Following an audit of 12 public private partnerships (PPPs) co-financed by the European Union, EU auditors recommend that the member states and European institutions should no longer promote this model that has been used for infrastructure projects in areas as diverse as transport and new technologies.
“PPPs cannot be considered a viable economic option for the successful construction of public infrastructure”, European Court of Auditors (ECA) member Oskar Herics told EUROPE on Tuesday 20 March.
PPPs differ from traditional public contracts in that the economic operator designated to complete the piece of infrastructure (motorway, internet network, swimming pool, etc.) bear part of the operational and financial risks and is totally or partially remunerated through the operation of concessions on the subject of the contract.
The ECA looked at 12 PPPs – motorways in Spain, Greece and Ireland, and internet networks in France – which cost in excess of €9.62 billion in total and which received European co-financing of €2.17 billion.
In general terms, the Court concluded that the PPPs audited had allowed the contracting public authorities to procure large-scale infrastructure through a single procedure but they “increased the risk of insufficient competition”, thus putting the contracting authorities in a weaker negotiating position. Furthermore, most of the 12 partnerships “were subject to considerable inefficiencies in the form of delays during construction and major cost increases”.
For example, there was a delay of 52-months on the Moreas motorway PPP in Greece. And the PPP to deliver high-speed internet infrastructure in Pau, France, ran up a 73% cost increase. Equally, the actual revenue generated by the PPP in Meurthe-et-Moselle, France, was only 51% of the original estimate. See: http://bit.ly/2u6wIrU (Original version in French by Mathieu Bion)