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... However, it is not necessarily that only the public sector provides MSWM services since there are many experiences public-private partnerships (PPP) in this sector worldwide (Chang et al., 2003). PPPs are long-term contracts between the public and private sector in which the private sector has responsibility for significant aspects of the building and operation of an infrastructure for the delivery of public services that the public sector should provide while both sectors share risks, costs and benefits (Iossa et al., 2013). ...
... The analysis of experiences regarding to PPPs performance suggest that there is no a 'one-size-fits-all' principle to design PPP contracts for a given objective or sector (Chong et al., 2006;Iossa et al., 2013). There are many factors that can influence in the likelihood of success or failure in a PPP agreement. ...
... There are many factors that can influence in the likelihood of success or failure in a PPP agreement. Therefore, the analysis of the contract design in PPPs, such as risk allocation or payment mechanism, are significantly relevant to understand PPP outcomes (Iossa et al., 2013). ...
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This article analyzes the influence of tourism on the municipal solid waste management (MSWM) system taking as reference the case study of Mallorca, an internationally renowned destination. The characteristics of tourism such as seasonality and land scarcity, set interesting challenges to public-private partnerships related to MSWM system. The analysis of Mallorca’s experience shows that land endowment strongly influences the choice of treatment technologies in tourism destinations. Furthermore, tourism seasonality significantly affects management costs which should be considered on PPP contracts. Finally, the tariff system in this kind of environmental PPPs in tourist destinations still need to improve to promote waste minimization and recycling.
... During the last decades, many national and regional governments have increased cooperation with the private sector through Public-Private Partnerships (PPPs) in which the private sector investment in public projects, whereby investors receive a return on their investment within a specific legal framework [13]. PPPs are long-term contracts between the public and private sector in which the private sector has responsibility for significant aspects of the building and operation of an infrastructure for the delivery of public services that the public sector should provide while both share risks, costs and benefits [14,22]. This kind of contracts seemed to be an effective means to attract funds from the private sector to provide public infrastructure and services while improving resource efficiency (shorter construction time, lower construction, operation and maintenance costs, etc). ...
... However, the analysis of experiences regarding to PPPs performance suggests that there is no a uniform principle to design PPP contracts in any sector [14,22]. There are many factors that can impact in the likelihood of success or failure in PPP agreements. ...
... There are many factors that can impact in the likelihood of success or failure in PPP agreements. Therefore, the analysis of the contract design in PPPs are significantly relevant to understand PPP outcomes [22]. ...
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The use of municipal solid waste (MSW) for energy generation is an important paradigm shift in municipal solid waste management (MSWM). The concept of waste-to-energy (WTE) is consistent with the basic principles of waste hierarchy set by the European Commission in environmental agenda. WTE became an effective response in small-island which usually rely on tourism for economic development. Many WTE power plants have been developed through PPP arrangements; however, little attention has been paid in the academic literature to the impact of tourism to WTE utilities performance. This paper analyzes the influence of tourism to a waste-to-energy public-private partnership (WTE PPP) through the case study of Mallorca, an internationally renowned summer seaside destination. The analysis of Mallorca's experience shows that tourism strongly influences management costs of WTE facilities and PPP contracts still needs to adapt the tariff system to promote better performance of the public service.
... The contractor is accountable for the investment in the public authority finances and capital assets in these models where the project carries the financial risk. 6 There are different governmental reasons and technologies for seeking public-private partnerships throughout the developed countries. 7 Significant motives have been to improve efficiency and risk distribution in comparison to traditional financing techniques and lessen budget and borrowing limits. ...
... Nonetheless, their use has been led initially by macro-fiscal objectives to control borrowings among pressures for developing infrastructure. 6 As demonstrated by elected officials, the public-private partnership will appeal to the government to achieve electoral promises by comprehensively carrying out more infrastructure projects under tight fiscal controls or recession. 13 It has been learned that public-private partnerships can be made successful in achieving the governmental fiscal goals by creating accounting standards to offer off-balance sheet liabilities and treatment of the undertaking projects. ...
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There are different governmental reasons and technologies for seeking public-private partnerships throughout the developed countries. Significant motives have been to improve efficiency and risk distribution in comparison to traditional financing techniques and to lessen budget and borrowing limits. In this study, the movement toward privatization enhancing the efficiency of MoH’s hospitals has been assessed using Data Envelopment Analysis (DEA) from 1979 to 2020. Moreover, the efficiencies of the individual hospital were estimated through the DEA model, which includes: scale efficiency (SE), pure technical efficiency (PTE), and overall technical efficiency (OTE). In addition, factor affecting such efficiencies was analyzed through Tobit regression. The VRS results suggest that the numbers of hospitals benefiting from the complete corporatized phase are greater than those benefiting from the last phase (and vice versa in the case of DRS). The variance between inefficient hospitals in the less corporatized phase (2000-2020) was more prominent than in the fully corporatized phase (1988-1999). In conclusion, fully corporatized hospitals (on average) achieve relatively better overall efficiency. It is recommended that additional corporatization might be stimulated by a standardized set of performance measures, which cover both the quality criteria and economic efficiency measurements from a healthcare perspective.
