Many governments bound the scope of their PPP program to particular types of projects or contracts. The aim can be to focus on those projects that are most likely to successfully achieve the government's objectives and provide value for money as PPPs. Where the PPP framework includes particular processes and institutional responsibilities, it may also be necessary to define under what circumstances these will apply. Governments may define the PPP program scope by a combination of the following:
• PPP contract types-there is no consistent, international definition of 'PPP', which can be used to describe a wide range of contract types. Section 1.1 What is a PPP: Defining 'Public-Private Partnership' describes this range, which can stretch from lease arrangements for existing assets and services to Design-Build-Operate-Finance-Maintain contracts for new assets. Some countries define the types of contract that are included under the PPP policy. The aim can be to prioritize contract types that are most consistent with the government's objectives. It can also be important to distinguish when the requirements and processes of the PPP framework will apply. For example, India's draft National PPP Policy (2011) describes the types of contracts that are considered as PPPs, types of contract that will not be used (those involving private ownership of assets), and those that are not covered by the PPP policy (Engineering-Procurement-Construction (EPC) contracts, and divestiture of assets). Brazil (2004) Law 11079, Federal PPP Law, Brasilia [#34] and Chile, Ministerio de Obras Públicas (2010) Ley y Reglamento de Concesiones de Obras Públicas, Santiago [#46] both define limits on the contract duration: in Brazil, a minimum of five years, and in Chile, a maximum of 50 years
• Sectors-the PPP program may be limited to the sectors most in need of investment or improvements in service performance, or those in which PPPs are expected to be most successful. For example, Singapore's PPP policy (2004) is limited to those sectors 'in which other similar countries have had proven success with PPP', including sports facilities, incineration plans, water and sewage treatment works, major IT infrastructure, education facilities, hospitals and polyclinics, expressways, and government office buildings. Some countries exclude sectors considered too sensitive-Uruguay and El Salvador excluded the water sector, Guatemala excluded education and health
• Project size-many governments define a minimum size for PPP projects implemented under the PPP framework. Smaller projects may not make sense because of the relatively high transaction costs of implementing a PPP. In some cases, smaller projects can be implemented, but are not subject to the appraisal and approval requirements defined in the PPP framework. In other cases, a size limit may mean PPP-type contracts cannot be used for smaller projects. For example, Singapore's PPP policy (2004) states that initially, PPPs will be pursued only for projects with an estimated capital value of over US$50 million. Brazil's PPP law (Law 11079, 2004) sets a minimum size of 20 million reais (US$11.7 million) for individual projects launched under the 'PPP Law'.
Table 2.2 provides more detail on how various countries have defined the scope of their PPP programs.
Table 2.2: Example Definitions of PPP Policy Scope
| Country | Reference | PPP Policy Scope |
| Australia | National PPP Guidelines-PPP Policy Framework (2008) [#13, Section 3.1.3, page 6] | Project size-value for money considerations mean PPPs will likely only be applicable for projects over US$50 million |
| Brazil | National PPP Law (Law 11079, 2004) [#34, Article 2, paragraph 4] | Contract Types-only two types of contracts will be considered PPPs in Brazil: (i) sponsored concession-returns for the private party come from user fees and government transfers-, and (ii) administrative concessions-all of the returns to the private party come from government transfers. Concessions not requiring government transferred are not considered PPPs in Brazil. The law also states that the concession must be at least five years long to be considered a PPP. Project Size-PPPs will only be used for project over 20 million reais (US$11.7 million) |
| Chile | Concessions Law (Law 20.410, 2010) [#46] | Contract types-the law specifies a maximum duration for concession contracts of 50 years Sector-the law does not specify the sectors. However, it states that PPPs are to exploit public works and services, the use of "national goods" to develop necessary services |
| Colombia | Contract types-PPP contracts must always make the private investor responsible for operations and maintenance, and must be for less than 30 years. (If the project is longer, it will require approval from the national Council on Economic and Social Policy) Project size-Total investment in the project must be above 6000 smmlv (i.e. Minimum Legal Monthly Wage) | |
| Mauritius | Public Private Partnership Policy Statement (2003) [#181, Section 5, page 4] | Sectors-in the early stage of the PPP program, the government plans to focus on certain key areas-transport, public utilities, solid and liquid waste management, health, education and vocational training, and ICT |
