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The Seven Sins of Flawed Public-Private Partnerships / Augusto de la Torre.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- de la Torre, Augusto.
- Series:
- Other papers
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Finance.
- Accounting.
- Bankruptcy and Resolution of Financial Distress.
- Bonds.
- Capital Markets.
- Commercial Banks.
- Contracts.
- Debt.
- Debt Markets.
- Default.
- Discount Rate.
- Due Diligence.
- Economic Development.
- Emerging Markets.
- Finance.
- Finance and Financial Sector Development.
- Financial Services.
- Infrastructure Economics and Finance.
- Insurance.
- Jurisdiction.
- Life Insurance.
- Loans.
- Long-Term Finance.
- Outsourcing.
- Private Participation in Infrastructure.
- Private Sector Development.
- Public Finance.
- Public-Private Partnerships.
- Savings.
- Taxes.
- Local Subjects:
- Access to Finance.
- Accounting.
- Bankruptcy and Resolution of Financial Distress.
- Bonds.
- Capital Markets.
- Commercial Banks.
- Contracts.
- Debt.
- Debt Markets.
- Default.
- Discount Rate.
- Due Diligence.
- Economic Development.
- Emerging Markets.
- Finance.
- Finance and Financial Sector Development.
- Financial Services.
- Infrastructure Economics and Finance.
- Insurance.
- Jurisdiction.
- Life Insurance.
- Loans.
- Long-Term Finance.
- Outsourcing.
- Private Participation in Infrastructure.
- Private Sector Development.
- Public Finance.
- Public-Private Partnerships.
- Savings.
- Taxes.
- Physical Description:
- 1 online resource (1 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2015.
- System Details:
- data file
- Summary:
- There are three stakeholders in a public-private partnership (PPP), (a) the government in office, (b) private firms (financial and non-financial) and investors (individual and institutional), and (c) final beneficiaries (taxpayers or users, present and future). The raison detre of PPPs is threefold: (i) to crowd in private firms and investors into projects that they will otherwise not undertake; (ii) to transfer to the private sector a significant part of the risks and costs that the government would otherwise fully absorb; and (iii) to ensure that the projects efficiency/quality is at least equal to that obtained if the government alone carried all costs and risks. Important (yet often ignored) implications follow. First, outsourcing (e.g., construction and maintenance) to the private sector does not by itself constitute a PPP if all risks and costs are, in one way or another, still borne by the government. Second, a PPP does not reduce total risk; it simply distributes it differently, involving private sector firms and investors. Third, the total costs borne by the final beneficiaries would be lower under a PPP (compared to a project whose costs and risks rest completely in the governments balance sheet) only if the PPP achieves efficiency gains; otherwise, what beneficiaries save in taxes they will pay in user fees, although, under a PPP, more of the costs would be assigned to direct beneficiaries/users, than to taxpayers at large. Fourth, that a PPP can provide (cash) budget relief may be a welcome corollary for the government in office but it is not a core objective of a PPP.
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