Also available
More and more projects are being financed after the PPP model. What do you think are the benefits of the PPP financing?
There has always been public-private partnership whether they work together or separately in the same sector. The whole idea of privatization in the first instance is that in many countries, including the well advanced countries, the governments were into so many things that are better done by the private sector, particularly in the developing countries.
What has changed now?
A lot of it is a lot of talk, particularly changes in the financial sector where it is not easily appreciated the kind of lumpy investment you really need, the kind of structured finance you really need in terms of lower costs, because the economy itself cannot absolve the high cost of commercial investment, so you need public service long-term fund to get the quality of infrastructure that you need. But people don’t understand that and they think the private sector can just move into building bridges and power stations.
The much talked about public-private partnership is really rehashing what has always been the case. What is very important is that we should recognize them. Government cannot do everything and government should not seek to do everything. The private sector cannot abandon its profit motive, more or less profit maximization mode.
The other question is the capacity, manpower, the engineering skill, management skills and the technology that is involved in all of these. All of these have to come together for PPP to work, otherwise we just spend a lot of time talking and the bridges, roads, railways, ports etc. are not built. We talk about concessioning but unless the private sector can see the profile of returns, we should try and see the efficacy of medium and long-term financing, that gives you the grace period which also permits substantial learning period to develop the skills, managers and technologies.
