PPP: A credit card, marriage contract and ‘bayanihan’

Conclusion

PPP7Simplifying a complex arrangement like a public-private partnership (PPP) is not a daunting task as it may seem. Using metaphors and comparing PPPs with common or day-to-day activities will definitely help in informing the public about this development strategy. Popularizing PPP de-monopolizes knowledge and facilitates the creation of a broad PPP learning ecology.

(1) PPP is a “mega-credit card.”
Because of the size of the deal, the nature of the responsibilities and terms of payments, certain quarters refer to a PPP as a “mega-credit card.” A credit card is used by a bank, where it allows the credit-card holders to borrow funds.

In the case of PPPs, where the government subsidizes the project and pays in “installments” or tranches, the government “borrows” from the private-sector participant (PSP). The PSP invests and, as a consequence, it charges “interest” or is entitled to obtain a reasonable rate of return. The PSP “lends” to government, since the latter does not have enough resources. Effectively, however, we are the ones paying for what the government “borrows,” since it is our money that is being used to pay the PSP.

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