What is ADB's Office of Public-Private Partnership?

Transcript

A public-private partnership, or PPP, is formed when a government and a company work together to build and run a public asset such as a road, a power station, airport or railway. Not all national infrastructure needs can be met by the public sector. But where there’s a good fit, PPP projects can be offered to the private sector in a fair and transparent manner through bidding. The winning bidder gets to design, build, finance, and often operate the asset usually for a number of years under a contractual agreement with the government.

So, why the need for PPPs? Well, Asia’s overall infrastructure needs are colossal. ADB estimates that the infrastructure needs of Asia and the Pacific amount to over $1.7 trillion each year. Governments can only come up with about 40% of this from their budgets and contributions from multilateral financiers. When structured well, PPP taps into the new technology and efficiency of the private sector to deliver value for money.  There are major advantages for all parties. For a start, it helps governments to get the best value and structure, as bidders will compete against each other to build the asset or run the service at the lowest possible cost.

PPPs can also improve public sector management. They encourage governments to build strong and effective legal and regulatory structures to ensure that the assets are run properly. They can improve public sector procurement as well, as governments become more adept at choosing the best company for the job. Concession agreements can be standardized, and national planning becomes easier. From the company’s perspective there needs to be a stable revenue stream, manageable risks, good support from the government, and contractually agreed comprehensive performance targets. 

Putting a public-private partnership together is often challenging. With the competition amongst countries for private sector investment, as well as the returns, the financial and regulatory risks must be mitigated enough to be attractive.

The coronavirus disease (COVID-19) pandemic reinforced the role played by resilient, efficient infrastructure in creating resilient societies. PPPs can help deliver the critical infrastructure facilities needed to build back better from the pandemic.

With extensive experience in developing PPPs, ADB is uniquely placed to help developing economies in Asia and the Pacific to build the infrastructure they need for sustainable and inclusive growth.

ADB’s comprehensive support from enabling environment to sovereign and private financing as well as its longstanding commitment to development and strong reputation as an honest broker helps to build support and trust from all parties involved in a PPP project.

ADB’s PPP operations are spearheaded by its Office of Public–Private Partnership.

ADB’s expertise in PPPs encompasses a diverse range of sectors. We help our developing member countries to deliver high-quality roads and railways, as well as facilities for water, sanitation and district heating, solid waste management, renewable energy, vaccine research and development, elderly care, and information technology. 

ADB’s aim is to help deliver infrastructure through PPPs that are a win for everyone. We do this by developing sustainable projects with the right balance of risks and benefits, that attract private sector interest but deliver value for money to the government.

ADB has successfully delivered many exciting PPP projects throughout the region. Its projects have reduced congestion on the bustling highways of Dhaka, provided heating solutions in Uzbekistan’s capital Tashkent, helped promote sustainable development in the green New Clark City in the Philippines, and introduced solar energy to the sun-drenched Koror and Babeldaob islands of Palau and delivered cost-efficient solar projects in Asia

ADB has been with the region since the start of its PPP journey. We’ll keep working with our member countries to develop innovative financing and solutions that provide the infrastructure our developing members need—now and for the long-term.