Green Urbane

Why Public-Private Partnerships are needed now more than ever?

Public-Private Partnership refers to “a contractual relationship between one or more government entities and one or more organisations of the private sector.” There are various forms of public-private partnerships, their roles, and developmental framework, however, depend on the nature of the agreement signed. It is noted, PPP can address key structural operations that the Public sector alone might be pressured to deliver.

The PPP model gained momentum in the United Arab Emirates due to the pressing aim of creating a sustainable and competitive economy. Creating the aforementioned economy requires diverse skills, knowledge, and expertise-PPP is the most viable front to offer this. On the private end, it meets the criterion of efficiency and profit maximization and on the public end, it meets the criterion of funds, integration, and expertise.  Often when private tenders seek comfort in partnering with public sector projects; national, regional, and foreign investment is also attracted.  An Australian study of 54 projects found that only one percent of the projects went above the budget placed.

While PPP models are a fairly recent phenomenon, they are expected to leady the way in UAE. Abu Dhabi Investment Office (Adio), Emirate’s Department of Finance, and Roads & Transport Authority (RTA) are amongst the few departments shifting towards PPP models. Owing to the increasing political and bureaucratic will, UAE is likely to proceed with more PPPs in the future.

Another implication of PPP leading the way comes from the financial deficit the novel coronavirus has brought upon the globe. A Dubai- based senior finance executive concluded, “widening budget deficits have certainly increased the desire to do more PPPs.” PPP allows for risk and funding sharing, taking away the burden from only one sector in the economy thus making them so popular in the current time.

For PPP models to thrive the government must guarantee a minimum level of legal security, predictability, transparency, and the application of definite strategic goals. One of the fundamental reasons for Public-Private Partnerships not being very common comes from the reservations of governments. Officials often have mixed perceptions about enabling the private sector to finance, manage, or construct public assets.

Moreover, a study conducted by Syracuse University found that there are higher meeting costs and schedule objectives in PPP models compared to traditional public sector projects alone. It is apparent the PPP approach is not viable for every project; the costs and benefits of every project must be weighed before concluding which approach to go forward with.