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

Video | 19 January 2016

The Office of Public–Private Partnership (OPPP) was established in September 2014 to help deliver bankable PPP projects across developing Asia. Find out more about how the office works and why public–private partnerships are key to regional economic growth.

Transcript

Title: What is ADB's Office of Public–Private Partnership?

Description: The Office of Public–Private Partnership (OPPP) was established in September 2014 to help deliver bankable PPP projects across developing Asia. Find out more about how the office works and why public–private partnerships are key to regional economic growth.

VO: A Public–Private Partnership or PPP is a government and a company working together to build and run a public asset such as a road, a power station, airport, or a railway. Not all national infrastructure needs can be met by the private sector. But where there’s a good fit, PPP projects are 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. The region requires around a trillion dollars a year for at least the next decade. Developing countries in Asia and the Pacific can only come up with a fraction of this sum from their budgets and multilateral financiers are limited to modest contributions. ADB’s overall lending for infrastructure in Asia and the Pacific is just 11 billion dollars a year, with partners like the World Bank having a further 23 billion to lend. So, there’s a huge gap between what is required and what governments can afford. Enter the private sector where a proper deal can be brokered and managed. There are major advantages for all parties. The government should get the best value 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 managements. They encourage governments to build strong and effective legal and regulatory structures to ensure that they are run properly. And public sector procurements should get better to. 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 guaranteed revenue stream, manageable risks, good support from the government and a comprehensive contract.

Putting a Public Private Partnership together is often challenging. With its extensive experience in this area, ADB is uniquely placed to help developing Asia make use of PPPs to build the infrastructure they need to promote prosperity. For example, ADB is helping the Philippines develop a railway and train service under a PPP framework to improve transport links between Manila and Matnog. ADB provides knowledge and technical assistance to help countries not only roll out PPP projects but also help build a critical, regulatory, and legal bodies to manage them. Often ADB’s involvement in a PPP project, given its long experience and AAA financial rating helps build support and trust from all parties involve.

ADB’s Office of Public–Private Partnership was established on September 2014. It provides transactional advisory services to developing member countries in order to deliver bankable PPP projects.