Financing Infrastructure: Public Private Partnerships (PPPs)

[#Metro]

One of the important questions when planning infrastructure is how to pay for it, and additionally, manage project, cost escalation, and quality risks.

Public Private Partnerships (PPPs) are one of many financing tools available to finance infrastructure in addition to the traditional 'Government-Only' funding model. The amount that the private sector contributes does not have to be 100%; It can also be fractional, to give a mix of public and private financing for a single project. In 'maintain and operate' models, the might not be any private financing at all.

PPPs in Queensland and elsewhere include (links to relevant contract docs or profile):

- Gold Coast Light Rail
- Sydney Light Rail
- Canberra Light Rail
- Airtrain (an interesting case where the private sector contracts the public sector to be the service operator)
- Cross River Rail tunnel construction and long-term maintenance packages
- Sydney Metro (availability payment model)
- Legacy Way Tunnel (initiated by Brisbane City Council, then fully divested)

There are many ways to structure a PPP, from concessions (fee-for-service), BOOT (Build, Own, Operate), DBO (Design, Build, Operate), BOM (Build-Operate-Maintain) and so forth.


Source: World Bank


Source: Infrastructure Partnerships Australia

The Department of Transport and Main Roads and the Queensland Treasury have provided information about PPP financing on their websites. The QLD Government has had a PPP policy since at least 2001.

Department of Transport and Main Roads (QLD) Public Private Partnerships
https://www.tmr.qld.gov.au/business-industry/business-with-us/public-private-partnerships

Project Assessment Framework, Queensland Treasury
https://www.treasury.qld.gov.au/programs-and-policies/project-assessment-framework/

Project assessment framework
Keeping major projects on track is critical to obtain maximum value for money for the government's investment, and to deliver the services Queenslanders need. Queensland's Project Assessment Framework (PAF) is used across government to ensure a common, rigorous approach to assessing projects at critical stages in their lifecycle, from the initial assessment of the service required, through to delivery.

The PAF's application is not limited to infrastructure projects or public private partnership (PPP) projects. At each stage of a project, the project's progress and quality is assessed to ensure that the project (and associated investment) meets strategic objectives and achieves value for money. Once a project 'clears' a particular stage, it can progress to the next.

Notes

Public Private Partnerships
https://www.tmr.qld.gov.au/business-industry/business-with-us/public-private-partnerships

PPP Arrangements/Types of PPP Agreements
https://ppp.worldbank.org/public-private-partnership/agreements

Public Private Partnerships
https://infrastructure.org.au/chart-group/public-private-partnerships-by-jurisdiction/

Project Delivery
https://crossriverrail.qld.gov.au/about/project-delivery/

The Tunnel, Stations and Development (TSD) public-private partnership is being delivered by PULSE. The PULSE consortium is led by CIMIC Group companies, Pacific Partnerships, CPB Contractors, and UGL with international partners DIF, BAM and Ghella.

Legacy Way Tunnel Acciona
https://www.acciona.com.au/projects/legacy-way-tunnel/

It involved the construction of the Legacy Way tunnel and the toll road connecting the western Toowong highway to the city centre. The project involved the design, construction, operation and maintenance (for 10 years) of 4.25 km twin road tunnels, with an outer diameter of 12.4 metres (11.3 m internal diameter) in an urban environment.

[#Metro]

Sydney Metro is a PPP

Sydney Metro & Southwest is a PPP using an availability payments model, as described on the Transport for NSW website.

Project Name:
Sydney Metro City & Southwest (SMCSW) Operations, Trains and Systems 2 (OTS2) PPP

When complete, Sydney will have 31 metro railway stations and a 66km standalone metro railway system. 

SMCSW is being delivered through multiple contract packages including (but not limited to) a tunnelling package, multiple stations packages and a line-wide contract. The OTS2 package is an availability PPP where the State will retain demand risk.

A substantial State contribution will also be made during construction.  The OTS2 PPP is an augmentation to the existing (Northwest) OTS PPP and has been structured so that on the "OTS Incorporation Date", the OTS Project Deed will fall away as a standalone document and the Sydney Metro Northwest and Sydney Metro City will be governed by the OTS2 Project Deed.  The OTS2 Project Deed will also govern the on-going delivery and subsequent operation and maintenance of Sydney Metro Southwest when it is completed.

Sydney Metro City & Southwest
https://www.treasury.nsw.gov.au/projects-research/public-private-partnerships/awarded-projects/sydney-metro-city-and-southwest

[Gazza]

Interesting that WA achieves higher public transport use per captia with a fraction of the PPPs 

Time and  time again their projects come in cheaper per km than the eastern states, and they don't have a single toll road.

Are WA less worried about transferring risk?

[#Metro]

A key research question is whether this approach can be applied to BRT as well. So far in Australia most of the LRT projects (Gold Coast, Canberra, Sydney) have been PPPs of some sort.

Can this approach be applied to BRT? It seems like it can.    

TransMilenio BRT in Colombia appears to be a 'maintain and operate' model.

TransMilenio Bus Rapid Transit
https://inclusiveinfra.gihub.org/case-studies/transmilenio-bus-rapid-transit-colombia/

TransMilenio is the one of the world's largest bus rapid transit (BRT) systems. It is a network of high-capacity buses carrying 2.3 million passengers a day around Bogotá in Colombia.

TransMilenio was created in 1999 to alleviate heavy congestion in the capital and to provide an efficient and cost-effective transportation system for Bogotá's eight million citizens. Plans for the BRT system received strong political support, as well as adequate financial backing and committed participation from the traditional transport industry. It went from a well-defined but general idea to an operational project in just three years. Its successful business model has been replicated in many cities around the globe and it is one of the most cost-effective mass transport solutions available.

In 1999, TransMilenio S.A. was created as a public-private partnership (PPP) to construct and operate the BRT system. In this partnership, the public sector was responsible for the investment needed to develop the infrastructure, and the private sector was responsible for the system's operation and maintenance. Later, in 2012, the Integrated System of Public Transportation (SITP) was established to operate all public transport systems across Bogotá, including TransMilenio and the other bus and taxi operators.