The Seven Sins of Flawed Public-Private Partnerships
There are three stakeholders in a public-private partnership (PPP), (a) the government in office, (b) private firms (financial and non-financial) and investors (individual and institutional), and (c) final beneficiaries (taxpayers or users, present...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2015/12/25674410/seven-sins-flawed-public-private-partnerships http://hdl.handle.net/10986/23595 |
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okr-10986-23595 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AUCTION CONTINGENT LIABILITIES CAPITAL MARKETS FINANCIAL SERVICES HOLDING BROKERAGE LIABILITY ACCOUNTING CHECKS PUBLIC-PRIVATE PARTNERSHIPS FUND MANAGERS INTEREST INSTITUTIONAL INVESTORS LIFE INSURANCE GUARANTEES LONG-TERM FINANCE SAVINGS ACCOUNTS EXCHANGE DISCOUNT RATE CAPITAL BASE LIQUIDITY LONG-TERM LIABILITIES FIXED ANNUITIES CAPITAL STRUCTURES REVENUES CAPITAL STRUCTURE REGULATOR DEFAULT RISK BONDS LOAN DISCOUNT RENEGOTIATION SUBSIDY PRICE SAVING BENEFICIARIES GOVERNMENT GUARANTEES PENSION CREDITOR DISPUTE RESOLUTION BUDGET CONCESSION LONG-TERM ASSET MARKET LIQUIDITY INVESTMENT HORIZONS INSTITUTIONAL INVESTOR PRIVATE CREDITOR DISPUTE RESOLUTION MECHANISM SAVINGS PUBLIC-PRIVATE PARTNERSHIP CONCESSION CONTRACT CURRENCY CONTRACT RENEGOTIATION INFRASTRUCTURE PROJECT CONTRACTS PRIVATIZATIONS OPTIONS MARKETS DEBT RETURN PUBLIC FINANCE NEGOTIATIONS LIFE INSURANCE COMPANIES BREACH OF CONTRACT LOANS SECONDARY MARKET LIQUIDITY RISK SHARING PENSION FUNDS FINANCIAL SYSTEM DUE DILIGENCE SUBSIDIES FINANCE TAXES CONTINGENT LIABILITY INVESTORS SYSTEMIC RISKS GOOD JURISDICTION PROCUREMENT DISCLOSURE STANDARDS SOVEREIGN RISK FUTURE GOVERNMENT GUARANTEE CONFLICTS OF INTEREST CONCESSIONS BOND MARKET CONTRACT INFRASTRUCTURE BONDS BIDS BALANCE SHEET MARKET DEFAULT INFRASTRUCTURE PROJECTS LOCAL CURRENCY FINANCIAL CONTRACTS GOVERNANCE RENEGOTIATIONS INFRASTRUCTURE CONCESSIONS INSURANCE ECONOMIC DEVELOPMENT GOVERNMENT BONDS INTERESTS INVESTOR MISSING MARKET MUTUAL FUND INVESTMENT RATES OF RETURN BOND COMMERCIAL BANKS CONTRACTUAL OBLIGATION INFRASTRUCTURE BOND INFRASTRUCTURE FINANCE FINANCIAL ASSETS PRIVATE INVESTORS BID COORDINATION FAILURES PROFIT RESOLUTION MECHANISM CONTRACT RENEGOTIATIONS SUPERVISORY AGENCY PENSION FUND LONG-TERM INVESTORS INSURANCE COMPANIES LEVERAGE EXCHANGE RATE INSTITUTIONAL FRAMEWORK SECONDARY MARKET FINANCIAL SYSTEMS LIABILITIES LONG TERM FINANCE OUTSOURCING FINANCIAL SERVICES INDUSTRY GUARANTEE LONG-TERM ASSETS UNDERDEVELOPED FINANCIAL SYSTEMS EXCHANGE RATE REGIMES FAIR PRICE ASSET MANAGERS |
| spellingShingle |
AUCTION CONTINGENT LIABILITIES CAPITAL MARKETS FINANCIAL SERVICES HOLDING BROKERAGE LIABILITY ACCOUNTING CHECKS PUBLIC-PRIVATE PARTNERSHIPS FUND MANAGERS INTEREST INSTITUTIONAL INVESTORS LIFE INSURANCE GUARANTEES LONG-TERM FINANCE SAVINGS ACCOUNTS EXCHANGE DISCOUNT RATE CAPITAL BASE LIQUIDITY LONG-TERM LIABILITIES FIXED ANNUITIES CAPITAL STRUCTURES REVENUES CAPITAL STRUCTURE REGULATOR DEFAULT RISK BONDS LOAN DISCOUNT RENEGOTIATION SUBSIDY PRICE SAVING BENEFICIARIES GOVERNMENT GUARANTEES PENSION CREDITOR DISPUTE RESOLUTION BUDGET CONCESSION LONG-TERM ASSET MARKET LIQUIDITY INVESTMENT HORIZONS INSTITUTIONAL INVESTOR PRIVATE CREDITOR DISPUTE RESOLUTION MECHANISM SAVINGS PUBLIC-PRIVATE PARTNERSHIP CONCESSION CONTRACT CURRENCY CONTRACT RENEGOTIATION INFRASTRUCTURE PROJECT CONTRACTS PRIVATIZATIONS OPTIONS MARKETS DEBT RETURN PUBLIC FINANCE NEGOTIATIONS LIFE INSURANCE COMPANIES BREACH OF CONTRACT LOANS SECONDARY MARKET LIQUIDITY RISK SHARING PENSION FUNDS FINANCIAL SYSTEM DUE DILIGENCE SUBSIDIES FINANCE TAXES CONTINGENT LIABILITY INVESTORS SYSTEMIC RISKS GOOD JURISDICTION PROCUREMENT DISCLOSURE STANDARDS SOVEREIGN RISK