PPP/3P
V.MOHANRAJ,
I Ph.D. Scholar,
TNAU

Public-Private Partnerships
• Public-private partnerships involve collaboration between a government
agency & private-sector companies that can be used to finance, build, and
operate projects, such as public transportation networks, parks, and
convention centers.
• PPP is a mode of providing public infrastructure & services by Government
in partnership with private sector. It is a long term arrangement between
Government and private sector entity for provision of public utilities and
services.

Public-private partnership arrangements have existed
throughout history, popular -1980s as Govts attempt to obtain
some benefits from the Pvt sector without having to make the
full privatization jump.
According to gov.uk, the United Kingdom was the first nation in
the world to develop the concept of public-private partnership
arrangements for public service projects.

According to the World Bank Group,
Public-private partnerships do not usually include turnkey
construction or service contracts – these are classed as public procurement
projects or privatization of utilities where the public sector still has a limited
ongoing role.
The PPP Knowledge Lab says the following regarding PPPs:
“A public-private partnership (PPP) is a long-term contract between a
private party and a government entity, for providing a public asset or service,
in which the private party bears significant risk and management
responsibility, and remuneration is linked to performance.”

Public-Private Partnership Examples
• Transport infrastructure such as highways, airports, railroads,
bridges, and tunnels.
• Municipal and environmental infrastructure include water and
wastewater facilities.
• Public service accommodations include school buildings,
prisons, student dormitories, and entertainment or sports
facilities.

PPP mechanism in India
• PPP -major element of India’s infrastructure creation efforts as -
huge level of investment requirement in the sector.
• 12FYP targets to spend $1000 bn to expand infrastructure.
Conventional form of finance – the budgetary allocation by
government is not enough to meet this big investment size.
• Several efforts to modify and energize the PPP mode of
infrastructure generation.
• A committee chaired by Kelkar also made valuable
recommendations to empower the PPP mechanism.
• India’s experience with PPP in a serious manner started from
2006 onwards

Models of PPP
(a) Build Operate and Transfer (BOT):
Simple and conventional PPP model -private partner responsible to
design, build, operate (during the contracted period) and transfer back the
facility to the public sector.
Role -finance for project, responsibility to construct & maintain it.
Public sector -allow it to collect revenue from the users.
Ex: NHAI projects.

Build-Own-Operate (BOO):
Variant of BOT and the difference is that the ownership of
the newly built facility will rest with the private party here.
Public sector partner agrees to ‘purchase’ the goods and
services produced by the project on mutually agreed terms and
conditions.

Build-Own-Operate-Transfer (BOOT):
Also on line of BOT.
After negotiated period of time, infrastructure asset is
transferred to the government or to the private operator.
This approach has been used for the development of
highways and ports.

Build-Operate-Lease-Transfer (BOLT)
• Government gives a concession to a private entity to build a
facility (and possibly design it as well), own the facility, lease
the facility to the public sector and then at the end of the
lease period transfer the ownership of the facility to the
government.

Lease-Develop-Operate (LDO)
• Government or the public sector entity retains ownership of
the newly created infrastructure facility and receives
payments in terms of a lease agreement with the private
promoter.
• This approach -airport facilities.

Rehabilitate-Operate-Transfer (ROT)
• Governments/local bodies allow private promoters to
rehabilitate, operate a facility during a concession period.
• After concession period, project is transferred back to
governments/local bodies.

DBFO (Design, Build, Finance and Operate)
• In this model, the private party assumes the entire
responsibility for the design, construction, finance, and
operate the project for the period of concession.

DCFO/OM
• The private party assumes the entire responsibility for the
design, construct, finance, and operate or operate and
maintain the project for the period of concession.

Management contract
Here, the private promoter has the responsibility for a
full range of investment, operation and maintenance functions.
He has the authority to make daily management
decisions under a profit-sharing or fixed-fee arrangement.

Service contract
• This approach is less focused than the management contract.
• In this approach, the private promoter performs a particular
operational or maintenance function for a fee over a specified
period of time

Advantages of Public-Private Partnerships
• Advantages to both parties.
• Private-sector technology and innovation, for example, can
help provide better public services through improved
operational efficiency.
• Public sector, for its part, provides incentives for the private
sector to deliver projects on time and within budget.
• Creating economic diversification makes the country more
competitive in facilitating its infrastructure base and boosting
associated construction, equipment, support services, and
other businesses.

Disadvantages
• There are downsides, too.
• Physical infrastructure (roads or railways, involves
construction risks). If product not delivered on time, exceeds
cost estimates, or has technical defects, private partner
typically bears burden.
• Private partner faces availability risk if it cannot provide
the service promised. Not meet safety or other relevant
quality stds, for example, when running a prison, hospital, or
school.

• Demand risk occurs when there are fewer users than expected for the
service or infrastructure, such as toll roads, bridges, or tunnels. If the
public partner agreed to pay a minimum fee no matter the demand, that
partner bears the risk.

Partnership agreements
Partnerships in following areas:
Business:
• Two or more companies join forces in a joint venture or a
consortium to
i) Work on a project (e.g. industrial or research project).
ii) Join forces to have a stronger position on the market,
iii) Comply with specific regulation (e.g. in some emerging countries,
foreigners can only invest in the form of partnerships with local
entrepreneurs). Mergers & Acquisitions transaction.

Politics (or geopolitics):
Usually called an alliance, governments may partner to
achieve their national interests, sometimes against allied
governments holding contrary interests, as occurred during
World War II and the Cold War.

Knowledge:
In education, accrediting agencies increasingly evaluate
schools, or universities, by the level and quality of their
partnerships with local or international peers and a variety of
other entities across societal sectors.

Individual
• Some partnerships occur at personal levels, such as when two
or more individuals agree to domicile together, while other
partnerships are not only personal, but private, known only to
the involved parties.

Forms of partnership
• General partnership: Partnership in which all partners manage
the business and are personally liable for its debts.
• Limited partnership (LP): liability of limited partners is limited
to their investment in the partnership.

More recently, additional forms of partnership have been
recognized
• Limited liability partnership (LLP): a form of partnership in
which all partners may have some degree of limited liability.
• Limited liability limited partnership (LLLP): a form of limited
partnership in which general partners have limited liability for
the debts and obligations of the limited partnership.

• Silent partner or sleeping partner is one who still shares in
the profits and losses of the business, but who is not involved
in its management. Sometimes the silent partner's interest in
the business will not be publicly known.

References:
• Van den Ban BW & Hawkins BS. 1998. Agricultural Extension. S.K. Jain
Publication.
• Debabrata Das Gupta. (2008). Extension Education: Core Concepts And
Emerging Areas: Agrobios (India).
• Singh, A. K., Lakhan singh, & Roy Burman, R. (2006). Dimensions of
Agricultural Extension (Second ed.): Rama Publishing House.
• https://www.investopedia.com/terms/p/public-private-partnerships.asp
• https://www.indianeconomy.net/splclassroom/what-are-the-different-
models-for-public-private-partnership-ppp-in-infrastructure/
• https://www.thebalancesmb.com/public-private-partnership-types-
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