A Public Private Partnership (PPP) is a contractual arrangement between a public entity and a private sector party, with clear agreement on shared objectives for the production of public infrastructure and services traditionally provided by the public sector. PPPs can have many different forms.
Required:
Explain the following types of Public Private Partnership arrangement
i) Operating and Maintenance Contract (2.5 marks)
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This model is when the public authority contracts with a Private Partner to operate and maintain a publicly owned facility or infrastructure. The private sector is partially involved, for example it provides a service or manages the operation. Services or management contracts allow the private sector to provide infrastructure related service for specified periods of time.
ii) Rehabilitate Operate and Transfer (2.5 marks)
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The initial worn-out asset is provided by the public agency requiring the private partner to invest in revamping the asset and allowed to operate it for a specified period and residual asset transfer to the consolidated fund.
iii) Service Concession (2.5 marks)
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Service concession arrangements involve contracts under which a public sector entity (‘grantor’) grants a private entity (‘operator’) the right to operate the grantor’s infrastructure (e.g., an airport, toll road, bridge, hospital, power distribution). The infrastructure may already exist or may be constructed by the operator. The concession arrangement may also require significant upgrades to the infrastructure without any equity right to the operator. The operator is allowed to recoup its investment over a specified contract period and return the residual asset to the grantor (government).
iv) Joint Venture (2.5 marks)
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This takes place when the private and public sectors jointly finance, own and operate a facility.