Quo Vadis PPP?

There are two extremes, how people look at PPP under current market situation. One extreme is quite negative, saying that PPPs have never worked any way, and that current turmoil on financial markets has only made it easier to recognize. On the other end of the rope are people, who see PPPs being remedy to financial crises. Most of professionals fortunately find themselves somewhere in the middle.

Sung Hoon Park, Senior Deputy Director of the Korean PPP Unit thinks that “during the time of financial crises PPPs are not the priority solution for Infrastructure financing; however Korea did use PPPs as one of the solutions to fight Asia financial crises impact in 1998-1999 and currently Korea is adopting the very same policy to rejuvenate the economy”.

David Asteraki, Director in KPMG did mention in his recent report published in May 2009 (http://www.kpmg.com.au/Default.aspx?TabID=1621), that “Despite these problems, the prospects for PPP projects are reasonably good. They are attractive to the public sector as, historically, and where projects have been suitable for a PPP, they have provided strong value for money (VFM), delivering high quality outcomes on-time and on-budget.”

And Michal Tesar, Director of NEWTON Business Development says in the last Slovak PPP Association Newsletter (http://asociaciappp.sk/) that “PPP projects are just different way of financing, but they deliver benefits in comparison with traditional procedure:
- Fixed price of project, construction and operations
- Transfer of risks to private sector party
- Diligent analyses of project using due diligence
- Access to projects whole life costs
- Focus on outputs… “

EC Harrise in its report “Is PPP Dead and Buried?” does see future of PPP more in social economic benefits rather than just looking at VFM “Greater emphasis also needs to be made towards the social economic benefits delivered to a country or region which could mean adopting a more visionary approach to PPP models to include agglomeration benefits. Failure to do so will mean that PPP projects may never get off the ground on a pure cost benefit basis.”(http://www.echarris.com/pdf/7148_Public%20Private%20Partnerships%20Expert%20View%20FOR%20WEB.pdf)

Very interesting, I am not sure, I know where the PPP is going, but one thing, I am sure of, is that PPPs are going to stay and play even more prominent role in infrastructure once the global economy and financial markets recover.