Public Private Partnership Structure Research Articles

The contribution of public-private partnership (PPP) to sustainability: governance and managerial implications from a literature review

Purpose Based on the theoretical background of stakeholder capitalism, the purpose of this paper is to contribute to the scientific debate on the topic of public–private partnerships (PPPs), considering in particular how this governance structure relates to the pursuit of sustainable development. Specifically, this objective will be pursued with a focus on stakeholder relations and governance aspects, to highlight enablers and barriers in change for sustainability. Design/methodology/approach The systematic literature review is applied starting with the use of keywords in Web of Science, which leads to the extrapolation of 629 articles on the topic of “PPP and sustainability”. Subsequently, through various skimming steps, 75 papers are sampled. A mixed (quantitative-qualitative) approach is then followed: a co-word semantic network to identify the pattern of discourse and a more in-depth and explanatory analysis of the papers. These quantitative and qualitative tools synergistically work together to evidence the main aspects related to the aim of the paper. Findings With reference to the governance structure and stakeholders of PPPs, the analyses highlight the shift towards a triadic type of relational governance that considers stakeholders (especially the community) in addition to public–private partners. This can improve the partnership's performance (particularly in sustainable development) and social legitimacy. With reference to the role of PPPs in the implementation of sustainable development, they have positive potential in terms of implementing sustainability and raising stakeholder awareness of it. Nevertheless, PPPs may entail risks to the implementation of sustainability. The findings lead to some concluding remarks on future research opportunities. Research limitations/implications The research leads to some managerial implications, such as the need to follow a competitive collaboration approach among stakeholders, to develop relational governance skills and related managerial tools and to incorporate sustainability aspects starting from the design of PPPs. Originality/value The originality aspect of this research is the consideration of a PPP by relating it to the pursuit of sustainability. Such an inter-organizational structure could be suitable to deal with the complexity inherent in the implementation of sustainability and is peculiar in terms of governance and stakeholder relations, considering that it is characterised by the presence of several partners of different nature (public and private).

Desalination of seawater in Morocco: Case study of Chtouka and Dakhla public‐private partnership projects

AbstractSituated between the southern Mediterranean and the Sahara Desert, Morocco has a semi‐arid climate characterized by low and irregular rainfall and a succession of dry years. With demographic and economic growth, the country's water needs are constantly increasing. The desalination of sea water is an option adopted by the government to cope with the drying up of water resources. A number of projects have been launched to secure the country's drinking water and irrigation needs. In this study, the contributions of the public‐private partnership (PPP) set‐up are assessed from the institutional, financial, technical, and management points of view, as well as the contribution of this set‐up to the success of major desalination projects for irrigation. To achieve the objective, the study focused on two desalination projects for irrigation, one in the Chtouka plain and another in the Dakhla area, based on an assessment of the various components of the two projects, and the key success factors for each of them. The study reveals that the PPP arrangement brings several advantages to these desalination projects for irrigation, principally: the participation of the private partner in the financing, the sharing of risks between the two public and private parties, and the sustainable management of the various components of the project. The Dakhla project also offers added value compared with other desalination PPP projects, because it is the first project to be included in Law No. 86‐12 on PPP contracts. At the same time, the PPP structure presents risks in terms of controlling delays caused by external events. Thus, the inauguration of new desalination PPP projects, as part of the Generation Green strategy, is proving to be a relevant solution for guaranteeing additional resources for irrigation and improving the technical, economic, and financial conditions for managing the irrigation water service.

