4. Where PPPs are Used – Infrastructure Sectors

This section explains further the concept of infrastructure and public assets. It provides examples of infrastructure types that are usually developed under PPP schemes.

Public Assets and Infrastructure

This PPP Certification Guide is about procuring public tangible assets using a PPP process. Public assets are fixed assets (that is, assets purchased for long-term use) that are subject or dedicated to public use or concomitant to the provision of a public service.

The PPP Certification Guide also refers to public infrastructure instead of public assets, using infrastructure in the broad sense, as the type of public asset normally procured under a PPP.

The Oxford English Dictionary defines infrastructure as: “The basic physical and organizational structures and facilities (for example, buildings, roads, and power supplies) needed for the operation of a society or enterprise”.

This may include complete systems, but also parts of it, such as structures, plants, facilities or equipment generally necessary for the provision of a public service or subject to public use. Some examples are as follows:

• Facility buildings hosting the provision of justice, health, education, public security services, and culture (for example, theaters and convention centers);
• Transport structures, facilities or systems used by the public for transportation purposes. This includes structures such as roads, bridges, and tunnels; complex facilities such as airport terminals; systems such as light rail lines or groups of lines (including the rail structures, electro-mechanical equipment, depot facilities, communication and signaling systems); and vehicles for public use/transportation of passengers;
• Transportation structures, facilities or systems linked to a public service used by economic operators, including electricity or gas transportation, water transportation, passenger transportation (the rail track and related systems), and data transportation (in telecommunications);
• Equipment or plants treating sewage, and those generating public goods such as power, gas, and water;
• Buildings for social housing, that is, those intended to be rented to low-income families;
• Housing or accommodation facilities to host public servants (for example, office accommodations); and
• Systems or equipment for testing or investigating for a public benefit, such as public security, forensic services, or defense force equipment.

BOX 1.13 sets out distinctive features of a public asset that influence the concept of PPPs as an infrastructure procurement method.

Types of Infrastructure: Economic versus Social Infrastructure

There are two main types of public infrastructure: economic and social infrastructure.

Economic infrastructure is infrastructure that makes business activity possible, such as communications and transportation (for passengers and freight), as well as utilities’ networks, and systems and plants such as in water, waste and energy supply systems[30]. Typically, the activity that uses the infrastructure is priced or a related service is charged to the user or to an economic operator that uses the infrastructure to provide the service to the ultimate user/consumer.

Communications infrastructure is de-regulated in many countries and private operators are the ultimate legal owners of the infrastructure. They use the infrastructure to provide communications services in an open and competitive market. However, telecommunications systems can be considered public infrastructure in those countries in which the utilities are publicly owned and the activity is reserved for the public sector, or when the public sector decides to boost a telecommunications network in specific areas (for example, rural areas) through government investment[31].

Social infrastructure is infrastructure (mostly facilities in the form of buildings) that accommodates social services. For example, hospitals, schools and universities, prisons, social housing, law courts, and so on. See box 1.14 for distinction between social and economic infrastructure.

When the objective of the facility is to host or accommodate administrative functions or even to provide housing for public servants and their families (that is, where there is no public service provided from the building), the infrastructure is usually referred to as accommodation infrastructure.

This type of infrastructure and other assets used in government activities that do not necessarily provide a direct service to the public (for instance, defense) are sometimes also referred to as government infrastructure.

Type of Assets by Sector

Public infrastructure assets may be classified into a number of sectors. Table 1.5 provides a long list of subsectors and types of infrastructure assets where it is common to see examples of PPP developments with private finance.

However, two considerations are relevant:

• Developing PPPs and any other form of private participation in certain sectors in some countries may face strong public and political opposition; and
• Some country jurisdictions have opted to leave some sectors out of the scope of PPP policies and legislation (a notable example being health infrastructure and services). This may be appropriate as a compromise solution in order to gain political consensus on the use of PPPs.

So, while PPPs may fit well with most infrastructure sectors, the approach will not necessarily suit all specific projects (see section 5.5. and chapter 3.5).