7/27/2019 Introduction PPP

1/2

PPP

Public Private Partnerships or PPP is a means for a Government to provide

services to its people by partnering with a Private entity in order to make a

particular project more feasible. It is a contractual agreement between the

Government and the Private sector that paves the way for the delivery of publicinfrastructure and/or public services.1 The partnership between the

Government and a Private entity usually involves the latter in financing,designing, implementing, and operating infrastructure facilities and services.2 In

other words, a PPP is a contract wherein Private entities would lend its hand to

the Government and in return the former will receive from the latter some form

of compensation either monetarily, or some form of government incentive.

Value of PPP

Through this scheme, the Government is able to encourage Private entities,which may have the money and technical expertise that the Government does

not possess, to invest and help in the countrys campaign to serve its people.According to the Philippine Institute for Development Studies there are three key

reasons why Governments resort to PPP. These reasons are:

1. It has been effective in assisting governments to respond to the increasingdemand for infrastructure-related services

2. PPPs can help government to free up resources that could otherwise beused for an infrastructure project by shifting the burden of capital

spending to the private sector

3. PPPs contribute to a more efficient delivery of service.Kinds of PPP3

1. Serivce ContractThe Government hires a private entity to undertake and perform public services

for a period. The Government only contracts out some parts of the operations to

the private entity it hired. It, however, remains as the primary provider of the

service.

2. Management ContractLike the service contract, the Government remains as the primary provider of the

service. The only difference is that in a management contract, the daily

management control and authority is assigned to the private entity.

1Public-Private Partnership (2012, March). InPhilippine Institute for Development Studies. Retrieved

July 20, 2013, 1:00PM (Philippine Time) from http://dirp4.pids.gov.ph/ris/eid/pidseid1201_rev.pdf

2

PPP in Haryana (n.d.). InPublic Private Partnerships. Retrieved July 20, 2013, 1:00PM (PhilippineTime) from http://www.pppinharyana.gov.in/PPPinHaryana_WhatIsPPP.htm

3Supra Note 1

7/27/2019 Introduction PPP

2/2

3. Lease ContractIn this type of PPP the private entity becomes responsible for the service in its

entirety and undertakes obligations relating to quality and service standards.

The Government in this kind of PPP is only responsible for new and replacement

investments.

4. ConcessionsThe private sector in this kind of PPP is responsible for the full delivery of

services. It includes operation, maintenance, collection, management and

construction and rehabilitation of the system. The private sector is alsoresponsible for all capital investments and for providing assets. However,

despite being responsible for providing assets, such assets are still publicly

owned even during the concession period. The Governments role in this kind of

scenario is merely regulating the price and quality of service

5. BOTThese are specialized concession. The private entity finances and develops a new

infrastructure project according to the performance standards set by the

government. The private entity provides the capital required to build and

operate a new facility. And after the stated period in the contract lapse, the

private entity will return the facility to the Government.