Aligning Public and Private Interests in a Public-Private Partnership: Safeguarding the public interest while allowing private returns

Involving private parties in infrastructure projects—traditionally seen as “public goods” in economic theory—is not without controversy.

Concerns about investors reaping excessive private returns at the expense of the taxpayer, or about the public agency being forced to renege on policy objectives, continue to prompt governments to be cautious in recommending PPP delivery models. As a result, PPPs represent only a fraction of overall investments in infrastructure, even in mature markets. Although PPPs may not be a panacea to addressing all of the global infrastructure challenges, their ability to harness private sector expertise, innovation and financing can help governments confront complex challenges. A successful PPP should allow the public sector to not only safeguard, but even advance, its public policy objectives, while also allowing the private party to generate its required return. Building a successful partnership between the public and private sectors is inherently challenging; focusing on the right mechanisms, however, can result in a win-win for each party, while also creating the “best deal” for society.

This paper was funded by the Danish International Development Agency (DANIDA).