| Public-private partnerships’ role in cohesion policy |
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Public-private partnerships, or PPPs, have seen a surge in interest over the past few years as a means of carrying out public infrastructure projects, due to the growing amount of investment needed. Tight government budgets have prompted public agencies to seek additional sources of funding for their large initiatives; PPPs provide a way to secure capital early-on in the project and obtain access to more efficient management skills for projects that have in the past suffered from substantial delays and cost overruns. The European Commission recognises the important role that PPPs can play in achieving the EU’s cohesion policy objectives. Indeed, giving EU grants to PPPs has proven successful in several large-scale infrastructure projects, such as the Vasco de Gama bridge in Lisbon and the new airport in Athens. Nonetheless, successful examples are few in number due to the complicated project arrangements, high initial set-up costs, and lack of government skills and experience in this area, especially among the new member states.There is no simple, quick method for creating PPPs; specialised knowhow is needed to ensure that they are established in a sound manner. The EU is aware of the growing interest in PPPs across the region and plans to help governments create PPPs whenever this type of arrangement seems to be the most effective option for carrying out public infrastructure projects. PPPs must meet certain basic criteria in order to receive EU funding, including the following:
PPPs must operate in a complicated environment unique to each member state. The European Commission is prepared to provide technical assistance for setting up these types of projects, and to that end has formed two new instruments: JASPERS (Joint Assistance to Support Projects in European Regions) and JESSICA (Joint European Support for Sustainable Investment in City Areas). JASPERS is a joint initiative between the European Commission, the European Investment Bank (EIB), and the European Bank for Reconstruction and Development (EBRD). It aims to help countries which joined the EU in 2004 and 2007 arrange large projects backed by EU funds - the European Regional Development Fund (ERDF) or Cohesion Funds. JASPERS’ help could include technical, economic, or financial assistance, or support with any other preparatory work. It could also include the assistance needed to see a PPP project through to maturity. Several member states have already used JASPERS to launch PPP projects combining EU grants with private sector financing. JESSICA is a joint initiative between the European Commission, the EIB, and the Council of Europe Development Bank (CEB). It helps member states finance urban renewal projects through novel methods, such as Structural Funds channelled through sustainable city investment funds. These funds can be used for PPPs or other types of urban renewal projects in which the money is eventually repaid (i.e., renewable credit facilities). In conclusion, the EU aims to promote the use of PPPs in projects combining EU grants with private sector financing. However, projects should be reviewed on a case-bycase basis and the European Commission should hold in-depth discussions with the beneficiaries of any such grants, in order to develop a model consistent with national and EU legislation and the needs of all parties involved. The process of creating a PPP could be financed by technical assistance. The European Commission hopes that governments will be encouraged to share their PPP experience, because this could be an effective way of spreading best practice. Danuta HÜBNER, Les Dossiers Européens N°13 - janvier 2008
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