... PPPs offer the possibility of exploiting efficiencies in the implementation of projects as a result of allocating risks to the party that is in a better position to deal with it (see, for instance, Kerf et al. (1999) or European Commission (2003)). Factors that influence on contractual parties' capabilities to manage risks are diverse and includes, among others, the experience in similar projects, access to technologies and the degree of risk aversion (see Iossa et al. (2013)). ...
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This study presents an ex post comparative assessment of the relative performance of three Latin American broadband network emblematic projects implemented through public-private projects (PPP). Results show that the relative performance of these projects is extremely sensitive to differences in contractual design and regulatory approaches applied in each case. The detailed examination and comparative analysis of these experiences allowed us to extract important lessons in terms of design and implementation of PPP in telecommunications sector. In particular, our analysis finds that imperfect financing and demand risk allocations in projects can jeopardize their operational and financial sustainability. As well, the examination of these experiences allows us to conclude that in markets characterized by continuous economic and technological transformations, vertical separation restrictions imposed for reducing the risk of increasing market power and concentration may not be justified. As well, analysis shows that in such evolving contexts, a more flexible and adaptable regulatory approach is recommendable. Finally, our analysis reveals the role of complementary policies in the context of the implementation of countries’ digital strategies, as a means that contribute to ensure the accomplishment of broadband accessibility national targets.
... However, it could also be possible that higher corruption produces an inflated expenditure in PPPs. Tanzi and Davoodi (1998) and Haque and Kneller (2008) observe this effect on public capital projects.. Corruption stakes go together with project complexity, that is higher for large infrastructure, like those that employ PPP financing (Iossa et al., 2013). Hence, we do not form any prior on the expected sign of the corruption index. ...
Preprint
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We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking also into account of the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government's choice of PPPs: financially constrained governments find the PPP option more attractive due to the possibility of off-balance accounting, while high-debt countries reduce the private investors' interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period, while the post-crisis reforms and the increased surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government's preferences for current expenditures.
... However, it could also be possible that higher corruption produces an inflated expenditure in PPPs. Tanzi and Davoodi (1998) and Haque and Kneller (2008) observe this effect on public capital projects.. Corruption stakes go together with project complexity, that is higher for large infrastructure, like those that employ PPP financing (Iossa et al., 2013). Hence, we do not form any prior on the expected sign of the corruption index. ...
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Full-text available
We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking also into account of the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government's choice of PPPs: financially constrained governments find the PPP option more attractive due to the possibility of off-balance accounting, while high-debt countries reduce the private investors' interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period, while the post-crisis reforms and the increased surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government's preferences for current expenditures.
... The success of PPPs is strictly linked to whether these principles of risk allocation are applied in practice. As discussed in Iossa et al. (2014), many factors may contribute to determine an inefficient risk allocation, raising the risk of project failure. These includes political interference, opportunistic renegotiations close to elections (Le Squeren 2016), unsuitable revenue guarantees, and incompetency. ...
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Public–private partnerships (PPPs) are long-term contractual agreements between the public and private sector for the provision of public infrastructures and services. Due to tighter budget constraints and to a renewed interest in greater involvement of the private sector in the provision of public services, PPPs are likely to grow in the near future. In this paper, we review the theory and practice of PPPs, highlighting their potential role as well as discussing the main factors influencing the likelihood of performance failure.
... 38 In discussions we had with state officials, they thought it was unlikely that firms had used private financial instruments in the past. The final decision on the implementation of price adjustments should account for the trade-off between incentives and efficiency, taking potential differences in risk attitude under consideration (Iossa et al. [2007]). Overall, our results point to the positive effects of this intervention. ...
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The fluctuations in fuel prices over the past decade led a number of government agencies to introduce price adjustment clauses in procurement contracting. Those clauses were primarily designed to reduce contractors’ uncertainty without considering the impact of such initiatives on bidding and the budget. We analyze a newly constructed, detailed panel of observations on bids for construction contracts and compare bidding behavior across periods and projects, and across items within projects. Estimates from a difference-in-differences approach, indicate that bidding becomes more aggressive and less dispersed after the implementation of this policy. The difference is more pronounced when we consider itemized bids than overall project bids. Alternative techniques of regression discontinuity and nonparametric estimation are applied and yield consistent results.
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While it is not new that Nigeria is challenged by a huge infrastructure deficit, the COVID-19 pandemic has exposed the country’s comatose healthcare system. Given the country’s dwindling revenue, massive debt profile and the inability of the public-sector to efficiently manage public facilities in the country, this paper examines how the public-private partnership model of infrastructure procurement can be deployed as a solution for Nigeria’s healthcare crisis. In addition to the above, this paper takes a look at how a partnership with the private sector can aid Nigeria’s quest towards achieving healthcare-related Sustainable Development Goals. The paper also considers two healthcare-based projects as case studies to serve as lessons for future projects in the country. Among others, the paper recommends a holistic long-term solution for the country’s healthcare needs.
