WHAT IS A PUBLIC-PRIVATE PARTNERSHIP?

What is a Public-Private Partnership?

Public-private partnerships, known as PPP, 3P or P3, etc., are cooperative arrangements between two or more public and private sectors, usually of a long-term nature. Under the Public-Private Partnership, the government completes its projects with private companies. Many highways of the country are built on this model.


Through this, funds are arranged for the development of any public service or infrastructure. In this, government and private institutions together meet and achieve their already set targets.  


PPP is a broad term that can be applied to any long-term contract of simple, short-term management that includes money, planning, building, operations, maintenance, and disinvestment. PPP systems are useful for large projects that require highly skilled workers and significant cash outlay to start. They are also useful in countries that the state legally requires any infrastructure that serves the public. 


WHAT IS A PUBLIC-PRIVATE PARTNERSHIP?

Need of PPP


PPP is needed because when the government does not have enough money to meet the announcements of thousands of crores of rupees, then in such a situation the government makes agreements with private companies and completes these projects. 


A public-private partnership (PPP) is the funding model for a public infrastructure project such as a new telecommunications system, airport, or power plant. The public partner is represented by the government at the local, state, and/or national levels. The private partner may be a privately owned business, public corporation, or association of businesses with a specific area of ​​expertise.


Advantages Of Public-Private Partnership


  • By adopting the PPP model, projects are completed at the right cost and on time.
  • Due to the timely completion of PPP, the income from scheduled projects also starts from time to time, due to which the income of the government also starts to increase.
  • The efficiency of the economy can be enhanced by increasing the productivity of labor and capital resources in completing projects.
  • The quality of work done under the PPP model is better than that of government work and at the same time, the work is done according to its prescribed plan. 
  • Risk under the PPP model is divided into both public and private sector
  • The PPP model gives the government freedom from its budgetary problems and borrowing limits.    

Different models of PPP funding characterize which partner is responsible for the ownership and maintenance of assets at different stages of the project. Examples of PPP models include: 


Design-Build:


Private sector partners build infrastructure to meet the public sector partner's specifications, often for a fixed price. The private sector partner accepts all risks. 


Operation & Maintenance Contract:


The private sector partner, under the contract, operates the public-owned property for a specific period of time. The public partner retains ownership of the property. 


Design-Build-Finance-Operate:


The private sector partner creates a new infrastructure component, finances it, and maintains it under long-term leases. The private sector partner transfers the infrastructure component to the public sector partner when leased. 


Build-Own-Operate:


The private sector partner finances, builds, owns, and operates the infrastructure component. The constraints of the public sector partner are stated through the original agreement and the ongoing regulatory authority. 


Build-Own-Operate-Transfer:


The private sector partner is authorized to finance, design, manufacture, and operate the infrastructure components for a specific period, after which ownership is transferred back to the public sector partner. 


Buy-Build-Operate:


This publicly-owned property is legally transferred to a private sector partner for a designated period. 


Build-lease-operate-transfer:


Private sector partners design, build a facility on leased public land. Private sector partners operate the facility for the duration of the land lease. When the lease expires, the assets are transferred to a public sector partner. 


Operation License:


A private-sector partner is usually given a license or other expression of legal permission to operate a public service for a specified period of time. (This model is often used in IT projects.) 


Finance Only:


The private sector partner, usually a financial services company, funds the infrastructure component and charges the interest of the public sector partner for the use of the funds.

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