Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

My Department's primary role in regard to PPP contracts is to facilitate the PPP process centrally by developing the general policy framework, including where necessary the legal framework and the capital investment policy framework, within which PPPs operate and by providing central guidance to Departments and other State authorities in that context. PPPs are partnerships between the public and private sectors for the purpose of delivering a project or service. Some of the advantages associated with them are that they allow the public sector to avail of private sector expertise and innovation and that the private partner assumes responsibility for a considerable portion of the risk.

PPP contracts tend to be long-term arrangements, typically spanning 25 years or more after construction. They can be design, build, finance and maintain, DBFM, projects; design, build, finance, operate and maintain, DBFOM, projects; or concession projects. DBFM projects require the PPP company to provide and maintain the asset or infrastructure but not to operate it. This is likely to be used to provide schools and similar infrastructure. In such cases, the public sector will want to use the asset but will not require the private partner to provide the attendant service. In the case of a school, the public sector would employ the teaching staff. DBFOM projects effectively require the private sector to replace the public sector for the duration of the contract. These projects require the private sector to provide, operate and maintain the asset or infrastructure. In the case of a water treatment plant, for example, this would require the private sector to staff the plant to ensure service delivery on behalf of the public sector contractor. Unitary payments are made over the life of the PPP contract, typically 25 years after construction. Concession projects differ from other PPPs in how they provide a financial return to the financial sector. Unlike other PPPs, the private sector achieves its financial return in these cases by levying a user charge on the service.

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