:
20 Feb 2020

Subnational Public-Private Partnerships

Meeting Infrastructure Challenges

Worldwide, infrastructure needs to sustain growth are substantial – estimated by the OECD to be USD 6.3 trillion per year between 2016 and 2030 in energy, transport, water and telecommunications infrastructure. Subnational governments – cities and regions – play a vital role in providing and maintaining infrastructure. They are in charge of almost 60% of public investment on average in OECD countries. In a tight fiscal environment, it is critical to diversify sources of financing for infrastructure investment and to use public investment to leverage private funding in an effective way. Public-private partnerships (PPPs) represent an alternative to traditional government procurement with the potential to improve value for money. However, PPPs are complex and sometimes risky arrangements that require capacity to undertake them that is not always readily available in governments, in particular at the subnational level. There have been many examples in recent years of PPP failures or misuse, which call for caution in their use. This report offers guidance on how to improve the governance and implementation of PPPs for infrastructure at the subnational level.