Project advisory for synergy in public private partnerships
The interface between the public and private sectors is an area of great opportunity and innovation. It is now globally recognised that much can be achieved through using private finance for investment in strategic industries that have traditionally been funded through the public purse.
Most Asian countries are seeking to significantly enhance their infrastructure due to an ever widening gap between the provision of and demand for infrastructure, a growing population and the failure of governments to invest adequately in the required infrastructure. Across the region, economic and social infrastructures are being upgraded or renewed to foster greater economic growth and meet increasing user expectations.
Achieving the necessary provision of infrastructure supply will require staggering expenditures. In the short term, governments are unable to provide the funding necessary to meet these targets. This has created the need for private sector capital, which in turn presents significant opportunities for profitable private sector investment.
A number of governments across the region are seeking to attract private capital for infrastructure through the Public Private Partnership (PPP) model which has been successfully used in numerous countries, including UK, Australia, South Africa, Japan, South Korea and Canada.
Infrastructure investment and PPPs also present a number of challenges. Detailed analysis of projects prior to procurement is essential for ultimate success, with the need to ensure a suitable regulatory and legal framework.
Optimum risk allocation, effective but fair payment mechanisms, robust contractual arrangements, rigorous review of project cash flows, and appropriate financing and structuring arrangements are absolutely critical to ensuring a workable, effective solution that delivers both value for money to the public sector and excellent services to the end user.