Public-private partnerships (PPPs) play a crucial role in the world’s search for the expanded and better quality delivery of sustainable infrastructure.
PPPs entail is a procurement delivery model featuring a long-term contractual relationship between the public sector (whether at national, municipal, or utility level) and a private-sector entity whereby the latter delivers and finances a public service using a capital asset, sharing the associated risks with the public sector while also developing value for money versus a traditional procurement approach.
When direct project revenues from users are insufficient or non-existent (such as in the case of social infrastructure PPPs), the public sector supports the PPP contract with long-term public budget commitments.
PPPs exist in various permutations characterised by the level of risk and responsibility transferred to the private sector. The risk and responsibility may include design, construction, operation, maintenance and financing of the asset or service.
The underlying mechanism for PPPs relies on the private sector providing not just much needed commercial financing but also efficient management for new and improved infrastructure assets for a cost that is lower, on an overall life-cycle risk-adjusted basis, than the traditional public sector alternative. This is known as ‘value for money’ versus the public sector comparator.
When designed and procured well, private participation in infrastructure provision can promote new technologies, deliver higher accountability, align incentives, establish more cost-effective operations and achieve financial sustainability for infrastructure undertakings.
Under the right conditions, PPPs deliver a higher quality service at a lower cost over the long-term. The EBRD aims to help its public sector clients achieve those right conditions suing dedicated PPP transaction advisory to client governments.
PPP Advisory Unit
The PPP Advisory Unit is a dedicated team of PPP infrastructure experts with extensive experience in project management. This specialized group of professionals has an intensive track record of supporting and advising governments across the EBRD’s regions. They follow a strategic approach focused on delivering project preparation support alongside with policy dialogue.
During the preparation phases of PPP projects, the PPP Advisory Unit appraises and analyses the feasibility of the project (technical, legal, financial, fiscal as well as environmental and social assessments), sounds out the market, structures and drafts the tender documents, supports the tender process all the way through to the commercial and financial closure of the project.
Benefits of PPPs
PPP Support provided to Public Clients