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The presented study summarizes the results of the implementation of liberal market reforms in Russia and reviews tools of the market economy that could solve the problem of distrust within Russian society. Aim . The study aims to define the underlying problems that stem from the peculiarities of the historical development of the Russian Federation and now hinder the advancement of our country to a new level of development, and to propose directions for solving these problems. Tasks . The authors summarize the socio-economic consequences of the implementation of liberal market reforms; define the problems of the implementation of a rent-based economy in modern Russia; prove that Russia cannot advance to a new level of development without solving the problem of social distrust; review the tools that could change the current situation of global social distrust (publicprivate partnership, proactive budgeting, clusters, territorial marketing, Far Eastern Hectare program, smart cities, incident management). Methods . This study uses general scientific methods of cognition to examine the results of the implementation of liberal market reforms, identify the problems of modern Russia, and determine the possible directions and tools of development. Results . Russia’s development is historically based on finding and living off the natural rent. This perspective significantly narrows the range of ideas about the potential development directions for the Russian Federation. The rent-based development options proposed today expose another common Russian trait — uncertainty, lack of risk appetite, pessimism, and fear of “things getting worse”. Implementation of democratic reforms in the context of rent-based economic institutions, lack of mutual trust within society, poor performance of courts — all this aggravates the current situation. Conclusions . Nowadays, Russia needs an economy that would create a demand for human capital and inclusive political institutions that would make people engaged in the life of the nation, allowing them to capitalize on their creativity without leaving their homeland.
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We envisage the waste management strategy of the local bodies as one of sharing different responsibilities with households along different stages of the process viz., collection, processing and disposal. This difference arises in terms of the variants of Pay-as-You-Throw scheme, recycling arrangements for non-biodegradable waste and treatment options for organic waste. In this article, we account for this policy heterogeneity by locating the waste management practices adopted by different municipal authorities in an integrated strategic framework. We use information on waste management services from country case studies to identify the variations in the sharing arrangements between households and the municipalities in urban areas of low, middle and high-income countries. Our results suggest that an efficient market in waste management might be associated with the degree of apportionment of cost of waste processing by involving households in the primary disposal and private entities in final disposal in the presence of economic instruments.
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Private sector participation in urban rail transit has proliferated in the past two decades. The large metropolises of East Asia have had decades of experience with private sector participation in the provision of heavy metro services. The design of these public–private partnerships (PPP) arevaried. The diverseexperiences ofTokyo, HongKong, Singapore and Beijingcontain valuable lessons for other cities. Using a case study approach, this paper discusses three features of urban rail transit developments in the context of East Asian cities, viz., farebox recovery, land value capture mechanisms, and vertical structure of the industry. Super vertical integration between railtransitandrealestatedevelopmentaslandvaluecapturestrategyto financeurbanrailtransit has proven to be successful in Japanese cities and Hong Kong. Singapore’s experience illustrates that vertically unbundled PPPs could cut off avenues for cross-subsidisation, reduce information flows as well as economies of scale and scope, introduce principal agent problems, and result in underinvestment in capital stock and maintenance. We conclude that (i) a combination of high farebox recovery ratios and successful land value capture contributed significantly to the development of urban rail transit in East Asia cities; (ii) given the complexities and high costs of heavy metros, the optimal structure is a vertically integrated public-owned and driven system, with the public sector entering into selective partnerships with the private sector where risk sharing is clearly defined and allocated.
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Full-text available
Public Private Partnerships (PPPs) cover a range of possible relationships between public and private parties. PPP contracts are typically used in contexts of great uncertainty, such as large construction and infrastructure projects that are realized over a longer period of time. Hence, a major challenge in PPPs is to keep construction progress cost-efficient and on schedule, under continuously changing circumstances. One way to achieve this is through clever contracting, by proactively anticipating potential change in the planning phase and providing flexible contract mechanisms that enable an effective response. The purpose of this article is to discuss potential changes and the subsequent requirement of flexibility in PPP contracts. By flexibility, we mean the ability of the contract to deal with changing circumstances. We set out to do so by studying the available literature on the subject and by analysing the case study of the Blankenburgverbinding in the Netherlands, a Design, Build, Finance and Maintain (DBFM) project that is currently in its planning phase based on 32 interviews. Our main findings are that the timely and accurate recognition of potential changes, combined with the availability of flexible coping mechanisms, provide the stakeholders with a better understanding of the challenges they face in realizing their aims in the pre-contract phase of projects. This understanding helps to better prepare a PPP contract for potential changes.
Chapter
We examine the formation of public-private partnerships (PPPs), one of the most important organisational forms to evolve over the last few decades. Given that PPPs seem to have been incubated by the developed world (in particular the UK), with their relatively stronger governance structures, we examine if there is any fundamental reason why countries with stronger governance levels are more likely to opt for PPPs. In a bid to contextualise this issue, we begin by discussing the institutional structure of PPPs, as well as how they fare globally. We first discuss the trade-offs involved in the formation of PPPs. We then use this framework to develop a simple formal model based on risk sharing that is capable of analysing this issue. We show that PPPs are more likely to form in case governance is strong. Otherwise, PPPs are unlikely to form, and will be susceptible to contract renegotiation in case they do form.
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