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Ministry of Economy and Finance

Central Public-Private Partnerships Unit

PPP Framework

What are PPPs?

There are many kinds of 'partnerships' but in the context of public investment a Public-Private Partnership has a specific meaning and use.

Definition of Public-Private Partnerships

An agreement between the State and one or more Private Partners to restore, repair, expand, build, operate and/or maintain public infrastructure, Project Assets or to provide public services within a certain period of time, under which the Private Partner shall invest, bear risks and receive benefits based on performance and all of which shall be stipulated in the PPP Contract.

Common PPP Project Models

Build-Operate-Transfer (BOT):  The Implementing Agency grants the Private Partner a right to design, finance, construct, operate and maintain Project Asset(s) and collect fees, tolls, rentals and user charges from users of the Project’s facilities or services for an agreed contract period specified in the PPP Contract. After the expiry of the contract period, the Private Partner shall transfer to the Implementing Agency all rights and interests in the Project and the Project Asset(s), in accordance with the terms of the PPP Contract. Variants of the BOT model include the Build-Lease-Transfer (BLT), wherein the Private Partner designs, finances and constructs the Project Asset(s) and leases the Project Asset(s) to the Implementing Agency for a lease fee specified in the PPP Contract; and Build-Transfer-Operate (BTO), wherein the Private Partner transfers the title to the Project Asset(s) to the Implementing Agency, on completion of construction. All other aspects of the BOT model remain the same under these variants.

Build-Own-Operate-Transfer (BOOT):  Similar to the BOT model, the Implementing Agency grants the Private Partner a right to design, finance, construct, operate and maintain Project Asset(s) and collect fees, tolls, rentals and user charges from users of the Project’s facilities or services for an agreed contract period specified in the PPP Contract.  As distinct from the BOT model, during the contract period the Private Partner owns the Project Asset(s). After the expiry of the contract period, the Private Partner shall transfer to the Implementing Agency all rights and interests in the Project and the Project Asset(s), in accordance with the terms of the PPP Contract.

Build-Own-Operate (BOO):  The Implementing Agency grants the Private Partner a right to design, finance, construct, own and operate Project Asset(s) in perpetuity or for an indefinite period, on the terms of the PPP Contract.  The Private Partner shall be entitled to make commercial use of the Project Asset(s), including collecting fees and income from users of the Project’s facilities or services. Variants of the BOO contract includes: Rehabilitate-Own-Operate (ROO) and Modernise-Own-Operate (MOO), which involve granting of rights for takeover of existing Project Asset(s).

Management Agreement: The Implementing Agency contracts with the Private Partner to provide specified services relating to daily operations and maintenance of existing Project Asset(s) or other public assets owned by the Implementing Agency. Such agreements could include variations such as operations and maintenance agreements (O&M), in respect of existing Project Asset(s) or other public assets in return for fees payable by the Implementing Agency or another designated party. The Private Partner does not invest its own capital or hold any title to the Project Asset(s) or other public assets under the Management Agreement. A variant of the Management Agreement could include the Private Partner investing its own capital in the Project Asset(s) and recovering such investment through periodic payments from the Implementing Agency or other party, in accordance with the terms of the PPP Contract.

Design-Build-Finance-Operate-Maintain (DBFOM): The Implementing Agency grants the Private Partner a right to design, build, finance and provide operations and maintenance services for the Project Asset(s), in accordance with the terms of the PPP Contract. The Private Party earns revenue through periodic payments from the Implementing Agency or other party during the contract period, in accordance with the terms of the PPP Contract. At the end of the contract period, the Private Partner transfers all rights and interests in the Project and the Project Asset(s) back to the Implementing Agency.