Myths and Misconceptions

Realities / Clarifications

Profit motive of private sector is incompatible with the service motive of public entity

No. The key is to harness the private sector's profit motive by incentivising them to provide better quality service and earn a reasonable return.

PPPs increase user tariffs

Not Necessarily. When appropriate safeguards such as effective regulation and/or adequate competition are in place prices do not increase arbitrarily.

However in sectors where existing tariffs are inadequate to cover the costs of a specified level of service, tariffs may initially require some upward adjustment. Over time, efficiency gains are expected to rationalize tariffs.

Money for PPPs comes from private "pockets"

Initially, Yes. But the private sector will make those investments provided they can recover them either from users or the Government with a reasonable return.

Once a private partner is brought in, there is little or no role for the public entity

No. The public entity's role changes from direct involvement in construction and service provision to ensuring that the PPP delivers value for the project (also referred to as Value Proposition of Projects) as far as the Government is concerned, and better services for users.