Finding Credible Information About Public-Private Partnerships

Posted by Eivind Tandberg.

 

Many countries pursue public-private partnerships (PPP) as a mechanism to enhance the efficiency of public spending and to broaden the financing options for public services. For many transition and developing countries, the PPP concept is still new, and many countries do not yet have any PPP projects in operation. There is emerging awareness of the risks and potential benefits of PPPs, but countries often find it difficult to fully assess these aspects when developing PPP projects.

 

There is considerable demand for information about PPPs, and a number of information resources are available. However, much of the information is provided by entities that have strong interests in promoting PPPs, such as national PPP agencies, legal firms and financial market participants. It is often difficult to find objective and neutral information. This post suggests a few sources that contain interesting materials, but does not pertain to be exhaustive. There are obviously many other reliable and valuable sources in this sector.

One useful information source is the website of the Public-Private Infrastructure Advisory Facility (PPIAF), a multi-donor initiative which is managed by the World Bank (website). PPIAF helps governments improve infrastructure by sharing best practices and through technical assistance. The website contains links to a very comprehensive database of infrastructure projects with private participation (not only PPPs), sorted by region, sector, country, etc, as well as other knowledge resources. A PPIAF “Assessment of the Impact of the Crisis on New PPI Projects” concludes that:    "Private infrastructure projects in developing countries continue to take place but projects are being affected by the financial crisis. In the first months of the full-scale financial crisis (Aug—Nov 2008), the rate of project closure was 26% lower than in the same period in 2007. However, since then private activity recovered and the project closure rate in Aug—Dec 2008 was just 15% lower than in the same period in the previous year. The slowdown reflects an initial impact of the financial crisis which has made financing (both debt and equity) more onerous and difficult to secure. Infrastructure projects are facing higher cost of financing, and lower demand for infrastructure services is beginning to impact some sectors. The major impact to date is projects being delayed, and, to a lesser extent, cancelled. Transport and energy are the worst affected sectors so far, while ECA and upper middle income countries are the most affected groups of countries. It is too early to assess the full impact of the crisis on new PPI projects.  Financial markets remain volatile while the financial crisis has now turned into a global economic crisis. As the “flight to quality” sets in for banks and other financiers, the likely impact will be more stringent financial conditions, not only via higher cost of financing but also with lower debt/equity ratios, reduced maturities and more conservative risk allocation structures."   The European PPP Forum (website) is operated by the European Institue of Public Administration (EIPA). “The Forum aims to become Europe's PPP observatory - assessing the current role of public-private partnerships in delivering public services and their potential future role in doing so and using experience to date to develop a common assessment of the risks, challenges and opportunities arising from the use of PPP.” The website contains links to material and to PPP courses run by EIPA, as well as recent developments in the European PPP sector.   The web portal www.publicservice.co.uk provides a number of online publications and information services related to the public sector in the United Kingdom. This includes a PPP yearbook. The 2009 edition provides an overview of recent development and prospects in the UK PPP market, which probably is the most developed anywhere in the world. This includes an overview by sector, a list of major PPP projects and views of different stakeholders about how the credit crunch will impact the PPP market.   Finally, a 2005 publication by the South African Institute of International Affairs:  Assessing PPPs in Africa  remains one of the more interesting studies of PPPs in developing countries. The report describes eight case studies from different African countries and draws several lessons on the basis of these studies. It concludes that "those partnerships that have been most successful in Africa have been characterized by thorough planning, good communication, strong commitment from both parties and effective monitoring, regulation and enforcement by government."

Comments

[Andy Wynne]

From a different perspective of recognising the very real risks involved with PPPs see:
http://www.psiru.org/reports/2009-01-crisis-2.doc

This report notes that: The credit squeeze and recession are combining to make PPPs almost impossible to finance, anywhere in the world. Traditional government borrowing and procurement can still be used to implement infrastructure programmes.

[Ismail]

The web portal www.publicservice.com -- should be
http://www.publicservice.co.uk/

-Ismail

[Mike Burnett, European PPP Forum, European Institute of Public Administration]

This is a very valid point - even before the credit crunch it was difficult to find out if PPP in delivery was value for money (as compared to procured VFM)

Now, there's much greater coyness around financing, as deals chase money rather than money chasing deals