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Public Private

Partnerships
Public Private Partnership
Definition
A public-private partnership exists when
public sector agencies (federal, state, or
local) join with private sector entities
(companies, foundations, academic
institutions or citizens) and enter into a
business relationship to attain a
commonly shared goal that also achieves
objectives of the individual partners.
Contd:

 A public-private partnership is a contractual


agreement formed between public and private
sector partners, which allows more private
sector participation than is traditional.
 Public-private partnership (PPP) describes a
government service or private business venture
which is funded and operated through a
partnership of government and one or
more private sector companies. These schemes
are sometimes referred to as PPP, P3 or P3.
 Capital investment is made by the
private sector alone or by both private
and public sector depending on the
strength of a contract with government
to provide agreed services and the cost
of providing the service is borne wholly
or in part by the government.
 Eg. Central park in New York City,
Indiana East West Toll Road, State
Route in California.
Features:

 Two or more participants


 Each participant is a principal i.e
equal bargaining powers
 Stable Relationship
 Contribute in terms of materialist
( Eg. Land, Labour ) or immaterialist
resources
( Eg. Authority or symbolic values).
 Both the parties are equally
responsible and accountable.
Typical Uses

Contracting with a private company to:


 Renovate
 Construct
 Operate
 Maintain
 And/or Manage a facility or system
Why ???
Traditional funding sources are not keeping pace with infrastructure investment needs and the growing public demand for services.
 P3 is a tool that can help governments meet demands for the development of modern and efficient facilities, infrastructure and services
 while providing value for taxpayers.
Benefits
 Expedited project completion
 Project cost / Time savings
 Improved quality
 Use of private resources
 Access to new sources of private
capital
Four Basic Dimensions of P3

Although each is unique, all P3’s include four basic


characteristics:
 Shared goals
 Shared resources (time, money, expertise, people)
 Shared risks
 Shared benefits
Issues:
 Services rendered by private sector are at
substantially higher cost than could have been
achieved under the standard model of public
procurement.
 The central problem was that private investors
demanded and received a rate of return that was
higher than the government’s bond rate, even
though most or all of the Income Risk associated
with the project was borne by the public sector.
Getting Started
 How do you create one?
 How do you implement one?

A Public entity’s perspective of finding


and contracting with the best private
sector partner.
Pitfalls of PPP

 Unequal Responsibility
 Conflict of Interest
 Lack of Transparency and
Accountability
 The Future Promise
Typical Funding Sources
 Tolls
 Fees(Central park Manhatan)
 Grants(e.g Pfizer)
 Loans(ADB,WB)
 Bonds
Two Major Steps
 Crafting the Partnership
 Implementing the Partnership

CRAFT IMPLEMENTATION
The The
Strategy Strategy
Six
Distinct 1. Genesis
Phases 2. Feasibility

3. Plan & Test

4. Procure

5. Implement
6. Operations
Genesis
 What’s the need
 Is there a need for a Public/Private
Partnership?
 Establishing the goal
 Idea Generation
 Alternative Idea
Feasibility
 Is a Public/Private Partnership
feasible, not only financially, but
practically? Can it be done?
 Market Research
 Economic/Financial Analysis
 Program, Budget and Schedule
 Risk Analysis
Plan and Test
 What is the best way to complete the
project?
 Has the plan been thoroughly tested to
assess market demand, public and
stakeholder feedback and economics?
 Master Schedule/Budget
Procurement and Contracting
 How do you choose and contract with
the best-value private partner?
 Procurement Approach
 Sole Source, Bid

 Risk Allocation between Public and


private Partners
Implement
 Design

 Permitting

 Construction

 Administration
Operate
 Startup
 Monitoring
 Enhancement
 Contract extension
GIVE AWAY PROGRAM-HIV (PFIZER and
Uganda Govt.)
 DISEASE BURDEN HIGH—ABOUT 85,000
DEATHS/YEAR;HOSPITALS FULL OF DYING
PATIENTS-HOPELESSNESS PERVASIVE
 AFFECTING ALL SEGMENTS OF SOCIETY
With the help of the PPI -Uganda improve
Infrastructure
Hospitals, easy Availability of medicine.
Pfizer
 SEVERAL RESEARCH PROJECTS FUNDED
 PREVENTION INITIATIVES TO ASSIST MoH—
GATES GRANT 3.5MILLION
Medicines for Malaria Venture (MMV)

 Medicines for Malaria Venture (MMV), a not-for-


profit public-private partnership, was established
as a foundation in Switzerland in 1999.
 The Chairman of the Board of MMV is
Lynda Chalker.
 African nation are the most affected by the
malaria.e.g-Congo, Ethiopia, Tanzania and
Kenya,Nigeria.
 It is dedicated to reducing the burden of malaria
in disease-endemic countries by discovering,
developing and facilitating delivery of new,
effective and affordable antimalarial drugs.
Highways

 With an extensive road network of 3.3


million kilometers, India is the second
largest in the world.
Target
 Developing 10,000 km of expressways
 Four-laning 20, 000 km of national highways
 Widening 20,000 km of national highways to two lanes

Policy
 100% FDI under the automatic route is permitted for
all road development projects
 100% income tax exemption for a period of 10 years
Private Players
 L&T inter-state Road Corridor Limited
 Lanco Infratech
 DS Construction
PORTS
Target

The Government of India targets to increasing the cargo handling


capacity of major ports by two folds to reach 1.5 billion metric tonnes
(MT) by the year 201
Private Participation
 A leading private shipyard, ABG Shipyard has decided to set up a
greenfield shipyard in south Gujarat with an investment of USD 255.58
million. The new shipyard will be set up over 300 acres.

Gujarat-based Adani group is setting up a ship building and repair yard


at about USD 212.98 million.

Larsen and Toubro Ltd has chosen Kattupalli port, in Thiruvallur


district, near Chennai, as the location to build the over USD 425.97
million mega- shipbuilding yard.

Major shipping companies, such as Shipping Corporation of India (SCI),


Great Eastern (GE) and Essar have placed orders worth USD 3.3 billion
for 58 ships in Korea and China.
Conclusion

Questions
and
Discussion

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