Public Private Partnerships

A WRITTEN REPORT

Presented to
Department of Political Science
College of Arts and Social Sciences
MSU Iligan Institute of Technology
Iligan City

In Partial Fulfillment of the Requirements for

POLITICAL SCIENCE 114
(Theories and Approaches in Peace,
Conflict and Development)

JAYA KRISZA U. FINEZA

December 9, 2016

Public Private Partnerships (PPP)

History and Emergence of Public-Private Partnerships

Public-private ventures have existed since a long time. The first records which prove the
existence of private engagement in the public sector are from the time of Caesar Augustus. The
Roman Empire gave concessions to the Salassi tribe which authorized them to raise money from
travelers coming across the saint Bernhard Pass. In return the tribe maintained the pass and
provided guidance across the mountain. (Public-Private Infrastructure Advisory Facility, 2009)
The involvement of the private sector in public affairs was very common in Europe since
the 13th century. For example, the London Bridge that was put up in 1228 under King Edward
III was a toll bridge. Its construction was financed by the release of tolling rights. During the
Spanish War from 1585 to 1603 private engagement in public affairs was vital to the raise of
England as a sea power. The vessels which were captained by Sir Francis Drake and Sir Walter
Raleigh were financed by merchants and aristocratic landowners. More ships have been owned
by privateers than by the Queen. (Public-Private Infrastructure Advisory Facility, 2009)
By 1900s, new public infrastructure was mainly designed, constructed and financed from
public funds and prior to 1982 there was very limited private financing of transport infrastructure
in developing or transition countries. One major exception in Europe was the tolled motorway
construction programs in France and Spain from the 1960s financed by private sectors, mainly
contractors and banks. (Jamil, Sarah. 2008)
Emergence of Public-Private Partnership in the Philippines
PPP has been in the Philippines since 1990. It took effect by virtue of Republic Act
6957 known as An Act Authorizing the Financing, Construction, Operation and Maintenance of
Infrastructure Projects by the Private Sector, and for the Other Purposes. It was signed by
former President Corazon Aquino on July 9, 1990. Under Section 1, Declaration of Policy, RA
6957 recognized the indispensable role of the private sector as the main engine for national
growth and development.

The Act was meant to mobilize the private sector to invest in building, operating and
maintaining infrastructure projects and other developmental programs that have been under the
responsibility of the government.
RA 6957 was amended on May 5, 1994 when former President Fidel V.
Ramos signed Republic Act 7718 otherwise known as an act amending certain sections of
republic act no. 6957. RA 7718 is known as "An Act amending certain sections of Republic Act
no. 6957, entitled "An Act authorizing the Financing, Construction, Operation and Maintenance
of projects by the private sector, and for other purposes". Under Section 1, Declaration of Policy,
Republic Act 7718 clearly stated its intent to provide financial incentives and minimize
government regulations to motivate and support the private sector undertake certain projects.
On 9 September 2010, President Benigno Aquino III signed Executive Order Number 8,
entitled Reorganizing and Renaming the Build-Operate and Transfer (BOT) Center to the
Public-Private Partnership (PPP) Center of the Philippines and Transferring its Attachment from
the Department of Trade and Industry to the National Economic and Development Authority and
for Other Purposes. The Executive Order emphasized the need to expedite programs and
projects as it is a major strategy for achieving the countrys economic growth.

Definition of PPP
Building and rebuilding cities and new communities is a complex and challenging
endeavor under the best of circumstances. Among other things, it requires merging public and
private interests and resources. No longer can private capital be relied on to pay high price of
assembling and preparing appropriate sites for re-development. No longer can local governments
bear the full burden of paying the costs of requisite public infrastructure and facilities. True
partnerships propose collaboration and cooperation to achieve shared goals and objectives. This
process requires applying far more effort and skill to weighing, and then balancing public and
private interests, and minimizing conflicts. (Corrigan, et. al. 2005)
PPP can be broadly defined as a contractual agreement between the government and a
private firm targeted towards financing, designing, implementing and operating infrastructure
facilities and services that were traditionally provided by the public sector.

A public-private partnership exists when public sector agencies join with private sector
entities and enter into a business relationship to attain a commonly shared goal that also achieves
objectives of the individual partners.
Today, public-private partnerships are considered creative alliances formed between
government entity and private developers to achieve a common purpose of providing public
infrastructure, community facilities and related services. PPP can serve as model for community
and economic development, especially with issues that cannot be completely resolved by the
public and private sectors individually. (Friedman, 2016)
In PPP arrangement, government remains actively involved throughout the projects life
cycle. It is a mechanism for government to implement public infrastructure and/or services using
the resources and expertise of the private sector. The private sector is responsible for the more
commercial functions such as project design, construction, finance and operations.
PPP Models
Build-Transfer (BT): The government contracts with a private partner to design and build a
facility in accordance with the requirements set by the government. After completing the facility,
the government assumes responsibility for operating and maintaining the facility.
Build-Transfer-Operate (BTO): The private sector designs and builds a facility. Once the
facility is completed, the title for the new facility is transferred to the public sector, while the
private sector operates the facility for a specified period.
Build-Operate-Transfer (BOT): The government grants a franchise to a private partner to
finance, design, build and operate a facility for a specific period of time. Ownership of the
facility is transferred back to the public sector at the end of that period.
Characteristics of PPP
1. Advocacy - public-private partnership advances a cause or highlights an issue for global
consideration.
2. developing norms and standards - the partnership establishes codes of conduct and
standards for companies doing business in the global economy. Such codes provide a
frame of reference for defining acceptable behavior.

