1. The term public-private partnership ("PPP") is not defined at Community level. In general, the term refers to forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of an infrastructure or the provision of a service.
2. The following elements normally characterise PPPs:
• The relatively long duration of the relationship, involving cooperation between the public partner and the private partner on different aspects of a planned project.
• The method of funding the project, in part from the private sector, sometimes by means of complex arrangements between the various players. Nonetheless, public funds - in some cases rather substantial - may be added to the private funds.
• The important role of the economic operator, who participates at different stages in the project (design, completion, implementation, funding). The public partner concentrates primarily on defining the objectives to be attained in terms of public interest, quality of services provided and pricing policy, and it takes responsibility for monitoring compliance with these objectives.
• The distribution of risks between the public partner and the private partner, to whom the risks generally borne by the public sector are transferred. However, a PPP does not necessarily mean that the private partner assumes all the risks, or even the major share of the risks linked to the project. The precise distribution of risk is determined case by case, according to the respective ability of the parties concerned to assess, control and cope with this risk.
3. During the last decade, the PPP phenomenon developed in many fields falling within the scope of the public sector. Various factors explain the increased recourse to PPPs. In view of the budget constraints confronting Member States, it meets a need for private funding for the public sector. Another explanation is the desire to benefit more in public life from the know-how and working methods of the private sector. The development of the PPP is also part of the more general change in the role of the State in the economy, moving from a role of direct operator to one of organiser, regulator and controller.
4. The public authorities of Member States often have recourse to PPP arrangements to undertake infrastructure projects, in particular in sectors such as transport, public health, education and national security. At European level, it was recognised that recourse to PPPs could help to put in place trans-European transport networks, which had fallen very much behind schedule, mainly owing to a lack of funding.1 As part of the Initiative for Growth, the Council has approved a series of measures designed to increase investment in the infrastructure of the trans-European transport network and also in the fields of innovation, research and development, mainly through forms of PPPs.2
5. However, while it is true that cooperation between the public and private sectors can offer micro-economic benefits permitting execution of a project that provides value for money and meets public interest objectives, recourse to PPPs cannot be presented as a miracle solution for a public sector facing budget constraints.3 Experience shows that, for each project, it is necessary to assess whether the partnership option offers real value added compared with other options, such as the conclusion of a more traditional contract.4
6. The Commission also notes with interest that some Member States and accession countries have created tools to coordinate and promote PPPs, aimed, inter alia, at disseminating "good practice" for PPPs at national or at European level. These tools aim to make related expertise mutually available (for example the Tasks forces in the United Kingdom or in Italy) and thus advise users about the different forms of PPP and their stages, such as initial conception, how to choose a private partner, the best allocation of risks, the choice of contractual clauses or even the integration of community financing.
7. Public authorities have also set up partnership structures with the private sector to administer public services, particularly at local level. Public services concerned with waste management or water or energy distribution are thus increasingly being entrusted to businesses, which can be public, private, or a combination thereof. The Green Paper on services of general interest points out in this context that when a public authority decides to award the management of a service to a third party, it is bound to comply with the rules on public contracts and concessions, even if this service is deemed to be of general interest.5 The European Parliament also recognised that compliance with these rules can be "an effective instrument for preventing restrictions of competition, while at the same time permitting State authorities themselves to define and monitor the conditions regarding quality, availability and environmental requirements."6
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1. See Communication from the Commission of 23 April 2003 "Developing the trans-European transport network: innovative funding solutions - interoperability of electronic toll collection systems", COM (2003) 132, and the Report of the high-level group on the trans-European transport network of 27 June 2003.
2. Conclusions of the Presidency, Brussels European Council, 12 December 2003.
3. Eurostat, the Statistical Office of the European Communities, has on the 11th of February 2004 (cf. press release STAT/04/18) taken a decision on the accounting treatment in national accounts of contracts undertaken by government units in the framework of partnerships with non-government units. The decision specifies the impact on government deficit/surplus and debt. Eurostat recommends that the assets involved in a public-private partnership should be classified as non-government assets, and therefore recorded off balance sheet for government, if both of the following conditions are met: 1. the private partner bears the construction risk, and 2. the private partner bears at least one of either availability or demand risk.
4. See Communication from the Commission to the Council and to the Parliament " Public finances in EMU 2003", published in the European Economy No 3/2003 (COM (2003) 283 final).
5. COM (2003)270 final. See, for the text of the Green Paper and the contributions, http://europa.eu.int/comm.secretariat_general/services_general_interest.
6. Resolution of the European Parliament on the Green Paper on services of general interest, adopted on 14 January 2004.