Public-Private Partnerships are one of the most attractive tools being used to help address the urban environmental crisis. Their use is based on the recognition that both the public and private sectors can benefit by pooling their resources to improve the delivery of basic services to all citizens.

PPPUE uses the term “Public-Private Partnership” (PPP) to describe a spectrum of possible relationships between public and private actors for the co-operative provision of infrastructure services. The “right” relationship is the one that best meets the needs of the partners in the local context. One size does not fit all.PPPs offer alternatives to full privatisation (through divestiture of government assets) by combining the social responsibility, environmental awareness and public accountability of the public sector, with the finance, technology, managerial efficiency and entrepreneurial spirit of the private sector.

PPPUE helps governments and private sectors craft the approach that best fits their local needs, drawing from the lessons learned in partnership arrangements around the world. PPPUEs support is based on lessons learnd from practical experiences that are generated through a world-wide network of individuals and institutions engaged in public-private partnerships.

Efforts to implement these partnerships at the local level, however, face many challenges. For governments, the challenge is to find ways to fulfil their responsibility for ensuring that all citizens have access to basic services, while meeting the needs of private investors. This implies a new and often difficult transition for many governments, from provider and manager of basic services, to enabler and regulator. For private firms, the challenge is to be convinced that investing in any particular project offers more attractive returns than other available investment opportunities. Drawing that conclusion depends on the firm's comparison of the potential returns against the potential risks, including both country risk (reflecting the general frameworks established by governments for any private investment in the country) and project risk (reflecting the specific characteristics of the investment opportunity offered by governments).

Overcoming these challenges is further complicated, however, by a range of gaps in the capacity of both public and private actors. Major gaps include:

• the reciprocal mistrust and lack of understanding of each other’s interests and needs across the public and private sectors;
• the absence of locally available information on, and experience with, arranging sustainable partnerships; and
• the underlying legal, political, and institutional obstacles to forming effective public-private relationships.

These gaps often lead to lengthy negotiations, increased transaction costs and make smaller projects much less attractive to potential international and larger national investors.

PPPUE tackles these bottlenecks and lays the groundwork for more effective transactions at the local level. While multilateral and bilateral donors help national governments to implement sector reforms and develop national strategies for private sector participation, PPPUE supports these reforms from the perspective of local governments, which are increasingly responsible for the delivery of basic services.

Purpose & Focus of PPPUE

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