FUTURE GOVERNMENT GUARANTEE CONFLICTS OF INTEREST CONCESSIONS BOND MARKET CONTRACT INFRASTRUCTURE BONDS BIDS BALANCE SHEET MARKET DEFAULT INFRASTRUCTURE PROJECTS LOCAL CURRENCY FINANCIAL CONTRACTS GOVERNANCE RENEGOTIATIONS INFRASTRUCTURE CONCESSIONS INSURANCE ECONOMIC DEVELOPMENT GOVERNMENT BONDS INTERESTS INVESTOR MISSING MARKET MUTUAL FUND INVESTMENT RATES OF RETURN BOND COMMERCIAL BANKS CONTRACTUAL OBLIGATION INFRASTRUCTURE BOND INFRASTRUCTURE FINANCE FINANCIAL ASSETS PRIVATE INVESTORS BID COORDINATION FAILURES PROFIT RESOLUTION MECHANISM CONTRACT RENEGOTIATIONS SUPERVISORY AGENCY PENSION FUND LONG-TERM INVESTORS INSURANCE COMPANIES LEVERAGE EXCHANGE RATE INSTITUTIONAL FRAMEWORK SECONDARY MARKET FINANCIAL SYSTEMS LIABILITIES LONG TERM FINANCE OUTSOURCING FINANCIAL SERVICES INDUSTRY GUARANTEE LONG-TERM ASSETS UNDERDEVELOPED FINANCIAL SYSTEMS EXCHANGE RATE REGIMES FAIR PRICE ASSET MANAGERS de la Torre, Augusto Rudolph, Heinz The Seven Sins of Flawed Public-Private Partnerships |
| geographic_facet |
Latin America & Caribbean |
| description |
There are three stakeholders in a
public-private partnership (PPP), (a) the government in
office, (b) private firms (financial and non-financial) and
investors (individual and institutional), and (c) final
beneficiaries (taxpayers or users, present and future). The
raison detre of PPPs is threefold: (i) to crowd in private
firms and investors into projects that they will otherwise
not undertake; (ii) to transfer to the private sector a
significant part of the risks and costs that the government
would otherwise fully absorb; and (iii) to ensure that the
projects efficiency/quality is at least equal to that
obtained if the government alone carried all costs and
risks. Important (yet often ignored) implications follow.
First, outsourcing (e.g., construction and maintenance) to
the private sector does not by itself constitute a PPP if
all risks and costs are, in one way or another, still borne
by the government. Second, a PPP does not reduce total risk;
it simply distributes it differently, involving private
sector firms and investors. Third, the total costs borne by
the final beneficiaries would be lower under a PPP (compared
to a project whose costs and risks rest completely in the
governments balance sheet) only if the PPP achieves
efficiency gains; otherwise, what beneficiaries save in
taxes they will pay in user fees, although, under a PPP,
more of the costs would be assigned to direct
beneficiaries/users, than to taxpayers at large. Fourth,
that a PPP can provide (cash) budget relief may be a welcome
corollary for the government in office but it is not a core
objective of a PPP. |
| format |
Working Paper |
| author |
de la Torre, Augusto Rudolph, Heinz |
| author_facet |
de la Torre, Augusto Rudolph, Heinz |
| author_sort |
de la Torre, Augusto |
| title |
The Seven Sins of Flawed Public-Private Partnerships |
| title_short |
The Seven Sins of Flawed Public-Private Partnerships |
| title_full |
The Seven Sins of Flawed Public-Private Partnerships |
| title_fullStr |
The Seven Sins of Flawed Public-Private Partnerships |
| title_full_unstemmed |
The Seven Sins of Flawed Public-Private Partnerships |
| title_sort |
seven sins of flawed public-private partnerships |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2015/12/25674410/seven-sins-flawed-public-private-partnerships http://hdl.handle.net/10986/23595 |
| _version_ |
1764454204252880896 |
| spelling |
