| A long-term contractual relationship between a state or state owned entity (SOE) and a private-sector entity whereby the latter delivers and funds public services using a capital asset, sharing the associated risks with the state or SOE. There are a number of types of PPP characterised by the level of risk and responsibility transferred to the private sector which may typically include the design, construction, operation, maintenance and financing of the asset or service. |
| Broadly defined to include financial and non-financial forms of participation that involve managing infrastructure services. Covers projects ranging from relatively simple service and management contracts through to full or partial public divestiture of the asset. |
| The private party performs specific, time-bound tasks, such as supplying inputs, taking care of planning studies, computing and payroll services, public relations, maintaining assets etc., usually in exchange for a fixed fee. |
| A private firm is appointed to provide managerial services, often for a fixed fee. The contract typically requires the private party to manage a utility and provide services to the public for a given period of time. The remuneration of the private operator may be fixed at the outset, in which case the commercial risks of the operation are borne entirely by the public sector, or it may be linked to the performance of the utility, in which case the private operator bears some commercial risk. |
| Written agreement under which a property owner (state) allows a tenant (private sector operator) to use the property for a specified period of time in return for a specified rent. The private-sector operator is responsible for providing the contracted service at its own risk, including operating and maintaining the infrastructure for a given period of time. The operator is not responsible, however, for financing investment such as the replacement of major assets or expansions. If user payments cover more than the operator's remuneration, the operator is generally obligated to return the difference to the public authorities. |
| Affermage only differs from a lease in terms of revenue for the private sector. In both cases, the private operator collects the tariffs and pays fees to the state. But while the fee is fixed in the first case, it is proportional to the volume of output sold in the second case. |
| An agreement to operate a facility or provide a service on an exclusive basis for a given contractual term. The private sector may be responsible for asset replacement and network expansion. Revenue received by the private sector operator will be based on user charges. |
| Build-Own-Transfer contracts often correspond to Greenfield concessions. The private sector will build and retain ownership of an asset for a fixed-term. May involve take or pay provisions, i.e. revenue guarantees, that subject governments to contingent liabilities. On expiration of a BOT, ownership of the asset is returned to the public sector. |
| Build-Own-Operate contracts are similar to BOTs except that they do not involve transfer of the assets to the public sector after a pre-determined period of time. |
| Build-Own-Operate-Transfer schemes imply that the private sector obtain the capital needed for construction and operation of the infrastructure for an agreed period of time (anywhere between 15 and 30 years), and then transfers ownership back to the government. |
| Build-Operate-Train-Transfer schemes are another variation of BOT whereby the private operator commits to train the public sector to allow a smoother transfer of the asset back to the public sector at the end of the contractual term. |
| Transfer of the ownership of existing assets and responsibility for future upkeep and expansion to the private sector. |
| Company that joins two or more parties - private or/and public. |
| Persons or groups who are directly or indirectly affected by a given policy area, as well as those who may have interests in it and/or have the ability to influence its outcome (are in their sphere of influence), either positively or negatively - and want to engage in the decision-making process. They may include civil society organisations and groups with special interests including locally affected communities or individuals and their formal and informal representatives, national or local government authorities, elected representatives, regulators, agencies, end users, the academic community, utilities and other businesses and non-state actors / non-governmental organisations. |
| Countries participating in the MENA-OECD Investment Programme include Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestinian Authority, Qatar, Saudi Arabia, Tunisia, United Arab Emirates and Yemen. |
| Permanent assets that a society needs for the orderly operation of its economy. It includes roads, bridges and highways, power plants and grids, communication systems, ports, railways, transit and airports, housing, water and sewers. A sub-sector, social infrastructure, includes those assets which provide social services, notably schools, healthcare facilities, universities, prisons and court houses. The infrastructure sector as a whole strengthens and drives the economy, creates jobs and acts as a key enabler for future economic development and raising living standards. |
| In order to support a private partner, the government may wish to guarantee its debt. Guarantees are regarded as contingent liabilities recorded off the balance sheet until the guarantee is eventually called. |
| What government judges to be an optimal combination of quantity, quality, features and price (i.e. cost), calculated over the whole of a project's life cycle. Value for money must be the primary objective in PPP design. A PPP project yields higher value for money compared to traditional procurement or government in-house production if it provides better features, higher quality or lower whole-of-life cost. Higher value for money is mainly obtained through risk transfer, competition and the use of private sector management skills and innovation. |
| Risk sharing plays a fundamental role in whether or not a PPP will yield value for money. As risk is an important part of the incentive mechanism for the private partner to be as efficient as possible, risk sharing is a key feature for a successful PPP. In general, risk must be carried by the party best suited to carry it, i.e. the party that can carry the risk at least cost. Thus, efficiency improves through adequate risk sharing. The way risk is shared between the government and the private partner is also the key feature when classifying a project as a PPP or as traditional procurement. |