Public private partnerships

Public-private partnerships (PPPs) are increasing in number worldwide and are used to build and manage large public infrastructure projects. In PPPs, the private sector plays a role in developing and maintaining public infrastructure and services, which is usually a public sector responsibility. Despite the relevance of this subject, economic and finance literature is still scarce. This gap between practitioners and theory must be addressed and means a requirement for understanding this phenomenon from a finance perspective: what are PPPs and project finance, how they create value for the public and private sectors, and how they are structured and financed.

Since 1993, Portugal has been using PPPs intensively, mainly for highway construction and in the health sector. Portugal has used PPPs to build an extensive highway network. As one of the leading countries using PPPs, the Portuguese experience is impressive, relevant, and an interesting study subject. However, there has been little discussion and research, with only a few studies published.

This thesis covers several issues on PPPs: The first chapter is a literature review on risk allocation, valuation and Value for Money; The second chapter uses a case-study methodology to review the PPP life cycle; The third chapter describes the Portuguese experience in PPP renegotiations; The fourth chapter addresses the PPP efficiency by using seven highway projects and the Malmquist index efficiency model; The last chapter addresses the public sector efficiency in building infrastructures by public procurement.