When governments work with the private sector to deliver new infrastructure projects, the results are often win-win.
Public Private Partnerships (PPP) or Alternative Financing Partnerships (AFP), as they are known in Ontario, allow the public sector to access private finance to build much needed infrastructure while enabling them to transfer risks better managed by the private sector. Governments needing roads, rail systems, courts and hospitals without cash to spend are increasingly turning to private sector consortia to deliver infrastructure cheaper and faster than completing it in-house. Rather than paying for an asset up front, governments pay for it along with a service over time. There are little to no payments during construction — payments are made annually. And if the private sector doesn’t deliver the asset or fails to perform, the government doesn’t pay or pays less, and can terminate the contract with the private sector. The private sector is paid based on their ability to meet pre-determined performance standards.
But the challenge of creating a partnership that works for both sides is never easy.
The terms of a partnership are a delicate balancing act where both sides manage their respective risks. For governments, the delivery of essential infrastructure projects is often both sensitive and political, where taxpayers and labour emotions must be considered. For private companies, the uncertainty that arises from billion-dollar long term initiatives means hedging bets against complications and a huge cash outlay. And in Canada, provincial control over infrastructure requirements means lack of centralized government, standards and controls. This makes finding a transaction and financial advisor essential to the success of a project — one with experience on both sides of the public/private sector across the country.
How we can help
In 2004, PwC was the world-leader in Global Advisory Mandates with 250 engagements and was awarded the prestigious Global Project Financial Advisor of the Year award by Thompson Financial. Our network of contacts in all levels of government and throughout the business world delivers solutions that add value. Contact one of over 20 dedicated Canadian PPP professionals across the country to discuss how a PPP can help your project or how we can help you raise financing and assist you with a bid on a project.
