Paving the Way for Public–Private Partnerships in Infrastructure Development

Abstract

Infrastructure privatization has multidimensional impacts with long-term uncertainties and wide risk portfolios. A wide range of barriers to public–private partnerships (PPPs) in infrastructure development have been identified through a questionnaire survey, which are broadly classified into six aspects: (1) social, political, and legal risk; (2) unfavorable economic and commercial conditions; (3) inefficient public procurement framework; (4) lack of mature financial engineering techniques; (5) problems related to the public sector; and (6) problems related to the private sector. To explore measures for removing these barriers, a systematic research approach (literature review, case studies and interviews/correspondences with experts and experienced practitioners) has been taken to draw experience, learn lessons, and benchmark the best practices in international PPPs. An improved PPP protocol for infrastructure projects in general has been developed, addressing key issues in nine areas: (1) appropriate roles of governmental authorities; (2) best value for money approach; (3) effective management of adviser services; (4) formulation of appropriate PPP schemes; (5) use of relational contracts; (6) improvement of the procurement framework; (7) payment structure; (8) contract monitoring, termination, and step-in rights; and (9) transfer management. Effective measures for successful PPPs are identified in each of the nine areas.