Environmental Engineering Reference
In-Depth Information
parties include one private and one public party; (3) they are privately funded
projects, and (4) there is an allocation of risks.
The main reason why the public sector frequently decides to join a PPP is
because of insufficient money. The main idea is to use the money of the private
sector to realize the project. At the same time, the public sector always seeks to
minimize risks and thus to transfer them to the private sector. The allocation of risks
is often a contentious issue between both partners, so it needs to be assessed further.
1.3.1 Contract Period
The average contract period ranges between 15 and 30 years.
91
On an international
scale, there are some PPP agreements with a lifespan of between 50 and 99 years.
92
If both parties desire comparable, long-term cooperation, the law that governs the
PPP is significant as national law can prohibit excessive contract periods.
1.3.2 Contractual Partner
There are primary project participants, namely the public authority and the private
partner, and secondary participants like banks, subcontractors, consumers, consul-
tants and possible operators.
93
Regardless of whether one is talking about the role of
primary or secondary project participants, it is always important that no one party
has too much power within a PPP (e.g. public intervention).
94
1.3.3 Project Funding
Normally, the project is not financed solely by the private operator, but rather by
secondary participants (e.g. banks).
95
The private sector tries to keep the amount of
equity as small as possible.
96
There are different proposals concerning the neces-
sary amount of equity, as it should be around 30 %.
97
In the case of the Desertec
Concept, this would be 120 billion Euros. In 2005, commercial banks provided
91
Corner (
2006
), 37 (41); cf. Noltensmeier (
2009
), 36; Kn¨ tel in Siebel et al. (
2008
), para 1272.
92
Kn¨ tel in Siebel et al. (
2008
), para 1309.
93
Metje (
2008
), 17.
94
Wolfs and Woodroffe (
2002
), 101 (102).
95
Wahl (
1994
), 15 (16).
96
H
ofler (
2007
), 35 (46).
97
Schoeltzke and Claus (
2007
), 133 (138).
€
