PPP can unleash urban planning development and investments.
Development of urban areas is normally achieved through projects developed by the private sector, public sector, or both. Projects developed by the public sector allow for more control over the urban vision of the country, but sometimes reveal poor capabilities in implementation. On the other hand, private sector projects excel in implementation using advanced technologies, but come with the risk of losing control of the urban planning vision. As a result, projects developed through private public partnerships (PPPs) often lead to the best results when it comes to maintaining a unified vision and high-quality delivery.
Different forms of PPP
A lease is a contract through which the owner of the assets (Government) gives a private company the right to use these assets and maintain their profits for an agreed time against paying a rent. The Government will be responsible for the fixed investments and dept service.
A concession is a contract that may include all characteristics of lease, in addition to capital costs and investments that the investor bears.
A BOT is a contract that gives a project company the right to design, build, operate and manage a certain project proposed by the government. The project company may commercially exploit the project for a defined number of years.
A BOOT is a contract that builds on the BOT adding ownership of the assets during the project period with final transfer of the fixed assets back to the Government.
A BOO is a contract to enable complete privatization, where the private sector is completely charged with the responsibility of building, operating and managing, taking full ownership of assets.
Who should drive PPP and urban planning policies?
PPP proposals often originate from the public sector with limited involvement from the private sector. As a result, legislation and processes often lean in favor of protecting the government’s rights. Investors find these types of PPPs inhibiting to their freedom to exercise projects. PPPs can do more much to attract investments by being more favorable to investors through a flexible contract, lean registration process, and suitable strategic environment.
In order to drive urban investments and knowledge transfer any urban planning PPP strategy should focus on addressing the following questions:
- Which authority should drive the process?
- Which type of contract to put in place with investors?
- How to chose between types of PPPs and make the choice transparent to investors?