User:Riganidigital/Public-Private Partnership in Infrastructre Resource Center

The Public-Private Partnership in Infrastructure Resource Center for contracts, laws and regulations (PPPIRC) is an initiative that provides access to an array of sample legal materials, such as annotated sample agreements (including power purchase agreements), toolkits, and public-private partnership (PPP) legislation of different countries, which can assist in the planning, design and legal structuring of any infrastructure project that involves a PPP.

The PPPIRC site is an initiative of the World Bank. Since July 2014 it is part of the World Bank’s PPP Cross-Cutting Solution Area. Funding is provided by the World Bank, the Public-Private Infrastructure Advisory Facility (PPIAF), the African Legal Support Facility (ALSF) of the African Development Bank, and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank.

What are Public Private Partnerships?
There is no broad international consensus on what constitutes a Public-Private Partnerships (PPP). Broadly, PPP refers to arrangements, typically medium to long term, between the public and private sectors whereby part of the services or works that fall under the responsibilities of the public sector are provided by the private sector, with clear agreement on shared objectives for delivery of public infrastructure and/ or public services. It typically does not include service contracts or turnkey construction contracts, which are categorized as public procurement projects, or the privatization of utilities where there is a limited ongoing role of the public sector.

Checklists and Risk Matrices
The Checklists and Risk Matrices page compiles a list of documents such as airport concession checklist; questionnaire of legal environment of host country; construction contracts checklist; energy management contract due diligence checklist; operation and maintenance agreement checklist; water operation and maintenance agreement sample term sheet; road concession risk matrix; due diligence checklist for legal and institutional enabling environment for PPP; checklist on sovereign immunity among others.

Transparency, Good Governance and Anti-Corruption
While an infrastructure project can require good governance and transparency, corrupt activity can occur at any stage of a project. Prevention of political corruption requires the integration of anticorruption approaches during project design. PPPIRC Transparency provides examples of some of the tools that the World Bank and other institutions employ to address the risk of corruption in infrastructure projects, including: international initiatives to combat corruption; anticorruption action plans; how to manage unsolicited proposals and output based aid, etc.

Legal Framework Assessment
When planning and developing infrastructure projects, whether they involve the private sector or not, the existing legal, regulatory and social environment of the country must be considered. PPPIRC provides information about legislation relevant to PPP and sector reform projects; Legal Framework Assessment and Regulation of sectors and regulatory reform.

Common Law vs. Civil Law
There are two main types of legal system in the world, with most countries adopting features from one or other into their own legal systems: Common Law System and Civil Law System.

Common Law System: Countries following a common law system are typically those that were former British colonies or protectorates, including the United States. Features of a common law system include a written constitution (not always) or codified laws; judicial decisions are binding – decisions of the highest court can generally only be overturned by that same court or through legislation; extensive freedom of contract. Generally, everything is permitted that is not expressly prohibited by law.

Civil Law System: Countries following a civil law system are typically those that were former French, Dutch, German, Spanish or Portuguese colonies or protectorates, including much of Central and South America. Also, most of the Central and Eastern European and East Asian countries follow a civil law structure. The civil law system is a codified system of law. It takes its origins from Roman law. Features of a civil law system include generally a written constitution based on specific codes (e.g., civil code, codes covering corporate law, administrative law, tax law and constitutional law) enshrining basic rights and duties; only legislative enactments are considered binding; in some civil law systems, e.g., Germany, writings of legal scholars have significant influence on the courts; courts specific to the underlying codes; and generally, everything is prohibited that is not expressly permitted by law.

Key Features of Common Law or Civil Law Systems
PPPIRC has a list of key administrative rules that apply to PPP delegated management arrangements such as rights of contracting authority that may override contractual provisions; protections of operator implied by law; and other Civil Law rules that can impact PPP arrangements.

PPP/Concession Laws
There are a number of areas where existing laws of a host country may need to be modified to allow for successful infrastructure PPP projects, such as enabling the grant of step-in rights to lenders and requiring open and fair procurement processes. These modifications may be embodied in sector-specific law, or in the case of procurement, a procurement or competition law, or the can be included in a general concession or PPP law. Each PPP/ concession law needs careful drafting to be consistent with the host country's existing laws. PPPIRC PPP/Concession Law site includes links to guidance on drafting PPP/ Concession laws and sample enacted PPP laws.

Privatization Laws
Privatization is a transaction or series of transactions reliant upon sound laws and defensible property rights. It is also a process by which governments convert state-owned businesses into corporations, undertake financial and operational restructuring to prepare enterprises for sale, define procedures to ensure transparency and fairness, and allocate proceeds. PPPIRC Privatization Laws site provides analyses of legal issues arising in the course of privatization, as well as illustrative examples of good practice privatization laws.

