Private Sector Involvement in Public Private Partnerships: Arlene C. Mendoza

Private Sector Involvement
in Public Private
Partnerships
Arlene C. Mendoza
Public-Private Partnerships (PPPs)
An Overview
Defining Public-Private Partnerships
The term “public–private partnership” describes a range of

possible relationships among public and private entities in the
context of infrastructure and other services. Other terms used
for this type of activity include private sector participation
(PSP) and privatization. While the three terms have often been
used interchangeably, there are differences:
3
PPPs present a framework that—while engaging the

private sector—acknowledge and structure the role for
government in ensuring that social obligations are met
and successful sector reforms and public investments
achieved.
4
A strong PPP allocates the tasks, obligations, and risks among the
public and private partners in an optimal way. The public partners
in a PPP are government entities, including ministries,
departments, municipalities, or state-owned enterprises. The
private partners can be local or international and may include
businesses or investors with technical or financial expertise
relevant to the project. Increasingly, PPPs may also include
nongovernment organizations (NGOs) and/or community-based
organizations (CBOs) who represent stakeholders directly affected
5
by the project.
Effective PPPs recognize that the public and the private sectors
each have certain advantages, relative to the other, in performing
specific tasks. The government’s contribution to a PPP may take
the form of capital for investment (available through tax
revenue), a transfer of assets, or other commitments or in-kind
contributions that support the partnership.
6
The government also provides social responsibility,

environmental awareness, local knowledge, and an ability to
mobilize political support. The private sector’s role in the
partnership is to make use of its expertise in commerce,
management, operations, and innovation to run the business
efficiently. The private partner may also contribute investment
capital depending on the form of contract.
7
PSP is a term often used interchangeably with PPPs. However,

PSP contracts transfer obligations to the private sector rather than
emphasizing the opportunity for partnership. In the mid to the
late 1990s, there was a slowdown in public–private contracting in
infrastructure sectors, which was largely precipitated by a social
backlash against the perceived preference for the private sector
over the public sector in delivering infrastructure services in
developing countries.
8
To some degree, the social backlash was rooted in confusion

between PSP and privatization. Some PSP schemes were overly
ambitious and the social agenda was overlooked, leading to
legitimate public concerns. The critical analysis of PSP
experience has led to the design of a new generation of
transactions, which are now more commonly known as PPPs.
9
Private-sector involvement in public private partnership
Multi-Stakeholder Governance Model
Multi-stakeholder Governance Model
▪ Multistakeholder Model is an organizational framework or

structure which adopts the multistakeholder process of
governance or policy making, which aims to bring together the
primary stakeholders such as businesses, civil society,
governments, research institutions and non-government
organizations to cooperate and participate in the dialogue,
decision making and implementation of solutions to common
problems or goals.
11
Multi-stakeholder Governance Model
12
Public / Social / Partnership (PSPP)
▪ The name “public social private partnership” (PSPP) is

a development of Public Private Partnership (PPP).
▪ PPP is one expression of a strong trend towards (re)
privatisation, which in some European countries has
arisen as a result of more difficult economic conditions
in recent years and the associated structural crisis in the
public sector (see Eschenbach, Müller, Gabriel: 1993).
14
▪ In political discussions, lack of public funds is often

put forward as a limit on state activities. Instead of
financing infrastructure projects alone, the government
increasingly looks to cooperation's with private
investors.
15
▪ Compared to providing the service directly, in a PPP the state

can concentrate on its core competences. The state does not
need to allocate experts of its own for the implementation of
the project and is thus less intimately involved.
▪ Additionally, PPPs exhibit a trend away from conventional,
tax-based financing approaches towards financing through
contributions of individual users (e.g. tolls for motorways).
16
▪ Also, the EU policy on competitive tendering of public

works and services has forced changes towards a more
market-oriented approach to delivering tasks for which
the state is responsible.
17
▪ Public private partnership contrasted with