Promoting the Solar Industry in Ghana through Effective Public-Private Partnership (PPP): Some Lessons from South Africa and Morocco

Over the past decades, solar energy has gained much attention in Ghana, especially after the 2012–2016 power crisis. The government through Public-Private Partnerships (PPPs) has attempted to increase the shares of solar generation to augment its efforts in reducing the energy deficit of the country, especially in remote and off-grid communities. However, the extent to which PPP has been utilized as a viable tool for solar sector development in Ghana is questionable. This study discusses the current state of PPPs in Ghana’s solar industry and compares how it has been efficiently used as a tool to promote the solar industry in South Africa and Morocco. Fundamental theories such as Altruism, Game, Principal-agent, and Pareto Optimality (PO) were used as analytical tools to examine how PPPs are handled in the selected cases. The study ascertains that the Game and PO are applicable theories that have guided SA and Morocco’s solar infrastructural development. This study discovered that PPP has been efficiently used in SA and Morocco to push its solar industry to be among the best in the world and Ghana can perfectly emulate it. The study further reveals that the Principal-agent analogy and altruistic intent of the Ghanaian government tend to discourage Private sector participation in the solar industry. It further suggests the Pareto Optimality, Game approach, and a win-win transparent attitude towards PPPs. This study recommends a well-developed PPP structure and law for Ghana. It encourages transparency and discourages partisan preferentialism to increase PPPs in Ghana’s solar industry.

Study on the selection of equity structure of PPP waste-to-energy projects from the perspective of sustainable development

The equity structure of Public-Private Partnership (PPP) projects reflects the interests of the public and private sectors, and concerns the economic, social and environmental performance of projects. In the context of the global promotion of sustainable development, optimization of equity structure from a sustainable perspective is very important for improving the sustainable performance of PPP projects. However, in the existing research, there is no quantitative model for selecting equity structure of PPP projects with the goal of improving sustainability. To address the research gap, a multi-objective programming model is developed to seek the balance of economic, social, and environmental performance of PPP projects and its rationality and practicability are verified using a case of a waste-to-energy PPP project. The study proposes a quantitative model of equity structure selection to achieve sustainability goals for PPP projects and the results are helpful for government decisions on promoting the sustainability of PPP projects.

Monte-Carlo optimization model for dynamic capital structure adjustment in Chinese public-private partnerships under revenue uncertainty

In the case of revenue uncertainty, the static capital structure predefined in the feasibility stage of Public-Private Partnership (PPP) cannot satisfy the need of dynamic adjustment in the capital structure of Chinese PPPs during project operation, thus deteriorating project financial viability in the long run. Therefore, this paper aims to propose a Monte-Carlo optimization model that can enhance the requirement of the dynamic capital structure of PPPs in the uncertain environment regarding the Chinese bridge sector. By quantifying the adjustment cost derived from changes in equity and debt, the proposed model can make a comparison analysis of dynamic capital structures of a specific project in different scenarios with three capital structure adjustment strategies adopted, respectively. In particular, the before-and-after effects and effectiveness derived from the use of government subsidies, capital market financing, and debt financing in adjusting capital structures of a PPP project, respectively, can be compared and evaluated. Based on historic data of the Hangzhou Bay Bridge (HBB) case, the imbalanced roles of the three strategies are unveiled that the strategy of government subsidies has a stronger effect as compared with the other two strategies, thereby enhancing project financial viability and sustainability. The simulation results of the HBB case further indicate that the debt financing strategy, which is the actual strategy applied to HBB can alleviate the short-term project operation pressure, but it may affect the project revenue in the long term, and aggravate the repayment risk of the project. These analyses have uncovered the strategic role of dynamic capital structure in maintaining financial viability and avoiding project bankruptcy. This model fills a gap when we need to deal with changes through dynamic capital structures in PPP projects. Several policy implications are provided in the end for transport PPP projects to improve the survival of PPPs during project operation under revenue uncertainty.

Corruption as an Obstacle to the Harmonious Development of Public-Private Partnership

This article assesses the current structure of public-private partnership in the Russian Federation. The author gave characteristics of problems faced by the commercial sector in the implementation of projects profitable for the enterprise. The author discussed the ways to address the issue of corruption in this type of relationship as well as. Based on the analysis, the author concluded that corruption activity inhibits the formation of constructive and trusting social ties, as a result of which the criminal situation worsens and the national economy becomes less competitive.

