2. DEFINITION
A public-private partnership exists when
public sector agencies (central, state, or
local) join with private sector entities
(companies, foundations, academic
institutions or citizens) and enter into a
business relationship to attain a
commonly shared goal that also
achieves objectives of the individual
partners. 2
3. NEED OF PPPS IN INDIA
Traditional funding sources are not
keeping pace with infrastructure
investment needs and the growing
public demand for services.
In
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5. PPP MODELS
Build-operate-and-transfer: A contractual arrangement whereby the project company
undertakes the construction, including financing, of a given infrastructure facility, and the
operation maintenance thereof. The project company operates the facility over a fixed term and
at the end of the fixed term, the project company transfers the facility to the government agency
or local government unit concerned.
Build-and-transfer: A contractual arrangement whereby the project company undertakes the
financing and construction of a given infrastructure or development facility and upon completion
turns it over to the government agency or local government unit concerned, which shall pay the
company on an agreed schedule its total investments expended on the project, plus a
reasonable rate of return thereon.
Build-own-and-operate: A contractual arrangement whereby a project company is authorized
to finance, construct, own, operate and maintain an infrastructure or development facility from
which it is allowed to recover its total investment, operating and maintenance costs plus a
reasonable return thereon by collecting tolls, fees, rentals or other charges from facility users
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6. FOUR BASIC DIMENSION OF P3
Although each is unique, all P3’s include four basic
characteristics:
Shared goals.
Shared resources(time, money, expertise, people).
Shared risks.
Shared benefits.
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8. BENEFITS
Access to private sector finance.
Efficiency advantages from using private sector skills
and from transferring risk to the private sector.
Potentially increased transparency.
Enlargement of focus from only creating an asset to
delivery of a service, including maintenance of the
infrastructure asset during its operating lifetime.
This broadened focus creates incentives to reduce the
full life-cycle costs (i.e. construction costs and operating
costs).
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9. DE-MERITS OF P3
User has to pay toll/ user charges for a service
which the user had been availing free of cost in the
past.
Public-private partnership project comprises high
level of risk.
Long-term contracts under public-private
partnership cannot forecast all project parameters
with accuracy, and any contract revision/ adaptation
may be looked upon with suspicion.
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