3. sharing and coordinating resources and expertise - the partnership contributes to key
development issues by sharing complementary resources and expertise from different
sectors. By utilizing economies of scale in knowledge generation and dissemination, the
partnership helps build capacity in developing countries.
How PPP Improves Quality of Life and Standard of Living
Many government organizations are tapping the private sector for capital, technology, and
expertise to finance, develop, and manage public-sector infrastructure projects. Policymakers
are also finding that, when coupled with the right sets of policies and institutional
environments, these publicprivate partnerships (PPPs) can also become catalysts for economic
development.
1. PPPs foster service expansion.
For the private sector, investment in a public infrastructure project is a business
prospect. The drive to generate profits, combined with technical and managerial
specialization, spurs private partners to invest more resources in expanded
services and improved customer service.
2. PPPs operate with greater efficiency.
Wasteful practices eat into profits; in PPP projects, private-sector partners find
opportunities to introduce more efficient practices to reduce waste and improve
revenue collection.
3. PPPs deliver in less time.
Private firms have numerous incentives for delivering a project on time, including
the prospect of a faster return on their investment.

The Role of PPP in Education

The main rationale for developing public-private partnerships (PPPs) in education is to

maximize the potential for expanding equitable access to schooling and for improving
education outcomes, especially for marginalized groups.
Education services
Governments contract out the enrollment of students in private schools. By paying for
students to enroll in existing schools, governments can quickly expand access without
incurring any up-front expenditure on constructing and equipping new schools. This can
be targeted to specific students and groups, such as low-income or disadvantaged
students. Contracting for education services also makes it possible to leverage private
schools investments in their school capital assets by sending publicly funded students to
these schools. As a result, the publicly funded students receive a high quality education.
Also, if the contracted schools are willing to subsidize publicly funded students from the
fees paid by their paying students (as many nonprofit schools do), this form of
contracting allows publicly funded students to benefit from the higher fees paid by
privately funded students (World Bank 2006).
Professional and support services
Governments can hire private organizations to provide a range of support services to
public and private schools that cater to low-income students. In many countries, the
capacity of the public sector to deliver high-quality education is compromised by a lack
of knowledge of effective pedagogical practices. To mitigate this, governments can
contract with private organizations that have had proven successes with their education
methods to provide certain key services such as teacher training, curriculum design,
textbook provision, and supplemental services for public or private schools educating
poor students.
Conclusion
Public-private partnerships (PPPs) provide an important tool for governments seeking to
expand and improve the infrastructure and delivery of social services for their citizens, and can
help to boost economic growth and poverty reduction. Implementing successful PPPs ultimately

relies on the abilities of the individuals tasked with making them work. The availability of
specific skills needed to prepare, launch, and manage PPPs can represent a major implementation
challenge in developing countries. Reaping the benefits of PPPs involves a careful and complex
preparation process as final results may take time to materialize after the contract has been
signed.
References

Child Care State Systems Specialist Network, A Service of the Office of Child Care (n.d.)
Public-private Partnerships: Getting Started and Principles for Success. PDF
[https://childcareta.acf.hhs.gov/sites/default/files/public/getting_started_tips_tricks.pdf]
Corrigan, et. al. (2005). Ten Principles for Successful Public/Private Partnerships PDF
[http://uli.org/wp-content/uploads/2005/01/TP_Partnerships.pdf]
Friedman, S. (2016). Successful Public/Private Partnerships: From Principles to
Practices. PDF [http://uli.org/wp-content/uploads/ULI-Documents/Successful-Public-PrivatePartnerships.pdf] Washington, DC.
Lee, Suezan C. (2006). Public-Private Partnerships for Development: A Handbook for
Business, PDF [https://www.ced.org/pdf/Public-Private-Partnerships-for-Development.pdf]
Jamil, Sarah. 2008). The Miscellaneous Desirability of Public-Private Partnerships and an
Approach
to
Design
an
Appropriate
Constitution.
PDF[https://www.wipo.unifreiburg.de/dateien/tagungen/reformen/the_miscellaneous_desirability_of_public.pdf]
Patrinos, Harry Anthony, et. al. (2009). The Role and Impact of Public-Private
Partnerships
in
Education.
PDF
[http://www.ungei.org/resources/files/Role_Impact_PPP_Education.pdf] Washington, DC.
Public-Private Infrastructure Advisory Facility (2009). Toolkit for Public-Private
Partnerships in Roads & Highways: Overview of PPP Experience. PDF
[https://ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/6/pdf-version/1-21.pdf]