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How PPPs Are Financed

Transferring responsibility to the private sector for mobilizing finance for infrastructure investment is one of the major differences between PPPs and traditional procurement. Where this is the case, the private party to the PPP is responsible for identifying investors and developing the finance structure for the project. However, it is important for public sector practitioners to understand private financing structures for infrastructure and to consider the potential implications for government. This section

  • Introduces ways that private finance of PPP projects can be structured (Finance Structures for PPP);
  • Highlights points that governments need to bear in mind when procuring a privately-financed PPP—that is, ways in which the government might need to enable or control how the private party raises finance to ensure the project is implemented successfully (Considerations for Government);
  • Describes different roles for public finance in PPPs—that is, why and how governments may be directly involved in the financing of PPPs (The Role of Public Finance in PPPs).

The chapter on PPP Financing in Farquharson et al's book on PPPs in emerging marketsprovides an overview of some of the topics covered in this section (Farquharson et al. 2011, Chapter 5). Yescombe's (Yescombe 2007) and Delmon's (Delmon 2015) books on PPPs cover a wide range of topics on PPP financing. The relevant sections of these books, as well as links to additional resources, are provided throughout the section for more information on specific points.

Key References

How PPPs Are Financed