Investing in PPP

Investing in PPP projects

Public-private partnership is an efficient instrument for the cooperation of state and business on mutually rewarding conditions for the purpose of resolving socially significant tasks. As a rule, a PPP agreement stipulates the financing, construction and operation of an infrastructural facility by a private partner on one side and a guaranteed return of the investment with a specific profit by the state on the other.

The PPP mechanism is applied in the realization of infrastructural projects, which require long-term investments, and allows to find a balance between the interests of the private and the public partner by optimally distributing the risks between the sides.

The demand for infrastructural investments on the part of the state concerns, first and foremost, the segment of services to the population – health care, education, socio-cultural sphere, IT, transportation, housing and utility sector.

Experts consider the following to be the main advantages of PPP:
• Chance to realize major infrastructural projects under limited budgetary funding conditions;
• Engaging highly qualified private sector specialists to resolve the tasks of the state;
• Clear division of responsibility, balanced distribution of risks between state and business;
• Decreasing the time of construction, optimization of costs and implementing innovative technologies in the establishing the facility due to the commitment of the private partner to the project’s long-term efficiency.