Two reports about the Public Public Partnership (PPP) model, written 2010 and 2011 by Lars M Andersson, have now been published in a pdf on this site. The studies are in Swedish, but here is a short summery of the content:
The first report, written in 2010, contains a study of the advantages and disadvantages of using PPP as a way of producing local infrastructure investments.
This part commences with a definition of what PPP is and how it is, in most cases, organised. The development from Margret Thatcher’s introduction of PPP to the present situation in Europe is described. The debate in the UK has now turned to more and more of criticism of this model.
The text puts specific focus on the use of PPP in the Nordic countries. In Sweden the first real PPP was the building of a new hospital in Stockholm, Nya Karolinska Solna. This project is described in the report. In Denmark, the local government funding agency, Kommunekredit, has introduced their own model for the financing through PPP.
Part I also contains an analysis of the driving forces behind PPP and how PPP is marketed to local authorities.
Here you find an analysis of PPP, divided into the following areas:
▪ Risk spreading
▪ Future flexibility
▪ Secondary market performance
The reports conclude by arguing for that PPPs in most cases are not suited for public infrastructure investments. The capital cost of a PPP is practically always higher then if the public entity would have borrowed the capital on their own. Furthermore there is no proof that this is outweighed by higher cost-efficiency. That the risks are being spread to the private party to a certain degree is true, but the public side will always retain the most significant risks. Furthermore, the procurements of PPP-projects increasingly face a lack of competition on account of the high costs for private enterprises to participate in such a process. PPP can, with the very long-term contracts, work against future flexibility and the secondary market is a proof that the public sector is paying far too much for many PPP-projects.
The second report was written in 2011 and surveys the discussion about PPP in the UK. The following publications are analysed:
▪ September 2011: House of Commons, Public Accounts Committee, Lessons from PFI and Other Projects, Forty-Fourth Report
▪ September 2011: European PPP Expertise Centre (EPEC), Market Update – Review of the European PPP Market, first semester of 2011
▪ August 2011: House of Commons, Treasury Committee, Private Finance Initiative, Seventeenth Report of Session 2010-12,
▪ June 2011: European PPP Expertise Centre (EPEC), The Non-Financial Benefits of PPPs – A Review of Concepts and Methodology
▪ Maj 2011: New Local Government Network, Localist Capital Finance – the Challenges Ahead
▪ April 2011: National Audit Office, Lessons from PFI and Other Projects
▪ April 2011: Unison, The Role of Private Finance in Public Investment
▪ Januari 2011: European Services Strategy Unit, Research Report No. 4: The £10bn Sale of Shares in PPP Companies – New Source of Profits for Builders and Banks, Dexter Whitfield