Deloitte has released two new reports on infrastructure public-private partnerships (PPPs) that are well worth a read. From the press release:
After decades of neglect, infrastructure has finally made it to the top of the political agenda. Thanks to stimulus packages in the United States and many other countries, public infrastructure is receiving both long over-due attention and a significant infusion of public funds.
While this is a welcome development, the level of direct government funding proposed will meet only a tiny fraction of infrastructure needs around the world. In the United States, according to the American Society of Civil Engineers, there is a $2.2 trillion gap between the supply of and demand for roads and bridges, water and sewage systems, public transit systems and other public infrastructure. The infrastructure stimulus money from the 2009 American Recovery and Reinvestment Act (ARRA) addresses less than 5 percent of these infrastructure needs.
At the same time, that gap may be increasingly difficult to close because the global recession and tightened credit markets have dramatically altered the landscape for infrastructure funding and finance. “Partnering for value: Structuring effective public-private partnerships for infrastructure” and “The changing landscape for infrastructure funding and finance” look at these economic trends and the impact they have on infrastructure funding, particularly with regard to the prospects for public-private partnerships (PPPs). The reports analyze these issues and make some concrete recommendations for effective, efficient models to meet the nation’s infrastructure needs.
The former report has a great overview of how governments should approach PPPs, particularly with regard to the use of Value for Money analysis to determine whether or not a PPP makes sense for a given situation. The latter report considers the effects of the recession and credit crisis on the infrastructure sector and concludes, “[…] there should be an ongoing role for the private sector in the development of infrastructure and the public services delivered through it. The credit crisis may have temporarily changed the economics of public-private partnerships as financial transactions, but it has only served to highlight the need for new approaches to solving the world’s infrastructure problem.” Both are excellent contributions to the literature on PPPs.