MIENTRAS QUE LA DEDICADA A INTANGIBLES MANTUVO UNA LIGERA TENDENCIA DECRECIENTE

The provision of project finance by the private sector is often the promise of their involvement in collaboration with the public sector. In addition to this, PPPs are also a means to incorporate the strengths, efficiencies, innovation and management prowess of the private sector into the partnership working. The overall objectives of implementing PPPs are more linked to achieving ‘value for money’ (VFM) for taxpayers, through the provision of more efficient and reliable services; to improve the quality of infrastructure services, to promote local economic growth; and employment opportunities (Carbonara, Costantino and Pellegrino, 2014), while maintaining the attraction of reasonable profits to the private sector (Sanni and Hashim, 2014).

Despite these assumptions, from empirical literature, this has not always been the case, Hodge and Greves (2007), argue that this optimism of PPPs is often a colourful way to disguise the true nature of operations in partnerships. Further to this, Bovaird (2004) criticism of partnerships indicate that they have not being marriages based on love neither have they been based on respect for the complementary strengths and capabilities each partner brings to the collaboration, but rather they are marriages for financial gratification. Evidently, the implementation experiences of partnerships have been mixed, with some partnerships able to attain set objectives, within time and budget; while others have failed to meet partnership expectations due to cost-over run or due to challenges from inadequate tendering and bidding procedures (McQuaid and Scherrer, 2010). The arguments of both sides of the partnership coin are further discussed in the next two sub-sessions.

2.3.1 Benefits of Public Private Partnership as a Policy Instruments

Partnerships are advocated to be due to national governments’ growing need for public expenditure controls due to increases in investment in infrastructures and budget deficit as a result of public debt capital (Appuhami, Perera and Perera, 2011). The

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adoption of PPPs has been emphasised to be due to the potential benefits they could generate for both the public and private sectors. These benefits have been attributed to specific characteristics from both sectors, if when combined, would lead to an outcome beneficial to all partner organisations involved (Hodge and Greve, 2007). In other words, the deeply set benefits of PPP are argued to be reaped not only through access to alternative sources of capital, but access to expertise and innovation, growth in the development of infrastructure, risk sharing, management of these services and improvement in services delivery (Loosemore and Cheung, 2015; Babatunde, Opawole and Akinsiku, 2012). Advocates of the PPP model argue that through competitive bidding; flexible negotiations; strengthened monitoring and accountability; strategic direction and innovative approaches for addressing societal needs that are impossible for an organisation operating alone to achieve (Ross and Yan, 2015; Babatunde, et al., 2013; Hodge and Greve, 2007; Broadbent et al., 2003).

Accordingly, two key promises underpin PPP arrangements when compared to traditional contracting arrangements; first, PPP models could lead to reduced pressure on government budgets that would allow greater capacity to spend on other policy priorities. They are seen as an alternative means to address budgetary constraints due to the “off-balance sheet” accounting of PPP transactions. There are no implications on public expenditure and public debt at the investment stage, but future payments from government to the partnership will be accounted for in the public budgets over the contract duration (Sarmento and Renneboog, 2016; McQuaid and Scherrer, 2010). Second, they offer an effective way of delivering ‘VfM’ in the provision of public infrastructure and service delivery (Hodge and Greve, 2007). More importantly, ‘VfM’ are hinged on the risk sharing opportunities available to partner organisations; this is due to the knowledge of future uncertainties that cannot be exhaustively covered by partnership contracts (Roehrich, Lewis and George, 2014). The next section discusses the potential challenges and implication of implementing PPP models.

