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PPP TOOLKIT for Improving PPP
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Sector: State Highway  |  Module 1: PPP Background

PPP supporting environment

PPPs, by their nature, rely on a supporting environment that must be created and sustained by the public sector. This is a very important aspect of the public side of the partnership. In addition there are certain aspects in the private sector that are required to support a PPP.

This section covers the main components of the PPP supporting environment. The presence and strength of these in the particular jurisdiction will have a large impact on how easily and successfully a PPP can be carried out.

The PPP Suitability Filter that is included among the tools in this toolkit is designed to test for the likely ease or difficulty of carrying out a particular PPP. The first part of the Filter is focused on the supportiveness of the environment for PPPs. It includes a set of questions covering each of the issues discussed here. These are:

The Suitability Filter can be accessed here.

A basic requirement – favourable investment climate

Naturally, success with PPPs requires a favourable investment climate. Like all private sector economic activity, PPPs will benefit from:

  • Secure and stable property rights, supported by
    • Clear and capable legal framework
    • Credible, transparent and consistent rule of law
  • Fair, clear and transparent competitive procurement processes
  • Stability in the environment affecting the operation of the project, including regulatory, legal and market aspects
  • A stable macroeconomic environment, in particular a stable price level and preferably a low rate of inflation, a stable and convertible currency, and stable government finances and access to funds.

India is fortunate to have many of these conditions in place to a relatively good degree, although there will be variations in quality between the many different jurisdictions that may be interested in PPPs. It is important that these conditions are fostered and maintained.

 

 

  Next Page: Legal environment and policy support for PPPs
   
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