The Public Private Partnership (PPP) concept and implementation has been widely endorsed and increasingly employed throughout the world for delivering major infrastructure projects. In Canada, this model has been widely endorsed and increasingly utilized; the United States federal and state governments are showing considerable interest in the PPP model for rebuilding the country’s infrastructure.

The basis of the PPP model is the principle that in spending of taxpayers’ money, best interests are realized when projects are awarded on the combined basis of cost, return on investment and best value. This best value considers the experience and capability of the team throughout the project lifecycle, the functionality and efficiency of the design, the degree of risk presented to public and private sector and the advantages of proposed debt and equity financing solutions. Conventional PPP implementations have been agreements to provide upfront private capital to construct large infrastructure projects that includes unique legal requirements and offers long-term revenue streams to the investors.

PPP’s with proper project cycle management, which includes planning and monitoring represents a paradigm shift in the allocation and management of the public purse.
With frequent paradigm shifts in the world economy, new global concerns in the last decade and growing expectations from citizens for greater equality within a rights based framework, inclusive growth and better ways of providing quality public goods and services have highlighted the need for new models for governance and growth. A different approach to the cooperation between the public and private sectors must evolve if society is going to effectively deal with the growing challenges. With nations agreeing on the on an ambitious target over the next 14 years through the Sustainable Development Goals (SDG); translating these goals into reality requires effective partnerships; PPPs’ can forge the innovative, sustained and most valued initiatives that will allow these targets to be met.

Public Private Partnerships needs to emphasize a fourth “P”; People that contribute and remain involved in the partnerships allow the sustainability of the service, once the project is completed.

Governments are increasingly looking at and approving hybrid PPP models directed at their infrastructure, for electric generation, transportation and water infrastructure. The hybrid model has part of the public capital investment made through construction milestones with the balance paid over an annuity over much longer contract periods, this marks a paradigm shift in the implementation mode. Linking performance standards to the annuity period is intended to drive long-term operations of the projects with reduced financial liability in the initial years. Governments are establishing Special Purpose Vehicles (SPV) to plan, structure, procure, manage and implement such PPP projects to allow them to scale it up in the future on a sustainable basis.

The Overseas Private Investment Corporation (OPIC) is a U.S. government development finance institution that mobilizes private capital aimed at solving critical challenges around the globe. OPIC dollar financing to eligible investments in developing and emerging markets to complement the private sector where financial institutions may not be able to lend. The OPIC provides financial products, political risk insurance and support for investment funds.

The Union Cabinet, chaired by India Prime Minister Shri Narendra Modi, recently approved a proposal for taking up a Hybrid Annuity based Public Private Partnership (PPP) model under Namami Gange Programme which aims to reform the wastewater sector in India. The private partner will needs to raise 60% in the form of equity and loans; as the loan requirement is less in comparison to other PPP models, financial institutions will also be more comfortable to lend or invest through this hybrid.


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