2.3.2 Criticisms of PPPs as a policy instruments

Arguments from literature suggest that it would be unwise to view partnerships in an all positive light, devoid of strategic and operational problems (Currie and Teague, 2015; Slater et al., 2007). Richter (2004 p. 43) also argues that PPPs are “not

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necessarily positively innovative, but that many of them carry large risks that are neither highlighted nor addressed due to the positive connotation of the term”. In the previous section, it was discussed that PPPs allow the provision of infrastructure and service delivery which would otherwise be challenging for the public sector to achieve; it is however acknowledged that the in-house skills required to manage these partnerships are often lacking (Loosemore and Cheung, 2015; Devkar, Mahalingham and Kalidini, 2013). This suggests that partnerships are prone to unfavourable conditions resulting from inadequate allocation of risks in the partnership working. Kwak, Chih and Ibbs (2009) criticised PPPs based on the high costs involved in tendering which limits the competition for PPP projects; complexities in the negotiation processes and public opposition that are causes for delays in the implementation of PPP arrangements and could be detrimental to their success. According to these authors, PPP projects are known to cost more as a result of constraints in the private sector ability to borrow capital to finance projects at a cheaper rate that the public sector can. Long-term partnerships are argued to undermine competition between potential partners and could lead to monopolistic situations resulting in higher costs to the public users of the infrastructure services (Bovaird, 2004). This leads to a number of situations, first that it would lead to a decrease in project accountability in PPPs because the information becomes “commercial-in- confidence” (Kwak, Chih and Ibbs, 2009). Secondly, the partnership, rather than partner organisations are termed as the accountable body, especially in cases where a SPV is established. However, the reality is that there are usually no direct processes by which these partnerships are held accountable in an appropriate manner (Bovaird, 2004). More specifically, partnerships are argued to have negative influence on accountability, focus, efficiency and effectiveness, except when carefully designed and operated (McQuaid, 2000).

Another criticism of PPP models is the loss of flexibility that comes with the long- term partnership arrangements that are governed by detailed contractual obligations. Inefficiencies are stated to result because the incomplete nature of these contracts could mean that renegotiation might occur in future due to changing circumstances (Ross and Yan, 2015). The direct implications of these re-negotiations are bargaining costs from the new transactions and this occurs usually without any form of competition suggesting a trade-off leaving the government with the decision to either

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choose to proceed with a project as a PPP or by traditional method of procurement. Rosenau (1999) suggested that PPPs do not necessarily demonstrate superior performance in terms of equity, access, or democracy nor do they reduce regulation; this is because government still must fulfil its roles as protector of the public good.

While PPPs might have the potential to generate substantial productive efficiencies, they may limit a government’s ability to react to changing demands for the public service (Ross and Yan, 2015). Bovaird (2004) also presents arguments on the issue of reluctance of politicians to share power, emanates from politicians losing control over decision-making with regards to the PPP policy even when there is the evidence that there are potential benefits to be derived from the partnerships. Further to this at the more practical level, trade unions and public sector workers alike have opposed PPPs, due to the fear of losing their jobs or detrimental changes to the existing conditions of employment. Bovaird (2004, p.204) also argue that “it is also clear from public opinion surveys that many service-users are unaware of (and uninterested in) the precise legal standing of the organisation which provides their service and are quite content with whatever configuration is used to provide service, as long as the service quality is satisfactory”.

Despite these criticisms, organisations facilitating PPPs are flourishing and are becoming increasingly important. International organisations such as the United Nations, the World Bank, and many development agencies are shifting their agenda towards facilitating PPPs for development (Andonova, 2010; Stadtler and Probst, 2012). These international organisations are known to have huge experience and capacity for maintaining, monitoring, reviewing and evaluating PPP arrangements. Usually, their main aim is to help public and private sector organisations facilitate the partnership process and to establish frameworks for the roles partner organisations play. International organisations have been argued to offer legitimacy to partnerships, due to their solid reputation and track records, large cross-sectoral network base and commitment to development (Stadtler and Probst, 2012).

Although, the experiences of governments have been varied and sometimes considered undesirable, the arguments presented above suggest that in the right context and circumstances there are benefits to be derived by governments through

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PPP arrangements at a scale and complexity beyond traditional method of procurements.