In some European countries, private sector involvement in the activities of the public sector is a long-lasting tradition. The present need for EU member states to comply with environmental requirements imposes a heavy investment burden on governments, this being one of the factors pushing them further towards partnerships with the private sector. Thus, discussions about public private partnerships (PPPs) have evolved at the local to regional and European levels. At each of these levels, member states are introducing changes in legislation and institutions supporting PPP are being formed.
The state of PPP development varies widely between the member states, but the establishment of PPPs is one of the tools available to governments to achieve policy objectives to meet the demand for public services. However, because PPP is a new tool, public sector officials seldom have experience implementing such projects.
As of the year the research was done, the EU had neither an agreed uniform definition of PPP, nor had it an overall, EU-wide policy regarding PPPs. The capability of the private sector to raise finance is not the only common characteristic of PPP involvement; this is coupled with shared risks and demand on the part of the governments for the management and experience that the private sector provides.
Over the last ten years, a number of EU initiatives in the area of PPPs have taken place. Among the most notable are: the White Paper on Growth, Competitiveness and Employment (COM (93) 700); the High Level Group on PPP Financing of Trans-European Transport Networks (TEN-T) Projects (Kinnock report) (COM (97) 453); and the Green Paper - EU Consultative Paper on PPPs and Community Law on Public Contracts and Concessions (COM (2004) 327). The PPP Green Paper has become an answer to the European Parliament suggestion that the possibility of adopting a draft directive on setting universal rules in the area of concessions and other forms of PPPs should be assessed.
Effective legal, regulatory and contractual conditions perform successfully when they are based on and supported by the institutional framework of a country. A majority of Organization of Economic Co-operation and Development (OECD) countries, including the 10 new EU member states, realize this necessity and have developed various institutional framework models. Three such models are usually defined according to the degree of centralization of PPP institutions in a country's overall state structure; the models are: highly centralized (Canada); highly decentralized (France and Portugal); and mixed centralized and decentralized (Ireland, the UK, Italy and the Netherlands).
New member states are actively amending their legislation to allow more effective involvement of the private sector.