PPPIRC also provides content, laws, regulations and sample of agreements on anti-corruption and freedom of information, joint ventures, procurement laws and thef and non-thecnical losses.

Agreements
Public private partnerships can take a wide range of forms varying in the degree of involvement of the private entity in traditionally public infrastructure. A public private partnership is generally memorialized in a contract or agreement to outline the responsibilities of each party and clearly allocate risk. The graph below depicts the spectrum of public private partnership agreements.

For a summary of each type of arrangement and sample agreements, see:    Utility Restructuring, Corporatization and Decentralization; Civil Works and Service Contracts; Management and Operating Agreements; Leases / Affermage;     Concessions, BOT, DBOs; Joint Ventures and Partial Diverstitutre of Public Assets Full Divestiture

Leases and Affermage Contracts
Leases and affermage contracts are generally public-private sector arrangements under which the private operator is responsible for operating and maintaining the utility but not for financing the investment. PPPIRC provides definitions, analysis and key features of Lease and Affermage contracts.

Concessions, BOTs, DBOs
Concessions, Build-operate-transfer (BOT) Projects, and Desgin-Build-Operate (DBO) Projects are a type of public-private partnership. PPPIRC includes an overview of concessions, BOTs and DBO projects, and links to checklists, toolkits, and sector-specific PPP contracts and information.

Joint Ventures / Empresas Mixtas
A mode for public-private infrastructure projects favored by many countries is the Joint Venture, known in Spanish as "empresas mixtas". This section explores key issues to consider when establishing Joint Ventures, and includes sample legislative frameworks for this kind of entities.

Clean Technology
Clean technology offers an overview of clean energy laws and regulations, issues related to climate change and carbon trading, PPP toolkits, examples of PPPs for green technology, renewable energy and energy efficiency projects.

Energy & Power
The Energy & Power section is overview of countries' existing energy laws and regulations, PPP toolkits, sample laws and licenses, Power Purchase Agreements (PPAs), implementation agreements, concession agreements, etc.

Solid Waste
The Solid Waste section offers information on current public private partnership legislation, sample and contracts on waste collection, street cleaning, waste disposal, treatment and recycling. Also, you will find initiatives to promote micro-enterprise to regularize informal sector.

Telecom & ICT
Telecommunications/ Information & Communication Technology (ICT) provides global information and resources on telecom sector reform, laws, regulations and licensing.

Transportation
The Transportation section provides sample legislation and agreements related to public-private partnerships in the transportation sector, including airports, ports, roads and tolls, lightrail, and other transportation infrastructure projects.

Water & Sanitation
This section includes resources, toolkits, and documents on water and sanitation sector reform, regulation and PPP projects, and a section on include PPP in Irrigation Projects.

Financing
A key motivation for governments considering public private partnerships is the possibility of bringing in new sources of financing for funding public infrastructure and service needs. PPPIRC has a comprehensive section where one can find in detailed the main financing mechanisms, sources of financing, key concepts and key issues related to project finance.

Government Support and Risk Management
By definition there is always a public component to a PPP. The form that this component takes will depend on the country and the project and can range from financial support, to indirect or contingent support, to in kind support (such as provision of land or equipment), to broader financial mechanisms that can support the country’s PPP program or encourage the financial markets to lend into projects. Learn more about the ways a government gives financial support to a PPP project in these sections: funded products, contingent products, financial intermediaries, project development funds.

Efficient financing of PPP projects can involve the use of government support to ensure that the government bears risks which it can manage better than private investors and to supplement projects which are economically but not financially viable. Where infrastructure projects have large public externalities, some level of direct financial support from the government may be appropriate.

The government will want to manage the provision of government support, and in particular any contingent liabilities created through such support mechanisms, for example through government guarantees of grantor payment obligations or debt repayment. PPPIRC Financing section explains how the government manages its liabilities, how the government protects itself, who will pay the cost of the guarantee.

Risk Allocation, Bankability and Mitigation
A number of key risks that need to be allocated and managed to ensure the successful financing of the project are: Operating risks, demand risk, force majeure and change in law, political and regulatory risk and expropriation and nationalization risk, environmental risk, social risk, tenor and refinancing risk, currency exchange risk and interest rate risk.

Risk Mitigation Mechanisms - Hedging, Futures Contracts and Insurance
Some financial risks can be shared through financial instruments known as derivatives, futures contracts or hedging. Hedging arrangements will influence the cost of debt, and the breakage costs to be included in termination compensation. Hedge counterparties, or possibly a hedging bank, will be a party to the intercreditor agreement to formalize the sharing of security and arrangements on default.

The lenders may require that insurance proceeds received by the project company, in certain circumstances or over certain amounts and at their discretion, must be paid to the lenders for repayment of debt. Applicable law may require insurance to be obtained locally.