The power of PPP in boosting national development

A Public-Private Partnership (PPP) is a project or venture that is not only funded but also operated through a mutually beneficial partnership between the government and one or more private sector actors.

Although a PPP can be structured in various ways, the private entity commonly secures financing for the project, in return for the rights to operate and, in some cases, own the productive asset.

In addition to providing access to new capital, private sector involvement can have additional benefits, such as more on-time project completion, higher quality project performance, and better maintenance of assets.

To be a good candidate for a PPP, a project is expected to use proven technology to deliver a clearly defined service. It must also be able to generate a revenue stream to make it financially viable and attractive to investors.

According to the Ministry of Finance, Infrastructure projects, such as roads, bridges, water and sanitation, electricity, and airports, are often good candidates for PPPs.

However, Finance Minister, Winston Jordan says that they can also be used in less traditional sectors, such as health and education.

He said that investments in airports or shipping ports are often attractive to international investors, because of their ability to generate revenue in U.S. dollars, in addition to local revenue.

He reminded that the Caribbean Development Bank (CDB) estimates that Guyana, like many Caribbean countries, will have significant infrastructure investment needs between 2015 and 2025.

Despite the fact that Guyana’s public capital expenditure is high relative to its GDP, the Finance Minister believes that Guyana still has a projected financing gap of US$ 31 million from now to 2025.

The Finance Minister articulated, “Public-private partnerships (PPPs) have the potential to expand the resources available for public sector investment, in addition to other benefits. However, good PPP management requires human and institutional capacity.”

He continued, “The Government has embarked on a number of institutional strengthening efforts to build capacity in the area of managing PPPs, and is also committed to building a “PPP Core Team”, developing a viable pipeline of potential projects, and establishing a PPP policy.”

Jordan also stated that PPPs could serve as a tool to leverage additional resources for infrastructure development, and improve the quality of delivery.

He said that some infrastructure investments that might be good candidates for PPPs in Guyana include toll roads and bridges, green energy generation, and improvements to irrigation systems.

The economist noted that PPPs could also be used in non-traditional sectors, such as education and health.

In his opinion, in education space, PPPs could be used for the procurement of new educational facilities. In health, PPPs could be used to build and operate new health facilities to reduce waiting times and improve patient care.

The Finance Minister is also of the firm view that PPPs may be especially useful for the provision of advanced health services requiring specialised medical equipment.