What does it Public Private Patnership?
Public Private Partnerships or ppp refers to the arrangement of collaboration and joint involvement of the government and the private sector in projects of public interest. It is usually signed in for large-scale government projects, such as roads, bridges, or hospitals etc.
Role Of The Public Sector In This Model
· Full retention of responsibility for the allocation and completion of the project. · Ensures that there is a well-defined risk allocation for the project. · Provides performance linked payments to the private sector entity.
Role Of The Private Sector In This Model
· Investments are undertaken by the private sector. · The technology and innovation are brought in by the private sector.
Different Modes Of ppp
Here is a non-exhaustive list of the different modes of public private partnership - · Build-operate-transfer model (BOT) is a conventional model wherein the private partner is responsible to design, build, operate the project during the contractual period and is later supposed to transfer the facility back to the government. · Build-own-operate model (BOO) is a model wherein the ownership rests with the private party and the public sector partner agrees to purchase the goods and services produced by the project. · Build-operate-lease-transfer (BOLT) is a model in which the government gives a concession to a private entity to build, own and lease the facility to the public sector for a specified period and transfer its ownership to the government at the end of this period. · Lease-Develop-Operate (LDO) is a model in which the public sector retains ownership of the newly created infrastructure facility and receives payments in lieu of the lease agreement with the private party.
Areas Best Suited For ppp
· Information infrastructure projects such as e-governance gateways; · Government-to-Business Projects such as e-procurements; · Government-to-Citizen Projects such as Integrated Service Centres; · Government-to-Government Projects such as online data-capturing; · Infrastructure projects such as airports, roads, highways etc.
Advantages Of ppp Projects
· The infrastructure projects reach fruition faster. · Combines accountability with efficiency. · Private resources are leveraged for public benefit.
Challenges In ppp Projects
· Contractual loopholes and regulatory hurdles · Crony capitalism is rampant. · Many projects are run by politically connected firms. · Repeated negotiations and renegotiations result in a strain on public resources. · The private sector creates a moral hazard by their opportunistic behaviour.
Note: The Vijay Kelkar Committee has offered valuable input on revitalising the ppp model.