okr-10986-235952021-06-14T10:19:27Z The Seven Sins of Flawed Public-Private Partnerships de la Torre, Augusto Rudolph, Heinz AUCTION CONTINGENT LIABILITIES CAPITAL MARKETS FINANCIAL SERVICES HOLDING BROKERAGE LIABILITY ACCOUNTING CHECKS PUBLIC-PRIVATE PARTNERSHIPS FUND MANAGERS INTEREST INSTITUTIONAL INVESTORS LIFE INSURANCE GUARANTEES LONG-TERM FINANCE SAVINGS ACCOUNTS EXCHANGE DISCOUNT RATE CAPITAL BASE LIQUIDITY LONG-TERM LIABILITIES FIXED ANNUITIES CAPITAL STRUCTURES REVENUES CAPITAL STRUCTURE REGULATOR DEFAULT RISK BONDS LOAN DISCOUNT RENEGOTIATION SUBSIDY PRICE SAVING BENEFICIARIES GOVERNMENT GUARANTEES PENSION CREDITOR DISPUTE RESOLUTION BUDGET CONCESSION LONG-TERM ASSET MARKET LIQUIDITY INVESTMENT HORIZONS INSTITUTIONAL INVESTOR PRIVATE CREDITOR DISPUTE RESOLUTION MECHANISM SAVINGS PUBLIC-PRIVATE PARTNERSHIP CONCESSION CONTRACT CURRENCY CONTRACT RENEGOTIATION INFRASTRUCTURE PROJECT CONTRACTS PRIVATIZATIONS OPTIONS MARKETS DEBT RETURN PUBLIC FINANCE NEGOTIATIONS LIFE INSURANCE COMPANIES BREACH OF CONTRACT LOANS SECONDARY MARKET LIQUIDITY RISK SHARING PENSION FUNDS FINANCIAL SYSTEM DUE DILIGENCE SUBSIDIES FINANCE TAXES CONTINGENT LIABILITY INVESTORS SYSTEMIC RISKS GOOD JURISDICTION PROCUREMENT DISCLOSURE STANDARDS SOVEREIGN RISK FUTURE GOVERNMENT GUARANTEE CONFLICTS OF INTEREST CONCESSIONS BOND MARKET CONTRACT INFRASTRUCTURE BONDS BIDS BALANCE SHEET MARKET DEFAULT INFRASTRUCTURE PROJECTS LOCAL CURRENCY FINANCIAL CONTRACTS GOVERNANCE RENEGOTIATIONS INFRASTRUCTURE CONCESSIONS INSURANCE ECONOMIC DEVELOPMENT GOVERNMENT BONDS INTERESTS INVESTOR MISSING MARKET MUTUAL FUND INVESTMENT RATES OF RETURN BOND COMMERCIAL BANKS CONTRACTUAL OBLIGATION INFRASTRUCTURE BOND INFRASTRUCTURE FINANCE FINANCIAL ASSETS PRIVATE INVESTORS BID COORDINATION FAILURES PROFIT RESOLUTION MECHANISM CONTRACT RENEGOTIATIONS SUPERVISORY AGENCY PENSION FUND LONG-TERM INVESTORS INSURANCE COMPANIES LEVERAGE EXCHANGE RATE INSTITUTIONAL FRAMEWORK SECONDARY MARKET FINANCIAL SYSTEMS LIABILITIES LONG TERM FINANCE OUTSOURCING FINANCIAL SERVICES INDUSTRY GUARANTEE LONG-TERM ASSETS UNDERDEVELOPED FINANCIAL SYSTEMS EXCHANGE RATE REGIMES FAIR PRICE ASSET MANAGERS There are three stakeholders in a public-private partnership (PPP), (a) the government in office, (b) private firms (financial and non-financial) and investors (individual and institutional), and (c) final beneficiaries (taxpayers or users, present and future). The raison detre of PPPs is threefold: (i) to crowd in private firms and investors into projects that they will otherwise not undertake; (ii) to transfer to the private sector a significant part of the risks and costs that the government would otherwise fully absorb; and (iii) to ensure that the projects efficiency/quality is at least equal to that obtained if the government alone carried all costs and risks. Important (yet often ignored) implications follow. First, outsourcing (e.g., construction and maintenance) to the private sector does not by itself constitute a PPP if all risks and costs are, in one way or another, still borne by the government. Second, a PPP does not reduce total risk; it simply distributes it differently, involving private sector firms and investors. Third, the total costs borne by the final beneficiaries would be lower under a PPP (compared to a project whose costs and risks rest completely in the governments balance sheet) only if the PPP achieves efficiency gains; otherwise, what beneficiaries save in taxes they will pay in user fees, although, under a PPP, more of the costs would be assigned to direct beneficiaries/users, than to taxpayers at large. Fourth, that a PPP can provide (cash) budget relief may be a welcome corollary for the government in office but it is not a core objective of a PPP. 2016-01-07T21:38:43Z 2016-01-07T21:38:43Z 2015 Working Paper http://documents.worldbank.org/curated/en/2015/12/25674410/seven-sins-flawed-public-private-partnerships http://hdl.handle.net/10986/23595 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research Latin America & Caribbean |