Transcript
‘softer’ alternative to the word ‘privatization’
enable private organizations to get a market share of public service provision.
It seems fair to say that a number of governments have tried to avoid using the terms “privatization” and “contracting out” in favor of speaking about partnerships
PPP ; definition:
a specific form of privatisation was developed to deal with limitations on public borrowing. This involved using a private company to borrow money, build a new hospital, school, road, etc, and then operate it over many years, recouping the investment and profit from payments
2 general Forms of PPP:
Claims and myths about PPPs:
evaluation
Evidence Note
1 Cost of Capital Interest + dividends
PPP moreexpensive
Private sector has to pay higher interest rates than government
2 Cost ofconstruction
PPP moreexpensive
Higher cost of ‘turnkey’ projects, offset by saving on cost of overruns
3 Cost of operation
Efficiency Neutral Empirical evidence suggests nosignificant difference
4 Transaction costs
Preparation &tendering
PPP moreexpensive
Costs of preparing contracts &tenders
5 Uncertainty Renegotiation &contingent liabilities
PPP more risky
Future renegotiations &changes
Framework for evaluating PPP proposals against public sector alternative
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