Ireland among leading users of PPPs

Ireland is one of the world's leading users of Public Private Partnerships (PPPs). A new report by Deloitte has found that Ireland is behind only Australia and the UK, which is the leader in the use of PPPs.

Ireland is cited in the report Closing the Infrastructure Gap: The Role of Public Private Partnerships as a leading PPP practitioner in the fields of transport, water/waste - where there are currently more than 100 PPP projects under way - education and housing/urban regeneration.

While the development of PPPs in Ireland started quite slowly, their current use across a wide number of sectors makes Ireland one of the more mature PPP markets in the world, the report says.

"Countries at earlier stages of PPP development could benefit from the opportunity to learn from the trailblazers who have moved to more advanced stages: the United Kingdom for schools, hospitals and defence facilities; Australia and Ireland for roads; and the Netherlands for social housing and urban regeneration," the report adds.

However, it says there are still areas in Ireland in which PPPs could be used to improve services.

A survey in 2005 of private infrastructure providers identified hospitals as the sector with the most potential for PPP development - 79 per cent of respondents ranked it first on their preference order for PPP development.

The maturing of the Irish market should allow for greater innovation in structures used for PPPs, extending its use into other sectors such as health and IT, Deloitte says.

"It is clear that the PPP model is working in Ireland and the opportunity exists to extend the current models into new sectors, including health," said Michael Flynn, head of Deloitte's PPP practice in Ireland.

"Various Government departments have their own PPP units and that has led to a more mature market with a growing deal flow compared to other markets," he said.

PPPs are gaining in popularity because they change the risk profile for Government departments and public service providers, according to Mr Flynn. "It puts the risk and responsibility on the party that is best able to manage it."

Under a PPP, the private sector will pay for any cost or time over-runs on the original agreed deal, he said.

By giving the private sector the responsibility to provide the infrastructure and other services, PPPs also allow the public sector to focus on providing services to the public, he said.

But he denied that the State had not received value for money in some of the earlier PPP projects it had negotiated with private sector operators.

"There probably are cases in the past where the State may not have got the best deal but that was not necessarily because it wasn't skilled at negotiating but it may have been that there was too much risk transfer so the State was asking the private sector to do too much or take on too much risk which the private sector had to price in."