COMPARATIVE ANALYSIS OF PPP PROJECTS SECTORAL STRUCTURE IN DEVELOPED AND DEVELOPING COUNTRIES

This paper aims to compare the type of public-private partnership (PPP) projects and their sectoral structure in developed and developing countries. This will be done through a comparative analysis of eight countries that belong to the categories of developed and developing countries and besides that implement numerous PPP projects. The results of the analysis indicate that developed countries chosen for this analysis implement more projects and record a higher total value of projects. Their projects are more diversified and apart from economic infrastructure encompass social infrastructure, which does have a higher number of projects, and in some developed countries higher value than economic infrastructure sectors. There is some overlapping between the groups and the sectors as this is not a strict rule that could be applied to all the countries, as each economy is an individual and specific case. As adequate PPP structure leads to economic growth and prosperity of the national economy, it is recommended to adjust the institutional framework, laws and regulations for PPP, attract more private capital, develop basic economic infrastructure and with its help attempt to converge the PPP project structure of developing countries to that of developed countries. The final goal is to have well developed economic infrastructure and then invest more in social infrastructure projects that can affect the wellbeing of all residents in an economy

Do public-private partnerships benefit private sector? Evidence from an emerging market

PurposeWe extend the literature on Public-Private Partnerships (PPPs) to understand the benefits of these incentive-compatible contracting arrangements to the private sector firms. We argue that the unique structure of PPPs helps in mitigating information asymmetry problem that drives underinvestment in the private sector of emerging markets and thereby enhances their investment efficiency. We test this hypothesis on PPPs that occurred in India over the last one decade. MethodologyWe consider the investment-cash flow sensitivity. FindingsWe find that, compared to the matched non-PPP investments made by the private sector firms, PPP investments result in significant reduction of investment cash flow sensitivity in the post-PPP investment period. Also, in the long run, the operating performance of the private sector firms improves in the post-PPP investment period. However, these benefits are sensitive to the nature of firm, commitment level of private sector and Government concessions. Overall, our results concur with the rising popularity of PPPs. OriginalityOur paper is the first study that examines the benefits of PPP for private firms.

Advancing medical device innovation through collaboration and coordination of structured data capture pilots: Report from the Medical Device Epidemiology Network (MDEpiNet) Specific, Measurable, Achievable, Results-Oriented, Time Bound (SMART) Think Tank

The Medical Device Epidemiology Network (MDEpiNet) is a public private partnership (PPP) that provides a platform for collaboration on medical device evaluation and depth of expertise for supporting pilots to capture, exchange and use device information for improving device safety and protecting public health. The MDEpiNet SMART Think Tank, held in February, 2013, sought to engage expert stakeholders who were committed to improving the capture of device data, including Unique Device Identification (UDI), in key electronic health information. Prior to the Think Tank there was limited collaboration among stakeholders beyond a few single health care organizations engaged in electronic capture and exchange of device data. The Think Tank resulted in what has become two sustainable multi-stakeholder device data capture initiatives, BUILD and VANGUARD. These initiatives continue to mature within the MDEpiNet PPP structure and are well aligned with the goals outlined in recent FDA-initiated National Medical Device Planning Board and Medical Device Registry Task Force white papers as well as the vision for the National Evaluation System for health Technology.%.

Madhya Pradesh Housing & Infrastructure Development Board: affordable housing via public–private partnership mode

The Madhya Pradesh Housing & Infrastructure Development Board (MPHIDB) is a state‐owned entity in Madhya Pradesh State of India with the mandate of providing housing for citizens, particularly for those in the low‐income segment. MPHIDB has been constructing houses on its own using the traditional engineering and procurement contract (EPC) model. In July 2015, it was exploring the possibility of creating affordable housing units via public–private partnership (PPP). The advantage of involving private sector is that MPHIDB can tap into creative energy and construction efficiency of the private sector and deliver the best results within the given set of time and resource constraints. The proposed structure of PPP is that the private partner will be given a portion of land in lieu of the affordable housing units that it will build and transfer to MPHIDB. However, there are trade‐offs involved in doing the project in PPP mode instead of EPC mode. The main advantages of a government body like MPHDIB doing the project on its own are as follows: (a) It is able to better manage regulatory risks in terms of getting clearances, land acquisition, and so forth; (b) it can raise finances at lower interest rates than what is charged for private sector entities; and (c) the entire land parcel is available to construct houses, and hence it can get more housing units per unit of land. The Commissioner (CEO) of MPHIDB had to decide whether to go for PPP or EPC model, and if he opted for PPP, how should the PPP be structured?

