EFFECTIVE LEGAL
FRAMEWORK FOR PPPs
By Peter Stein
Presented at OECD-seminar on PPPs
For Infrastructure Financing
Istanbul 2006-11-08
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GUIDELINES TO ACHIEVE
SUCCESS WITH PPPs
• Do not view PPP as simply a method to raise private
capital
• Main argument for PPPs is that they make use of private
sector skills
• Strong political commitment and good governance
• Key decision-makers should be viewed as influential
• Clearly stated principles when to use PPP and why
• PPPs result in efficiency gains when the quality of
services is contractible, there is adequate risk sharing
and incentive-based legislation
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KEY COMPONENTS – NATIONAL
LEVEL
• Appropriate legal framework-overhaul of
legislation
• Usually traditional laws on public work do not
have sufficient flexibility to design PPPs
• Need for well defined accounting rules and clear
channels of responsibility and accountability
• Earmarking revenues for future PPP-payments
• Competitive procurement with fair treatment of
all bidders
• Optimal risk-sharing
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KEY COMPONENTS – PROJECT
LEVEL
• Output-based contracts
• Payments to provider linked to
performance over the contract life
• Project manager independence and
authority
• Effective mechanisms for conflict
resolutions and benchmarking
• Establish policy how to divide benefits
resulting from refinancing
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ON COMPETITIVE
PROCUREMENT
• Maximise competitive tension until last
minute
• Choose provider based on price and
quality
• Model prospective shadow price bid
• Keep option of unconditional bidders
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EXAMPLE HOW TO SHARE
RISKS
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PETER STEIN
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CEO Stein Brothers AB
pstein@comhem.se
Kommendörsgatan 14
SE-114 48 Stockholm
Tel: +46 8 662 69 80
Fax: + 46 8 663 33 05
GSM: +46 70 424 09 68
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