There are a range of economic, social and political motivations for developing PPPs:
- The sharing or apportionment of risk
- The integration of specialist yet complementary skill sets
- Improved efficiency
- The provision of a recognized investment vehicle to attract private sector investment.
There are also complexities:
- International PPP markets are at very different stages in the maturity cycle
- Cross-jurisdictional evaluation is problematic.
- There are subtle differences in legislative frameworks and tendering processes.
Relatively active, particularly in Canada. Canada has seen a substantial spread of social and economic infrastructure, including hospitals, schools, judicial and office accommodation, and now has a greater focus on infrastructure and transportation. Although the market has slowed recently, Canadian PPP looks here to stay. With a model based on that of the U.K. but with a simpler and perhaps more efficient structure, it is a great benchmark for other emerging markets to emulate.
The U.S. has seen growth in the popularity of transportation PPPs, but has yet to adopt a uniform approach to social infrastructure projects. Risk allocation and financing arrangements differ from case to case, with few taking a whole life approach to incorporate operations and maintenance obligations tied to performance-based payment structures. However, California’s Long Beach Courthouse, which reached Financial Close last year, will be the first of its kind to adopt this approach and will much more closely resemble the “global” model.
Faithful+Gould has been the trailblazer for all PPP projects in Singapore, tipped as the hub or gateway for future Asian PPP. We recently acted as funder’s Technical Adviser on the $1.6billion Singapore Sports Hub PPP. This is the world’s first PPP-procured sports stadium, incorporating 55,000 seats and the world’s thinnest and widest retractable roof. The project won Project Finance magazine’s Global PPP Deal of the Year 2010.
There is currently real interest and appetite for PPP in the Middle East. Faithful+Gould is working with local partners in Kuwait and the UAE to develop accommodation and transportation-based PPP and BOT (Build Operate Transfer) projects.
What makes a successful PPP project in an emerging market?
- Clear objectives from the outset, with
- Transparent evaluation criteria and processes defined at a very early stage.
- Political, economic and financial risks
- Risks associated with the lack of managerial skills
- Inadequacy of institutions
- Corruption and lack of transparency
- Social issues and income inequalities in the local operating environments.
Faithful+Gould can help
Our global network provides PPP expertise and advice to a wide range of governments. We bring global best practice to localized delivery, offer problem solving for community and environmental benefit, and actively drive the carbon agenda.