PUBLIC PRIVATE PARTNERSHIPS AND BUILD, OPERATE AND TRANSFER (BOT ...

5. Furthermore, there are efficiency gains arising from innovation, management and
marketing skills offered by the private sector and greater incentives for the control of
construction, operating and maintenance costs. More so, the provision of additional
finance for infrastructure projects enables projects to be brought forward in time, thus
generating earlier economic benefits. 2
6. The diagram below illustrates the continuum of options for involving the private
sector in the provision of infrastructure delivery. 3
Diagram 1: Range of Private Sector Options
7. At the left are supply and service contracts, which tend to be of short duration and
require less private commitment than the options higher in the continuum. The private
contractor is not directly responsible for providing the service, but instead for performing
specified tasks, such as supplying inputs, constructing works, maintaining facilities, or
billing customers. At the left are the longer term arrangements which require significant
private sector commitment.
Options for PPP
8. There is a range of options for involving private sector participation that vary with
regards to ownership, operations and maintenance, financing, risk allocation and
duration. A summary of these options can be viewed in Table 1.
Table 1: Allocation of key responsibilities under the main private sector participation options
Option Asset
Ownership
Operations
and
Maintenance
Capital
Investment
Commercial
Risk
Duration
Service Public Public and Public Public 1-2 years
contract
Private
Management
contract
Public Private Public Public 3-5 years
Lease Public Private Public Shared 8-15 years
Concession Public Private Private Private 25-30 years
2 Haley (1996)
3 World Bank (1995)
3