While the term PPP has been in use since the 1990s, there is no single European model of a PPP. The European PPP Report 20091 states that "the range of structures used for PPPs varies widely: in some countries, the concept of a PPP equates only to a concession where the services provided under the concession are paid for by the public.2 In others, PPPs can include every type of outsourcing and joint venture between the public and private sectors". As a result, the recorded number of PPP projects may vary considerably across data sources.
In its Green Paper on PPPs, the European Commission recognised that the following elements normally characterise a PPP3:
• 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 (…);
• The important role of the economic operator, who participates at different stages in the project (design, completion, implementation, funding) (…);
• The distribution of risks between the public partner and the private partner, to whom the risks generally borne by the public sector are transferred (…).
In this paper, to be counted as a PPP, a project must be based on a long term, risk sharing contract between public and private parties based on a project agreement or concession contract. It must also include the bundling of design, construction, operation and/or asset maintenance, together with a major component of private finance. Payments are made over the life of the PPP contract by the public sector to the private partner and are linked to the level and quality of services actually delivered. This definition excludes for example investments made by regulated utilities, project refinancing, privatisations involving asset sale or service outsourcing. However, projects with user charges, shadow tolls, availability charges or mixed payment schemes are all included as representing different forms of risk transfer.
_____________________________________________________________________________________________________
1 DLA PIPER (2009).
2 Concession-based financing of infrastructure is common in the UK, France, Italy, and Spain.
3 Commission of the European Communities (2004).