Public-Private Partnership, also known as PPP financing is a type of infrastructure financing that is commonly practiced in Asian countries. These are the projects where the government and the private sector companies come together for the purpose of building an infrastructure for the country. These are government projects where the private sector might invest or lend expertise.
PPP is an arrangement that has some benefits like:
- Reduces financial risks
- Project scrutiny is conducted more carefully
- Well analyzed risks leading to change in project structures
- Appropriate distribution of risk between parties
- Isolation of risk for investors
How it helped in the dwvwlopment of a country?
There is no one standard definition of PPP projects, but it is a model where private sector participants in a public sector project delivery. It can be done in various ways like lending capital, expertise, operation, and various forms of services. This model has helped a lot of Asian countries in their infrastructural project. It helps by allowing the government to develop the infrastructure by involving minimum risk. It is a great model in terms of investors also, because it distributes the risk within the investors equally. Hence, minimizes the scale of the risk. Countries like India and China have highly benefited through this model of PPP financing.