conventional provision of public services PPPs can
be said to differ from other forms of provision of
public services in the following 3 points:
▪ In PPPs, the ownership of the project is shared. The
heart of a PPP is thus the sharing of risks and profits.
18
Private Participation in Railway Share
▪ Public–private partnership (PPP) has been used by various

countries worldwide as one of the tools to cope with the lack of
funding by the government in providing public infrastructure.
Western and central European countries use this type of partnership
to gain project advantages through a division of responsibility
between the public and private sectors. Private participation was
also adopted in other parts of the world such as the United States
and eastern countries in Asia to mitigate risk that occurred in the
project development and share equal responsibility in terms of
project ﬁnance and resources in the longer-term 20
▪ Southeast Asian countries such as Malaysia, Singapore, Thailand,

Vietnam, Philippines, and Indonesia also adopt the concept of PPP
in the past decade mainly to expand state capability in providing
physical assets for the public, and to reduce monopoly in the
market. This scheme oﬀers a prospective scenario for the public
agency by providing maximum value for money in the project
through life cycle cost optimization and market competition. PPP
encourages the government to focus on services for public interest
and supporting policy and regulation, rather than dealing with asset
procurement and project operation . 21
▪ PPP in Southeast Asian countries is still limited. The Philippines

successfully awarded 16 PPP contracts worth $6.4 billion since
2010 including airports, toll roads, education buildings, and water
supply. In Thailand, there are 44 PPP projects ranging from
transportation and logistics, utilities
22
▪ PPP in Southeast Asian countries is still limited. The Philippines

successfully awarded 16 PPP contracts worth $6.4 billion since
2010 including airports, toll roads, education buildings, and water
supply. In Thailand, there are 44 PPP projects ranging from
transportation and logistics, utilities, telecommunication, and
property development.
23
Privatization
Privatization
▪ Definition: The transfer of ownership, property or business

from the government to the private sector is termed
privatization. The government ceases to be the owner of the
entity or business.
25
Privatization
▪ Description: Privatization is considered to bring more

efficiency and objectivity to the company, something that a
government company is not concerned about. India went
for privatization in the historic reforms budget of 1991, also
known as 'New Economic Policy or LPG policy'.
26
Privatization
▪ The process in which a publicly-traded company is taken

over by a few people is also called privatization. The stock
of the company is no longer traded in the stock market and
the general public is barred from holding stake in such a
company. The company gives up the name 'limited' and
starts using 'private limited' in its last name.
27
REFERENCES
▪ Asian Development Bank (ADB), Private-public

Partnership Handbook
▪ Asian Development Bank (ADB), PhiLiPPines:

PUBLic-PrivAte PArtnershiPs By LocAL Government
Units
28
THANKS!
29

Private Sector Involvement in Public Private Partnerships: Arlene C. Mendoza

Uploaded by

Copyright:

Available Formats

Private Sector Involvement in Public Private Partnerships: Arlene C. Mendoza

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Private Sector Involvement in Public Private Partnerships: Arlene C. Mendoza

Uploaded by

Copyright:

Available Formats

Private Sector Involvement

The term “public–private partnership” describes a range of

PPPs present a framework that—while engaging the

The government also provides social responsibility,

PSP is a term often used interchangeably with PPPs. However,

To some degree, the social backlash was rooted in confusion

▪ Multistakeholder Model is an organizational framework or

▪ The name “public social private partnership” (PSPP) is

▪ In political discussions, lack of public funds is often

▪ Compared to providing the service directly, in a PPP the state

▪ Also, the EU policy on competitive tendering of public

▪ Public private partnership contrasted with

▪ Public–private partnership (PPP) has been used by various

▪ Southeast Asian countries such as Malaysia, Singapore, Thailand,

▪ PPP in Southeast Asian countries is still limited. The Philippines

▪ PPP in Southeast Asian countries is still limited. The Philippines

▪ Definition: The transfer of ownership, property or business

▪ Description: Privatization is considered to bring more

▪ The process in which a publicly-traded company is taken

▪ Asian Development Bank (ADB), Private-public

▪ Asian Development Bank (ADB), PhiLiPPines:

You might also like