| What Are Public-Private Partnerships? |
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A public-private partnership (PPP) involves the private sector in aspects of the provision of infrastructure assets or of new or existing infrastructure services that have traditionally been provided by the government. Why do governments contract with the private sector? While many governments have reformed their utilities without private participation, some seek finance and expertise from private companies to ease fiscal constraints and increase efficiency. By engaging the private sector and giving it defined responsibilities, governments broaden their options for delivering better services. What kinds of public-private partnerships are there? The range of options for public-private partnerships has expanded enormously over the past 30 years. Agreements between public and private entities take many shapes and sizes for both new and existing services. At one end of the spectrum is a management or service contract, where a private company is paid a fee for a service. At the other end is full privatization or divestiture (outright sale), where a government sells assets to a private company. Outsourcing has become another popular option; here a private company might handle an aspect of service, such as billing, metering, transport, or even cleaning. Hybrid models of public-private partnership have seen explosive growth in recent years, especially with the development of a more diversified pool of emerging market investors and operators with local expertise. These models often rely on simpler contractual arrangements and blend public and private money to diversify risks. What has been the record of public-private partnerships? The record varies tremendously across sectors. The most dramatic impact has been in telecommunications. Private telecommunications companies are investing in even the poorest countries and bringing service to the most remote communities. The record for network industries such as water and electricity is more mixed. Yet here too, many empirical studies have demonstrated that private participation is associated with increases in coverage, efficiency, and labor productivity. Other studies have shown that improvements in services have led to improvements in human health, such as lower child mortality and a reduction in waterborne diseases. Private participation has also reduced labor costs and increased efficiencies in the delivery of water and power. How many public-private partnerships are there? From 1990 to 2006 the Private Participation in Infrastructure Project Database tracked almost 3,800 projects involving private participation in the transport, energy, telecommunications, and water and sewerage sectors of developing countries. Investment commitments to these projects totaled US$1,100 billion. For a summary of the 2006 data, click here. What resources are available to help both governments and the private sector form public-private partnerships? PPIAF is a multidonor-funded organization that assists public entities in creating and supporting public-private partnerships in infrastructure. With its partners, PPIAF has developed a range of learning tools to help governments manage the transition to more efficient and effective public service provision, with or without a public-private partnership. These tools include checklists, model documentation, and several toolkits providing guidance on best practice. PPIAF can also provide support for public-private partnerships through technical assistance and training activities. PPIAF’s new Sub-National Technical Assistance Program works with sub-national entities - municipal, state, provincial, and other local and regional governments as well as local and regional public utilities, boards, funds, agencies, and authorities – to improve their creditworthiness for accessing market-based financing. The aim of the program is to help mobilize local capital for improvements in infrastructure services and promote the development of local financial markets. PPIAF Resources To see all PPIAF’s resources on public-private partnerships, click here. Private Participation in Infrastructure Project Database The Private Participation in Infrastructure (PPI) Project Database has data on more than 3,800 projects in 150 low- and middle-income countries. It is a joint product of the World Bank’s Infrastructure Economics and Finance Department and PPIAF. The leading source on PPI trends in the developing world, the database covers projects in transport, energy, telecommunications, and water and sewerage. Other Resources Private Infrastructure Development Group (PIDG) The objective of PIDG is to provide financial, practical, and strategic support to encourage private infrastructure investment in developing countries that contributes to growth and poverty reduction. PIDG is a multidonor, member-managed organization launched in 2002. An independent, not-for-profit think tank, the Center for Global Development works to reduce global poverty and inequality by encouraging policy change in the United States and other rich countries through rigorous research and active engagement with the policy community. World Bank Knowledge Services for Financial and Private Sector Development (Rapid Response Unit) Through its Web site, the World Bank’s Rapid Response Unit offers best-practice public policy advice for private sector–led growth and financial market development in developing countries. Find expert analysis, powerful databases, quick solutions, and comprehensive “how to” guides. Public-Private Partnership in Infrastructure (PPPI) Program The PPPI program’s objective is to provide capacity building to help client governments create the proper environment for developing successful and sustainable public-private partnerships. It also aims to provide technical assistance on issues related to the design, development, and implementation of PPP programs. Global and Regional Reports Results of Railway Privatization in Africa (2005)
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