What role for Public-

Private Partnerships?Delivering on the Post-2015 Development

Agenda

Lessons from an IEG Evaluation

December 12, 2014

Stefan Apfalter

Senior Evaluation Officer, IEG

Title of Presentation 2

How can PPPs help close the

$ 1 trillion infrastructure gap?

• Leveraging scares public resources

• Potential to increase efficiency

• USD 79bn p.a. PPP volume globally

• But PPPs are not the panacea

• PPPs require their own infrastructure!

Licensing and regulation

PrivatizationServices contracts

Construction contracts

“Pure public“ “Pure private“

Exis

ting

Asse

tsN

ew

Asse

ts

Performance-based

maintenance

Operations and

Maintenance (O&M)

Design, Build,

Finance, Maintain

Build, Transfer,

OperateBuild, Own,

Operate, Transfer

Lease

Concession

Core PPP types Other type of private sector involvementKey:

PPPs respond to market failure

while minimizing government failure

Applying a strategic country

approach

Advise governments on “if and how” to use PPPs

Based on comprehensive diagnostics

Readiness of sector

Public sector capacity

Fiscal implications

Integrated in NIPs

4

Addressing political economy

Sector reform is foundation of success,

but often fails

Broad-based and early stakeholder

consultations

Government

commitment required

Local capacity

5

Investing more at the frontier

6

% = PPP market in these countries

Learning through better M&E

7

Data

NO Data

Going forward

• Applying strategic country

approach

• Addressing political

economy factors

• Investing at the

frontier

• Learning through better M&E

8

9Thank you!

Upfront

VGP

Comparison of Public Sector

Payment Profiles

Costs /

Expenditures

Capital

Costs

Estimated Running

Costs

Running Costs

Overruns

Costs

Overruns

5 10 15 20 Years

Construction Operation and

Maintenance Phase

• Capital and operating

costs are paid for by the

public sector who also

takes the risk of cost

overruns and late

delivery

Traditional Government Procurement

Costs /

Expenditures

Preparation

Payment based on

Availability

Payment based on

Usage

5 10 15 20 Years

Construction Operation and

Maintenance Phase

• Public sector pays over the long

term as services are delivered

• Has to cover increased

preparation costs and, at times,

part of capital costs to make PPP

project bankable.

• Takes on contingent liabilities

PPP Procurement

Contingent Liabilities