| Mexico | Contract types-defines PPPs as long term contractual relationships between public and private entities, to provide services to the public sector or the general public, and where the infrastructure is provided to increase social wellbeing and investment levels in the country. Contracts must not exceed 40 years in duration (including extensions)-contracts that are longer than 40 years must be approved by law | |
| Puerto Rico | Sector-defines ten eligible sectors: sanitary landfill, reservoirs and dams, electricity generation plants, transport systems, educational, health, security, correctional and rehabilitation facilities, affordable housing, sports, recreations, tourist, and cultural attractions, communication networks, high/tech, informatics and automation systems, and any other sector that has been identified as a priority through legislation | |
| Singapore | Public-Private Partnership Handbook (2004) [#216, Section 1.4.2, page 8] | Sectors-limited to those in which there are successful PPP examples in other countries-including sports facilities, incineration plans, water and sewage treatment works, major IT infrastructure, education facilities, hospitals and polyclinics, expressways, and government office buildings Project size-PPPs will be used only for projects over US$50 million |
PPP policies often set out implementing principles-the guiding rules, or code of conduct under which PPP projects will be implemented. These principles set out the standards against which those responsible for implementing PPPs should be held accountable. Principles are often supported by regulations and processes, detailing how the principles will be put into practice. For example, Box 2.4: PPP Implementing Principles in Peru lists the implementing principles established in Peru's national PPP law.
| Box 2.4: PPP Implementing Principles in Peru Peru's PPP policy is set out through legislative decree 1012. In article 5, this defines the following guiding principles for the PPP Policy: • Value for Money: a public service must be provided by the private actor that can offer better quality for a given cost or lower costs for a given quality outputs. This is how the policy seeks to maximize user satisfaction and optimize the use of public resources • Transparency: all quantitative and qualitative information used to make decision during the evaluation, development, implementation and monitoring stages, must be made public in accordance with Article 3 of the Transparency and Public Information Access Law • Competition: competition must be sought in order to ensure efficiency and lower costs in the provision of public infrastructure and services. The government must also avoid any anti-competitive o collusion behavior • Adequate Risk Allocation: there must be an adequate risk allocation between the public and private parties. This means that the risks must be assigned to the party that has the greatest capacity to manage the risks at a lower cost, considering both the public interest and the project's characteristics • Budgetary Responsibility: this is defined as the Government capacity to assume the firm and contingent financial commitments related to the implementation of PPP contracts without compromising the sustainability of public finances or the regular provision of the public service. Source: Congreso de la República (2008) Decreto Legislativo N° 1012, Lima [#12] |
For other examples of strong guiding principles, see:
• The State Government of Karnataka Infrastructure Policy (2007) [#144, page 135], which clearly sets out and explains its 'Touchstone Principles'
• Australia's National PPP Policy Framework (2008) [#13, pages 10-11], which sets out seven principles: value for money, public interest, risk allocation, output-orientation, transparency, accountability, and 'engaging the market'
• Brazil's Federal PPP Law (Law 11079, 2004) [#34, Article 4] sets out seven principles for the use of PPPs-efficiency, respect for the interests of users and the private actors involved, non-transferability of regulatory, jurisdictional and law enforcement responsibilities, transparency, objective risk allocation, and financial sustainability
• The PPP Law (Law 11688, 2004) of the State of São Paulo, Brazil [#37, Article 1] sets out eight principles that should guide PPP design and implementation. These include: efficiency, respect for the interests of the end users, universal access to essential goods and services, transparency, fiscal, social, and environmental responsibility
• Indonesia's Presidential Regulation n.o 67 (2005) [#148, Article 6], which presents PPP principles promoting transparency, fair consideration, and competition in the PPP program, as well as 'win-win' structures for the public and private parties
• Colombia's National PPP Law (Law 1508, 2011) [#52, Articles 4 and 5] sets out the key principles of the PPP policy in the country: efficiency, necessity, and efficient risk allocation. The law also states that all payments to the private investor must be conditional on the availability of the infrastructure to contractually-set levels
• Jamaica's PPP Policy (2012) sets out four guiding principles: achieving optimal risk transfer and value for money for the public; being fiscally responsible; and maintaining probity and transparency [#166].
