PPP Basics: What and Why
The module provides an overview of PPPs, and discusses projects and contracts where there is a public interest in the provision of services and where the project involves long-life assets linked to the long-term nature of the PPP contract. What is a PPP: Defining "Public-Private Partnership" outlines the variety of contract types, and the terminology used to describe them. This section also presents types of partnerships to which the definition and guidance material in this Reference Guide would generally not apply. Some of them present similitudes to PPPs, others are significantly different.
Infrastructure Challenges and How PPPs Can Help discusses opportunities brought by PPP procurement, and the pitfalls practitioners may experience. PPPs are presented not only as a way of bringing needed additional investment to public infrastructure but also as a mechanism for improving infrastructure planning and project selection. It is also a mechanism for enhancing project management and guaranteeing adequate maintenance, avoiding cycles of construction followed by persistent neglect and then high-cost reconstruction. Well-structured PPPs bring private capital for investment, private-sector expertise, and commercial management incentives needed for enhancing service provision to users.
Therefore, private sector financing provides two key functions in a PPP. First, it complements public sector financing and allows projects to go forward that otherwise would have been discarded due to fiscal constraints. Second, it creates an incentive mechanism aligning private and public interests. How PPPs are Financed describes the various finance structures utilized for PPPs, and how governments can adjust contractual provisions to the financial environment, help develop markets, mitigate risks, and enhance credit.
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The Sustainable Development Goals and PPPs
World leaders gathered at the International Conference on Financing for Development in 2015 and adopted the 17 Sustainable Development Goals (SDGs) and...
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PPP Value Drivers
PPP value drivers are the mechanisms that can be used to improve value for money in infrastructure provision. They include the...
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Funding versus Financing
The terms funding and financing are often used synonymously, however, there is a technical distinction that is important to understand:
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Excessive Fiscal Risk—Examples from Colombia, Korea, Mexico, United Kingdom
Governments often provide guarantees to PPP projects, which often cost more than expected. For example:
- In the 1990s, the...
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Mumbai Water—Example of Poor Planning in Infrastructure
The experience of the Municipal Corporation of Greater Mumbai provides an example of weak planning in the water sector. The...
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When PPPs fail—The case of the 1993 water concession in Buenos Aires
In the 1990s Argentina implemented a major concessions program in the water sector. Water and sanitation concession agreements with private...
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Performance Based Road Contracts—Improving Maintenance of Infrastructure
Performance-based road contracts have proved successful in improving the quality of road maintenance—a pervasive problem in many countries. For example:
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The Pamir Private Power Project
In Tajikistan, the Gorno-Badakhshan Autonomous Region suffered from major energy shortages following independence from the Soviet Union in 1991 and...
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The Uruguay Weather Derivative
Uruguay’s state-owned public electric company, Administración Nacional de Usinas y Trasmisiones Eléctricas (UTE) relies on hydropower to generate more than...
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Examples of Project Finance Structure with Corporate Guarantees
In some cases, a project company may be unable to raise finance on a non-recourse basis. One option is for...
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Example of a Thinly-Capitalized PPP—Victoria Trams and Trains
The State Government of Victoria awarded five franchises (similar to concessions) for operation of trams and commuter rail in Melbourne,...
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CRPAOs in Peru
In Peru, an innovative financing structure has been developed to finance construction of its road concessions. The government of Peru...
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Mexico’s FONADIN
Prior to 2012, Mexico had no PPP Law. However, most government agencies that implement projects through PPP schemes did so...