An Alternative Model to Determine the Financing Structure of PPP-Based Young Graduate Apartments in China: A Case Study of Hangzhou

Public-private partnerships (PPP) can be employed to provide public rental housing for young graduates, which has been urgent to achieve social sustainability in China. However, few studies have been conducted to investigate the financing structure of PPPs, particularly the ratio of private investment, which is important in initiating a PPP project. This study develops a robust model to determine the financing structure through considering the uncertainties in operation. A case study in Hangzhou demonstrates the process of the model. The relevant findings provide private investors and the local government with effective references for negotiating the financing structure of a PPP project.

Social Innovation in Rural Taiwan: The Case of a Public-Private Partnership

How can governments, universities, and industries collaborate to create new value through new business models for service-based businesses? To answer this question, this paper takes a qualitative approach based on a three-year longitudinal study of a triple helix-structured public-private partnership (PPP) in Yilan county, Taiwan. In this case, the entrepreneurship initiative of a university-based non-profit organization connected the local government, the tourism and taxi industries, and community stakeholders with the aim of implementing a new business model for rural taxi tourism. Examining the use of advanced technology as a tool for efficient business delivery, this study demonstrates how new business models can reconnect stakeholders and redefine the taxi and tourism businesses while also enhancing the roles and careers of service providers. Making use of data from three years of field study, this paper puts forth a number of ideas with regard to what can be changed in the PPP structure such that it more effectively results in value creation for each of the participating partners. The theoretical and practical implications of this study are discussed at the end of the paper.

Meeting water demand in growing cities: a PPP project in Sudan

Significant increases in investment and improvements in management capacity are required to meet the demand for infrastructure services in the rapidly growing cities of low- and middle-income countries. Closing the infrastructure financing gap requires both public and private finance. Sudan has long experienced under-investment in potable water infrastructure, and access to clean drinking water in fast-growing Khartoum is inadequate. The Al Manara water treatment project is a success story, with capacity to deliver international standard water at scale, despite Sudan's ongoing economic difficulties. A public–private partnership structure allows timely completion of works and ensures sound management while transferring technical skills to the local utility and its Sudanese staff. The paper concludes by considering the extent to which this approach may be replicable in other cities of politically fragile countries.

Public–private partnerships in Flemish schools: a complex governance structure in a complex context

Public–private partnerships (PPPs) are used very widely but remarkably little empirical research has been published investigating the governance of PPPs. PPPs are complex infrastructure projects and present important governance challenges as the responsibilities of public and private partners are ambiguous and can be confused. This paper looks at the interactions between the elements of complexity and at the governance structure of PPPs, and their combined effect on performance. A case study in Flanders (the northern region of Belgium) is discussed.

Transaction Cost Regulation after Expropriation: Argentina's Public Utility Sector