| Key References: PPP Policy Examples | |
| Reference | Description |
| Australia, Infrastructure Australia (2008) National PPP Guidelines-PPP Policy Framework, Canberra | Sets out the policy objectives, scope, the assessment of projects as PPPs, and the principles guiding the application of PPPs |
| Indonesia, Presiden (2005) Peraturan Presiden Republik Indonesia Nomor 67 Tahun 2005 Infrastruktur, Jakarta; (2011) Peraturan Presiden Republik Indonesia Nomor 56 Tahun 2011, Jakarta | Sets out the purpose, scope, and principles of the PPP program in Indonesia, as well as defining the PPP process and responsibilities |
| Brasil, São Paulo Assembléia Legislativa (2004) Lei 11688/04 | Lei N° 11.688, São Paulo | Sets out the objectives of the PPP Program, creates the PPP Management Council, the São Paulo Partnerships Corporation, and the PPP Unit within the Planning Secretariat. It also establishes the private partner's responsibilities, sand establishes the rule for PPP contracts |
| General Congress of the United States of Mexico (2012) Ley de Asociaciones Publico Privadas (PPP Law) | Sets out the scope, principles, and processes for the PPP program in Mexico |
| Brasil, Congresso Nacional (2004) Lei N° 11079, Brasília | Defines PPP, and sets out the PPP process, including requirements for tendering process, contract design. It also establishes the institutional framework for the PPP Program |
| Chile, Ministerio de Obras Públicas (2010) Ley y Reglamento de Concesiones de Obras Públicas, Santiago | This law amends the previous Decree which acted as the PPP Law in Chile. It creates the Concessions Council, defines all the preparatory activities that must be carried out by the contracting agency, establishes the procurement process, sets rights and responsibilities, and establishes processes for dealing with change |
| Colombia, El Congreso (2012) Ley No. 1508, Bogotá | Sets out the scope, principles, and processes for the PPP program in Colombia, as well as institutional responsibilities for developing projects |
| Mauritius, Ministry of Economic Development, Financial Services and Corporate Affairs (2003) Public Private Partnership Policy Statement, Port Louis | Describes how PPPs fit into the larger economic framework of the country, defines a PPP, the objectives of the PPP policy, the sectors in which PPPs should be applied, and key considerations for assessing PPPs |
| Puerto Rico, Legislature Assembly (2009) No. 29 (S. B. 469), San Juan | Sets out the purpose, scope, principles, and processes of the PPP program in Puerto Rico |
| Singapore, Ministry of Finance (2004) Public Private Partnership Handbook (Version 1) | Provides an introduction to PPPs, their structures, and the process for procuring and managing PPPs in Singapore. It also defines the scope of Singapore's PPP program |
| Perú, Congreso de la República (2008) Decreto Legislativo N° 1012, Lima | This decree is the national law and it sets out the PPP policy in the country. Defines and classifies PPPs, sets out the principles that should guide the implementation of the policy, define the institutional framework, and sets out the financial rules for PPPs in Perú |
| India, Ministry of Finance, Promoting Infrastructure Development Through PPPs: A Compendium of State Initiatives, New Delhi | Presents PPP policies, laws, and regulations from 12 states in India |