Environmental Engineering Reference
In-Depth Information
4.2 PPPs Are a Valid Contractual Tool
of International Law
There is a lot of discussion about PPPs. Most of them revolve around their
categorization, benefits and drawbacks. First of all, PPPs are nothing new anymore
and are part of international and national law. Although some lawyers do not accept
this, it does not change the fact that PPPs have been around for almost over
30 years.
It is rather difficult to categorize PPPs as there is no real definition. This is
mainly due to their complexity, which however offers various types of contractual
setup. Therefore, only certain attributes can help us understand PPPs. These
attributes are: (1) a long duration of the contract, (2) one private and one public
party (3), a privately funded project, and (4) an allocation of risks.
Furthermore, cooperation in the case of PPPs can vary with regard to the
percentage of involvement. This is similar to the cooperation model, where the
state remains an influential actor. Other forms of cooperation like concessions or
joint ventures exclude almost all state influence. Unlike substantive privatization,
PPPs do not include a complete transfer of duties to the private sector. In the case of
PPPs, the public sector is still in charge to provide the respective service. Even in
the case of a concession PPP or a joint venture, the state still has some control over
the project. The main idea of PPPs is not to completely exclude the public influence.
There are positive and negative experiences with PPPs, which are mostly
connected to the different applications and expectations of the contracting parties.
Without a doubt, it is impossible to include all possible risks and events within a
PPP. A PPP cannot offer a complete legal framework, covering all possible future
situations. PPPs need a prior assessment of the respective situation. In the best case
scenario, there are PPP guidelines or governmental departments dealing exclusively
with PPPs. In most cases, PPPs failed because of missing or wrong feasibility
studies or exceptions. PPPs are not the solution to all financial problems of the state.
Every state must understand that a PPP is a long-lasting and complicated form of
cooperation which offers, due to its flexibility, an excellent chance to successfully
realize the Desertec Concept. Yet, it requires a lot of commitment and work. In
addition, the fact that PPPs are complex is not a valid argument against their
application. In the case of the Desertec Concept, it would be foolish to believe
that any other contract form would be less complex concerning its setup. In the case
of big scale projects and Greenfield investments, every contract requires a long and
properly implemented negotiation. If both parties are willing to cooperate as the
term PPP already indicates, the project will be successful.