With the passing of the Economic Emergency Act in January 2002 which froze all public utility rates and simultaneously devalued the local currency, Argentina entered a period of systematic breaches of the guarantees granted by the government to public utility investors in the early nineties. Such guarantees provided safeguards that managed to substantially reduce expropriation risk in the sector by lowering investors’ cost of capital, thus encouraging foreign capital inflows. The implementation of the Emergency Act in the country also marked the beginning of a period in which rule-based regulation of public utilities was replaced by a mechanism based on government discretion. This paper looks into the governance structure used by the government for the sector in the early nineties when the privatization process was designed and launched, and suggests what that governance structure should be today, more than a decade after the beginning of the contract breaches. Defining governance as the institutional and contractual framework within which public services are provided, the paper concludes that after a decade of systematic contract breaches and expropriations, neither the bilateral governance (i.e., government as regulator with a vertically integrated private company providing the service) adopted by the country in the early nineties nor the one that would be recommended by Williamson's taxonomy (i.e., state-owned vertically integrated companies) would be appropriate, at least in the short- and medium-term. Given that the guarantees provided to investors at the beginning of the nineties failed to prevent the contract violations, a structure that seeks to minimize the risk of a future expropriation should be based on a more market-oriented type of governance, without additional guarantees to investors. The proposed governance structure involves vertically separated companies with the current public utilities acting as OpCos, with network maintenance and commercial obligations only and without the responsibility of network expansions, a task that would be conducted by NetCos under the structure of public-private partnerships (PPP) or Special Purpose Vehicles (SPV) created for this exclusive purpose.

Financial structure of PPPs deals post‐GFC: an international perspective

PurposeThe purpose of this paper is to explore the implications of the Global Financial Crisis (GFC) on Public Private Partnership (PPP) markets around the world. Specifically, it aims to highlight the extent of over reliance on debt finance, as well as the conditions needed to attract enhanced levels of institutional investment into key infrastructural provision.Design/methodology/approachQuantitative insight for the paper is derived from the Infrastructure Online Database. TheInfrastructure Journal(IJ) Online Database profiles PFI/PPP deals around the world depicting the key actors involved, as well as the capital value of deals and the financial structures applied in terms of debt, equity and Multilateral and Government Finance. The quantitative insight derived from theIJdatabase is complemented by interview evidence and forum‐based discussion. In total, 38 interviews were conducted with a diverse range of key stakeholder groupings from across the public and private sectors, including government advisers, client side representatives (Health and Education sectors), contractors, financiers and FM providers. Interviewees were drawn from five key PPP markets at different stages in the maturity cycle, namely, Australia, Canada, India, the UK and the USA. In addition to the interviews, three forum‐based discussions were undertaken as part of the investigation exploring the key themes to emerge from the interviews from multi‐stakeholder perspectives.FindingsThe findings from the study highlight a number of inherent deficiencies in the PPP model, including the over reliance on private sector debt. Additionally, the research profiles the extent and form of national government interventions in PPP markets around the world, highlighting the need for a more innovative, sustainable and balanced funding frameworks for essential infrastructure conducive to the next economic/financial cycle.Originality/valueThis study is distinct in that it examines the cross‐jurisdictional implications of the global financial crisis on PPP markets.

