PUBLIC PRIVATE PARTNERSHIP

2. Public Private Partnership broadly refer to long term, contractual
partnership between the public sector & private sector,
particularly aiming towards funding, designing, executing &
operating infrastructure facilities & services that are
conventionally done by Government.
These collaborative projects are built around the expertise &
capacity of the project partners & are based on a contractual
agreement, which ensures appropriate & mutually agreed
allocation of resources, risk & returns.

3. This method of developing and operating public utilities and
infrastructure by the private sector under terms and conditions
agreeable to both the government and the private sector is
called public private partnership (PPP).

4. Categories of Public Private Partnership (PPP)
1. Service Contract
2. Lease Contract
3. Joint Ventures
4. Built Operate Transfer
5. Concessions

5. 1. Service Contract:
a. Under service contract, the Government hires a private
company to carry out one or more identified tasks or services
for a period of one to three years.
b. Governments remains the primary provider of the infrastructure
service & contracts out only portions of its operationto the
private player as partner.

6. c. The private partner needs to perform the service at the fixed cost
& must normally meet performance standards set by the
government.
d. The Government makes payments to the private partner a fixed
fee for the service, which may be a onetime fee, based on unit
cost, or some other basis.

7. 2. Lease contract:
a. In a lease contract, the private partner is legally responsible
for the service in its entirely & undertakes commitments
relating to quality & service standard.
b. But for new & replacement investments, which remain the
responsibility of the Government, the operators provides the
service at their expense & risk.

8. 3. Leasing contract is typically for a period of 10 years &
may be renewed for up to 20 years.
4. Obligation for service provision is moved from the
government to the private sector & the risk like
financial , operation & maintence is borne entirely by
the private sector.
5. The private operator is responsible for losses & for
unpaid consumers debts.
6. This type of contract does not involve any sale of
assets to the private partner.

9. 3. Joint Ventures:
a. Joint ventures are options to full privatization in which the
infrastructure is jointly owned & operated by the government &
private operators.
b. In case of a joint venture, the government & private sector
partners can either form a new company or assume joint
ownership of an existing company through a sale of shares to
one or several private investors.