The Future of PPPs in Low-Income Countries
While PPPs have not been as successful as expected, the various kinds of hybrid PPP project forms that have emerged may suggest ways in which PPPs can sustainably generate some value and meet some stakeholder expectations. These hybrids may indeed be successful, but in what ways do they represent significantly reduced expectations regarding the benefits of PPPs, as these projects were conceived in the 1990s? This chapter discusses what is perhaps the most dramatic compromise, the dominating role now played in most of these projects by subsidized or “blended” finance. Governments and their development partners pay for and manage most basic project preparation work, contribute to the capital costs of projects, and provide guarantees and other risk-mitigation mechanisms insisted on by private partners. How should blended finance like this be justified and managed to ensure against market distortion and wasted resources that could be used more productively elsewhere?