2. Private Participation in Public Infrastructure and Services: What is and is not a PPP

Important note: “Infrastructure” is used in this PPP Certification Guide in the broad sense. This includes not only complete systems or facilities with significant civil works, but also equipment (for example, rolling stock for rail) and plants (independent power producers, wastewater treatment plants, and so on) where the civil works may be less relevant. For the purposes of this PPP Certification Guide, infrastructure includes social infrastructure (such as hospitals and schools) as well as economic infrastructure (those that relate to water, energy, transport and telecommunications). This PPP Certification Guide uses “infrastructure”, “public asset” and simply “asset” interchangeably to refer to the public asset to be developed and managed under the PPP contract. See section 3 for a further description of the infrastructure term and examples of PPP assets.

This section introduces and explains the main contexts and potential examples of private participation in public infrastructure (see figure 1.1) with the aim of contextualizing the PPP approach. It includes not only procurement options or contracts, but also other contexts in which the private sector may be managing public infrastructure or providing services that may be regarded as public (privatizations and similar situations).

Private Participation in Infrastructure (PPI[10]) is not a synonym for a PPP. The PPI concept includes other forms of private involvement in the delivery and/or management of public infrastructure.

The section will explain which of these procurement options and contexts for private participation may be regarded as PPPs and which may not. It describes the following:

• Infrastructure procurement options that are not regarded as PPPs;
• Infrastructure procurement options that may be regarded as PPPs;
• Contracts for managing services or existing infrastructure; and
• Other private involvement in public infrastructure and services.

PPPs as a broad concept are an option to procure and/or manage infrastructure (including systems, facilities, equipment and plants) and related services, that is, the term implies the existence of a contract and the specific intention by a government to contract out the development and/or management of infrastructure or service. As a public contract, it has to meet a number of features or conditions to be regarded as a PPP, which are more specific and demanding for the infrastructure PPP types of contracts.

Only a procurement contract can be a PPP, and only when all the features described in section 1 are met (with the exception of significant private finance, which is the distinctive feature for private finance PPPs).Therefore, mere private sector involvement alone does not constitute a sufficient reason to describe an arrangement as a PPP, nor, in itself, does the presence of a complete scope bundled in one single contract, or the provision of finance by the private sector. The nature of the revenues does not constitute a decisive factor either, as there are many forms of contractual and non-contractual arrangements in which revenue may come either from users or from the budget.

This section explains the contractual schemes used to deliver, finance and manage infrastructure, as well as other contexts of private participation. These methods show the differentiating factors of a PPP route or model of procurement for contracting infrastructure development and management, which are summarized in Table 1.2.