Public-private partnerships are still always criticized

A market worth 50 to 70 billion dollars each year

The PPPs promoted by international organizations

Contracts 10 to 20% more expensive

Collusion and cartel creations

An opaque and anti-democratic process

The benefits of  PPPs

The inconveniences of PPPs

Public-private partnerships (PPP) is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. The State or community pays an annual rent to the company for years and sometimes decades.

A market worth 50 to 70 billion dollars a year

Source : OCDE 2012 (Note : PPPs in the energy sector are not included).

They appeared with the Private Finance Initiative in Great Britain from 1992, PPPs slowly spreaded in the world, especially in France from 2004 then Spain, Brazil, Colombia, Peru, Chile, Canada, USA, Turkey, India, Ausitralia, New Zealand, China or South Korea.

Between 1991 and 2000, populations served by private operators in developing countries went from 6 to 96 millions. For ten years, the new PPP market fluctuates between 50 and 70 billion dollars a year. In 2012, it represented 86 billion dollars, with an important part  awarded to structures already exploited, 5% of the world's construction market. In Great Britain, PPPs represent between 10 and 15% of public investmetns, when in Brazil half of the airports have been privatised.

PPPs promoted by international organizations

Promoted by international organizations such as the World Bank, the G20 or the OECD, PPPs allow States and public authorities to access thousands of billions of dollars in pension funds,  insurance companies and other institutional investors. International financial institutions advice goverments to conclude multiple PPPs simultaneously in order to create a basket of assets that can be brought together and sold to long-term investors.

However, PPPs are highly criticized lately through numerous reports. The latest comes from the Public Services International (PSI),  a global union federation that counts 669 trade unions in 150 countries, representing 20 millions workers in public services. According to David Hall, PSIRU, PPPs « are an expensive and inefficient financing mecanism because it hides the public loan while guaranteeing long-term profits to private companies ».

Contracts 10 to 20% more expensive

The use of PPPs allowed countries such as New-Zeland, Australia, Canada or the USA to achieve a balanced budget by hiding their public loans, when the amounts to be paid each year to promoters are the same amount as a loan taken out for a project.  

In the end, PPPs are on average more expensive, the additional cost added by the contract tendering organization and contract follow up is 10 to 20%, according to the PSI report.  Road constructions in Europe through PPPs cost  24% more than public financing, according to a study by the European Investment Bank (EIB), which supports this type of contracts. Besides, the need to have profitable projects can deteriorate public services.

Collusion and cartel creations

More expensive than normal public contracts or outsourced public contracts, PPPs are indeed less efficient and can even prove catastrophic. Several examples support this observation, such as the failure of the London transportation program, the New Delhi airport, corruption in the infrastructure projects in Chile or the financial problems linked to the imposed PPPs by the Troïka in Portugal.

By excluding SMB and small offices, which are relegated to be subcontractors, these global tendering contracts "promote collusion and cartel creations". In France, for instance, 92% of PPP contracts went to the  Bouygues, Eiffage and Vinci groups. "Public services are potential profit sources for companies, and PPPs are used to access them", says David Boys, who notices that public clients become prisoners of these contracts, when services are often monopolistic.

An opaque and anti-democratic process

A PPP is an " obscure process that essentially operates in secret, by hiding behind confidential negociations to maintain a commercial advantage", adds the PSi report. Apart from the lack of public consulting which prenvents any democratic control, the commercial contracts are very complex to protect the companies' profits. According to the PSI, the new commercial negociation cycles are happening (General Agreement on Trade in Services, GATS, Comprehensive Economic and Trade Agreement, CETA, Transatlantic Trade and Investment Partnership, TTIP, Trans-Pacific Partnership, TPP), which are carried out with a lack of transparency will facilitate and lock the PPPs, making it impossible to go back.

Today, interest rates are very low so PSI advices governments and local communities to develop their infrastructures with their own financial means. According to the PSI, the public sector has a better control, greater flexibility and a better efficient on their constructions, with economies of scale, less important transaction costs, less risks on the construction site execution and more democratic control. The retention of workers for public services also helps maintaining decent and stable employments when the precarious jobs spread in the private sector through subcontracting.