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» Economics » Topics begins with P » Public private Partnership

Page modified: Tuesday, July 12, 2011 21:52:16

Public private Partnership (abbreviation PPP), also public-private partnership is a mobilization of private capital and specialized knowledge for the fulfilment of national tasks. In the broader sense the term is used also for other kinds of cooperative cooperating of sovereignty carriers with private restaurant subjects. PPP accompanies in many cases with a partial privatisation of public tasks.

Even if due to the multiformity of the application fields a generally recognized definition for PPP were not found yet, then it is meanwhile recognized in the economic linguistic usage that the term is relevant both from the sense and from the term content only if the partners use their different strengths. Pure financing business is not called accordingly PPP. PPP is thus after today's, functional term understanding those usually "contractually regulated co-operation between public hand and private sector, with that necessary resources (e.g. know-how, operational funds, capital, personnel etc.) from the partners to the mutual use in a common organization connection to be on a long-term basis adjusted and existing project risks according to the risk management authority of the project partners be optimally distributed" (so the definition in the BMVBW appraisal "PPP in the public above ground construction", 2003 II, P. 1).

Kinds of the PPP

PPP is regarded predominantly as a special kind of the functional privatisation. In contrast to the material privatisation the state withdraws itself task thus not completely from one so far publicly noticed. In the context of the functional privatisation only private restaurant subjects are consulted during the national task fulfilment. The sovereign fulfilment responsibility remains untouched against it. Here contractual constructions are thus created, which can be out-arranged in the most different forms. The following model types for PPP contracts are today in practice usual:

Operator model

Thus for instance the operator model plans that the private entrepreneur establishes and operates an infrastructure project; it has also the owner characteristic and carries the economic risk. The financing is made however by fees, which have to pay users for the demand. In relation to the users the private operator furnishes his achievements in the name and on calculation of the municipality, the legal relations develops to that extent thus only between the municipality and the users. The concrete arrangement of the operator model takes place in each case via an operator contract. In this the municipality must secure itself in particular necessary the rights of access and control, in order to protect the required appropriate influence on the task fulfilment.

Management model

With the management model arisen later the public hand remains differently than with the operator model owner and Betreiberin of the plant. The model plans only that the private operating leader on contractual basis operates plants of the public subject of function in its names against payment. Typically thereby the transferred management covers the enterprise, maintenance and the maintenance of the plants. Besides it covers the technical and commercial administration of the plant.

Operating hiring model

As Zwischenform between the operator model and the management model that is regarded so-called operating hiring model. In relation to the management model it differs by a further retreat of the public hand from the current enterprise of the plant. The private operating leader has here a large organization area, which can express itself also in the fact that it is authorized to externaleffective acting.

Offering model

Under the designation OFFERED (Build, Operate, transfer; German: Build, operation, a transferring) is common an operator model, which plans the ready for occupancy production of plants including financing of the advance costs and comprehensive project management as well as the operating assumption for the start-up phase. The English conceptualness is meanwhile also in the German linguistic usage usual, it ties however differently than the German models more strongly to the Risikoallokation. Both short term and long-term BOTs is possible. In particular so long-term BOTs with running times is up to 30 years (partly also over it) with the building of infrastructure plants such as power stations or airports usual.

Mix-economical enterprises

The most intensive form of the PPP is operated in the context of the so-called mix-economical enterprises. These are enterprises, which have both public and private shareholders. This partly than modification of the operator models operated, partly comes to the private shareholder in addition, only a financial participation. According to the definition indicated above however only such mix-economical enterprises are to be understood as PPP, with which it does not only concern through the participation of private a financing business, but the partners their different authority into the enterprise to bring.

Reasons and risks

The public hand expects from the partnership with the private one the opening of new financial resources and also the discharge of the strained public households. In addition time gained comes at the time of the execution of complex projects as well as efficiency increase by integration economical know-how of the private ones. In accordance with the neoliberalen theory Less State of, more private the service and the efficiency are to be increased and the costs to be lowered. In addition, the private ones often made and can with certain projects, in particular in the public above ground construction, experiences already of many years therefore the existing project risks better estimate, so that it can come by PPP to a better Risikoallokation and thus to smaller costs.

The private ones promise themselves from the participation the opening of new business fields as well as accompanying with it the additional realization of profits possibility. Also the private ones expect the acceleration of the realization processes by use of the national capacities. Besides such partnerships for the private enterprises are suitable to page the risk out of a project and to reduce unfavorable effects for itself.

In addition, the participation of private in the public task fulfilment saves many risks. Still not all concepts developed. There is not in wide ranges still another juridical insecurity which can be underestimated. Also the state makes itself dependent thereby in higher measure on the private ones. A negative example for this supplied for instance the problem during the introduction of the truck duty to Germany by the company madly to Collect with.

PPP is formal-legally usually in the core a renting or a lease. Household-technically PPP works however like a credit. There PPP usually long-term use payments for concrete real estates contained is clearly more inflexible it as financing instrument than a credit. PPP reduces at the same time the traditional credit framework, since the sinking real estate possession and the long-term expenditure connection worsen the Rating of the regional administrative bodies.


Also the conception of a Win Win situation is criticized: Targets of an enterprise are increase in sales, maximization of profit and the fight for market shares, if it wants to remain existing in the competition. In conflicting aims in addition stands a policy, which is oriented at the public interest and therefore with the Allokation of resources also the interests of those humans and societies has to notice, which cannot inquire their needs or only insufficiently by its purchasing power.

Critics are the opinion that PPP is to open new utilization possibilities to plant-looking for fund capital, regional administrative bodies and taxpayers to be however disadvantaged could.

If a buyer (private investor) buys something, it would like to draw a use (all the same in which kind) from it. The private investor stresses the profit. To what extent a real use exists for the public - usually regional administrative bodies -, is not so far occupied. Losses by PPP business for the public can be reread in the reports of this public - usually regional administrative bodies -, nevertheless unconsidered mental net assets.

Points of criticism of PPP practice are:

  • Coalition of public regional administrative bodies etc. and private partner debited to third
  • Information asymmetries
  • Risks
  • Increase (indirect/covered) of the indebtedness
  • Supervision/local household safeguard concept
  • Shade households
  • Control of authentication of public resources use
  • Marketing of public interests

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