PPP stands for Public Private Partnership. The following are different types of PPP:
Management contracts
It is a type of PPP in which the public sector enters into an agreement with the private sector for managing a whole or a part of a public enterprise. In such a contract, the ownership is retained by the public sector.
Turnkey projects
It is one of the most traditional types of PPP, which is used by the government for developing and maintaining various public infrastructural facilities. Turnkey projects are also known as design-build projects.
In such type of project, private entities have to make a bid for designing or building a facility for a fixed fee, rate or cost. The bids are made after giving due consideration to the risk involved in design and construction stages.
Lease/Affermage
It is a type of PPP in which the services and infrastructural facilities are operated and maintained by an operator (leaseholder). In a lease/affermage, the operator usually does not make any significant investment in the facility.
However, these models are mostly used in combination with other PPP models like Build-Rehabilitate-Operate- Transfer (BROT). In such a case, the duration of contract period increases and therefore, the private sector needs to make significant investments. The contract arrangements of lease and affermage are very similar with only a slight technical difference.
Concessions
It is a type of PPP in which a private entity is granted rights by the government to build, and operate a facility for a particular period of time, which is often called concession period. In such type of PPP, apart from the ownership rights, government may also retain the supplying rights of the services.
The payments in such type of PPP can take place from the concessionaire to the government, and also vice-versa. The government usually makes payment to the concessionaire for meeting certain conditions, such as reducing the commercial risk of private sector, especially in the initial period of project implementation.
Private ownership of assets
It is a type of PPP in which the construction, designing, and operation of a facility is done by the private sector. In some cases, the government may even handover the ownership rights of the assets to the private sector.
Such type of PPP is very beneficial from the government’s point of view as it transfers the cost and risk associated with designing and construction of a facility from the government to the private sector.