Preface: building trust in agricultural biotechnology partnerships

The 2011 famine in the Horn of Africa and the spectre of food price volatility have led to renewed interest in boosting local agricultural production in Africa. The surge in interest is occurring at a time when the impact of climate change on agriculture is becoming a central theme in policy discourse. These trends are inspiring the need to foster agricultural research as a way to raise productivity, diversify production and protect the environment [1]. It is widely held that long-term strategies to boost African agriculture will have to include the application of biotechnology. However, policy discussions on the role of biotechnology in African agriculture are marked by widespread distrust. The main sources of the distrust include concerns over the safety of genetically modified organisms (GMOs), fear of corporate control of the food sector, and uncertainty over the workings of publicprivate partnerships (PPPs). The collection of papers in this special issue sheds light on why establishing trust among business, government, research institutions and the public is central to efforts to introduce agricultural biotechnology. The authors of these papers draw from experiences in Burkina Faso, Egypt, Kenya, Nigeria, South Africa, Tanzania, and Uganda to provide lessons for building effective partnerships based on trust. In addition, the papers contain real-life examples that show which PPPs have worked well, what undermined their evolution, and how their lessons could be shared to inform policy decisions and practical actions. The papers are being published at a critical moment in the evolution of African agriculture. First, the continent is currently considering ways to become an important player in global agricultural production. The strategies being pursued by most countries in Africa include consideration of the role of agricultural biotechnology. By 2011, only three African countries (Burkina Faso, South Africa and Egypt) were commercially producing genetically modified (GM) crops. Recent decisions in Kenya to adopt a law that would approve the cultivation of GM crops, for example, were accompanied by extensive debates that underscored the importance of building trust in the technology. Second, discussions over the introduction of GM crops are occurring in the context of broader interest among African countries to put science and technology at the center of their development strategies. Much of this interest has been inspired by the dramatic benefits that mobile phones have brought to the continent. Two decades ago, mobile phones were viewed with the same suspicion and concerns over trust in related information technologies; such automation raised concerns over their implications for employment. The evolution of mobile technology in Africa now serves as a reference point in balancing between the benefits and risks of new technologies. These lessons are likely to lead to discussion on agricultural biotechnology. Third, there is an increase in the number of PPPs seeking to foster the adoption of agricultural biotechnology. Those involved in these partnerships are seeking ways by which they can address the general anxiety arising from uncertainty over the structure, performance and benefits of PPPs. These actors will find valuable lessons in these papers on how to address such concerns. These articles differ from much of the material available today in several important ways. First, they open the door for exploring the theoretical and practical implications of focusing on trust as a way to build confidence in new technologies. Second, they provide inspirational practical examples in each of the countries and institutions analyzed. Finally, they will be invaluable to a wider audience, including policy makers; donors; entrepreneurs; researchers; investors; and students of agricultural policy.

The diffusion of risks in public private partnership contracts

PurposeThe UK government argues that the benefits of public private partnership (PPP) in delivering public infrastructure stem from transferring risks to the private sector within a structure in which financiers put their own capital at risk, and the performance‐based payment mechanism, reinforced by the due diligence requirements imposed by the lenders financing the projects. Prior studies of risk in PPPs have investigated “what” risks are allocated and to “whom”, that is to the public or the private sector. The purpose of this study is to examine “how” and “why” PPP risks are diffused by their financiers.Design/methodology/approachThis study focuses on the financial structure of PPPs and on their financiers. Empirical evidence comes from interviews conducted with equity and debt financiers.FindingsThe findings show that the financial structure of the deals generates risk aversion in both debt and equity financiers and that the need to attract affordable finance leads to risk diffusion through a network of companies using various means that include contractual mitigation through insurance, performance support guarantees, interest rate swaps and inflation hedges. Because of the complexity this process generates, both procurers and suppliers need expensive expert advice. The risk aversion and diffusion and the consequent need for advice add cost to the projects, impacting on the government's economic argument for risk transfer.Originality/valueThe expectation inherent in PPP is that the private sector will better manage those risks allocated to it and because private capital is at risk, financiers will perform due diligence with the ultimate outcome that only viable projects will proceed. This paper presents empirical evidence that raises questions about these expectations.

JESSICA und Stadtentwicklungsfonds — Neue Aufgaben für alte Landesentwicklungsgesellschaften?

The JESSICA-initiative of the European Commission and the European Investment Bank allows implementing innovative instruments to enhance investments in sustainable urban development. This article analyzes possible duties of the German regional development companies in the new field of urban development funds. As they are experienced players in the compliance of public objectives of urban development, the regional development companies have profound knowledge of the JESSICA-approach’s core areas. Given their experience in the field, the regional development companies could assume the selection and the control of urban development projects within a new structure of public private partnership in an urban development fund.

The Rise and Rise of Public Private Partnerships: Challenges for Public Accountability

The increasing popularity of public private partnerships (PPPs) thrusts on to centre stage the inherent tension between accountability and transparency on the one hand, and efficiency and commerciality on the other. This paper explores a number of accountability issues that are exacerbated by a public private partnership structure. The organisational structure of a PPP, where much of the activity associated with the delivery of a public service is embedded in a private‐sector entity, increases the likelihood that public scrutiny of decisions and actions is significantly inhibited