A Public-Private Partnership (PPP) is a long-term contractual agreement between a public agency and a private sector party to secure funding, construction or refurbishment, operation and maintenance of an (infrastructure) project and delivery of a service that traditionally was provided by the public sector. It involves the sharing of risks and rewards, multi-sector skills, expertise and finance to deliver desired policy outcomes. Moreover, it is a method of procurement and assumes a greater role of the private sector in the design, building, finance and/or operations of public facilities and services.
The concept of public-private partnership may cover different types of arrangements. One of them is the mixed economy company. This is created by the will of two parties: a public entity, representing the local community, and a private one. Their intention is to reach specific goals with a clear division of roles, rights and obligations. Another application of PPP is project financing. It combines the responsibility of a public authority to establish public transport infrastructure, integrated into urban development, with the innovation, efficiency and funding capacity of the private sector.
Some examples of PPPs are:
• Plan early for aerial / underground commercial use of stations, as this might require additional civil costs and licences
|NODES strategic objective||Contribution|
|Enhance accessibility and integration||+|
|Increase safety and security conditions||0|
|Increase economic viability and costs efficiency||++|
|Stimulate local economy||++|
|Increase environmental efficiency||0|
|Increase energy efficiency||0|
While the core idea of PPP models is the same in various countries and in different sectors, there is a major diversity in the way those models are applied and the results they finally produce. The European PPP Expertise Centre (EPEC) is an initiative involving the EIB, the European Commission and European Union Member States and Candidate Countries trying to help strengthen the capacity of their public sector members to enter into Public Private Partnership (PPP) transactions. EPEC has conducted a Practical Guide for Risk distribution and balance sheet treatment to assist the different member states since they are important aspects in PPPs. It also provides a checklist for putting PPPs and concessions in place. [Source: http://www.eib.org/epec/resources/publications/epec_risk_distribution_and_balance_sheet_treatment_2nd_edition_en.pdf]
For the same reason in Greece there is a separate unit named “The Special Secretariat for PPPs” which was set up in the Ministry of Economy and Finance along with the ratification of Law 3389/2005. This Unit replicates the structure and role of equivalent units in other Member States of the European Union for the promotion and implementation of PPPs. The mission of the Special Secretariat is the provision of support and assistance to the Inter-Ministerial PPP Committee and to public entities. According to the official website for PPPs in Greece (http://www.sdit.mnec.gr/en), Public-private partnerships constitute an important reform towards the construction of public infrastructure and the provision of quality services to citizens. This reform will significantly contribute to the development of the Greek economy over the coming years. In this framework, they develop a number of guidelines in Greek in order to assist the implementation of PPPs in Greece.
Application in NODES sites: Madrid Interchange Plan
The financing of the Madrid transport interchanges, in summary, has the following characteristics:
Barcelona (metro stations on line 9)
A PPP provides annual savings to public governments. The payment for the construction and for the maintenance of the infrastructure is deferred in time and allows additional necessary infrastructures to be built up.
Maintenance costs could be lower with good maintenance practices, plus there are the profits from economic resources due to the lease of commercial space, advertising, vending machines, mobile telephone coverage and other complementary services provided by the concession-holder.
A potential shortcoming of applying a PPP is the complexity in the allocation of risks (cost, construction, operation, system integration, revenue).
For the concession model:
All costs are assumed by the transport authority, but unforeseen expenses related to maintenance are borne by the concession-holder.