Kinds of PPP and Contract Models in International Practice – Specialized Advice From CWIIL Group PPP Units

We distinguish PPPs with regards to kinds of partnerships. The public private relationship in PPPs can either be “horizontal” or “vertical” in nature. In a horizontal partnership both partners are directly engaged as shareholders in a special purpose vehicle (SPV), which is providing required infrastructure services. In a vertical partnership the public sector contracts with the private partner through a concession agreement or a PPP-contract, and the latter is responsible for providing required services.

PPPs can further be divided according to the existing mode of sector financing into user-financed and budget-financed models. Under the former model, the private partner has its investment recovered through user charges that are directly linked to the infrastructure or services, such as tolls, vignette, licensing fee, water tariffs and ticketing. While under the latter model the private partner delivers service in return of down payments made by the public partner that are commensurate with the service level provided or upon availability of the facility. A key government responsibility here is to decide which mode of financing to apply and the choice is subject to the nature of infrastructure
service as well as political and economic circumstances of that country. The structure of financing will also affect the level of efficiency gains achieved.

Under functional and material privatisations, there are various PPP contract models employed in the international practice for different sectors. These varying models of PPPs have become commonly known by the acronyms of the tasks delegated. The following gives more details regarding what
these models might entail:

Build-Operate-Transfer (BOT) arrangement involves the transfer of responsibility for constructing, financing and operating a single facility to a private sector partner for a fixed period of time. At the end of that period, the responsibility reverts to the public party. The bundling of building and operations allows for “lifecycle efficiency”. The additional financing cost incurred by using the private sector can be offset by a reduction in operating costs resulting from the lifecycle approach in design, construction and operation. BOT is perhaps the most familiar models of PPP and the basic concept has been employed with some variations in many different ways, including BOOT, DBLOT and DBROT. Some
models are more prevalent in some nations than others.

Design-Build-Finance-Operate (DBFO) means that the private sector partner is also asked to supply resources for having the project built. Future revenue streams are usually based on availability payments made by the public sector or shadow tolls. Hence this contract model belongs to typical budget-financed PPPs.

Build-Operate-Own (BOO) involves the granting of ownership rights in perpetuity to develop, finance, design, build, own, operate, and maintain an asset. The private sector owns the asset outright and retains the ownership and operating revenue risk, with no transfer to the public sector. It is hence categorised as material PPP.

Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.

Consulting CWIIL Group of Companies, for any / all matters relating to Public-Private Partnerships, (PPP), ensures advise based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable business advise can be disastrous and thus should be avoided.

CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.

For Further Queries Feel Free to Contact :

Mr. Mohammad Mukhtar Mustafa,
Deputy Global Director, No. 4,
Strategic Business & Intelligence Division,
Email : deputy.gd.4@cwiilgroup.eu
Voice : +45.8176.1923
Connect : LinkedIn – Twitter – Facebook – Quora

For Queries Specific to Africa :
Email : africa@cwiilgroup.com , hq@cwiilgroup.eu
Web : www.cwiilgroup.com , www.cwiilgroup.eu

For any / all other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : corpcomm@cwiilgroup.eu
Web : www.cwiilgroup.eu

Office Hours :
Monday to Friday : 10.00 – 17.00 CET.
Saturday : 10.00 – 14.00 CET.
Sunday : Closed.

The Corporate Communications Team would require minimum a fortnight for Reviewing & Responding to Queries, which please note.

 

 

 

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14 thoughts on “Kinds of PPP and Contract Models in International Practice – Specialized Advice From CWIIL Group PPP Units

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