Ireland leading the way in Public Private Partnerships – Deloitte

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• Ireland sophisticated in use of PPPs in transport
• Potential for PPPs to improve health services

Ireland is a leading practitioner in the use of Public-Private partnerships (PPPs), a global Deloitte study entitled ‘ Closing the Infrastructure Gap: The Role of Public-Private Partnerships’ has found. As more and more governments around the world are teaming with the private sector to design, build, finance and operate everything from roads and ports to hospitals and prisons, Ireland has been identified as an example from which other countries can learn from.  

According to the report, Ireland is only behind Australia and the UK, which is the leader in PPP deployment, in the use of PPPs. Ireland is cited in the report as a leading PPP practitioner in the fields of transport, water/waste (there are currently over 100 PPP projects in waste water in Ireland), education, and housing/urban regeneration.

Public-Private partnerships have emerged as a crucial tool for governments to tackle critical infrastructure needs around the world. Once limited to a handful of countries, public-private partnerships have emerged as one of the most important models governments can use to close the infrastructure gap in both developed and emerging markets.

While the development of PPPs in Ireland started quite slowly, the current use of PPPs across a wide number of sectors puts Ireland as one of the more mature PPP markets in the world, the report said.

However, there still are areas in Ireland in which PPPs could be used to improve services. A survey  in 2005 of private infrastructure providers identified hospitals as the sector with the most potential for PPP development - 79 percent of respondents ranked it first on their preference order for PPP development.  The maturing of the Irish market should allow for greater innovation in structures used for PPPs, extending its use into other sectors such as health and IT.

Commenting on the report, Michael Flynn, who leads the Deloitte PPP Practice in Ireland, said: “Currently, Ireland has a projected need of €100 billion for investment in infrastructure of which a significant portion will be delivered through public-private partnerships. It is clear that the PPP model is working in Ireland and the opportunity exists to extend the current models into new sectors including health. The successes of PPPs in Ireland to date should give confidence in their greater use into the future.”

The report also found that as well as Ireland, the UK, Canada and Australia are leaders in the use of PPPs. The UK pioneered the trend over a decade ago; today, partnership models account for between 10 and 13 percent of all UK investment in public infrastructure. In Canada, 20 percent of all new infrastructure is now designed, built and operated by the private sector. Australia was the first country to use PPPs in the transport area. 

The report found that the most effective public-private partnerships marry the best skills of the public and private sector to the benefit of the public services being delivered to the citizen.  By giving the private sector the responsibility to provide the infrastructure and other services, this allows the public sector to focus on its main responsibility and objectives of providing quality services for the citizen.  The report found that the use of PPPs can be further improved by considering three essential approaches:

• Adopt a “life-cycle” perspective for each project: This means looking not only at the financial terms of the deal, but to the entire life of the project and the impact of a project on existing and future operations of the public sector.
• Use more innovative models: While standardising PPP policies and practices is important, governments should also develop imaginative new approaches to fit the requirements of unique projects and changing circumstances.
• Unlock value from underutilized assets: Savvy governments are increasingly examining ways in which they can best exploit the value of their assets by exchanging them for other assets or services that might serve more pressing needs. 

The major infrastructure sectors in which public-private partnerships have been successfully applied include transport (roads, rail and ports), water, waste, hospitals, public housing, prisons, and defense.

Deloitte member firms are home to a growing network of more than 200 professionals with deep expertise in public-private partnerships. In a recent study, the UK’s Warwick Business School rated Deloitte member firms’ public-private partnership “community of practice” among the top professional communities surveyed.

Copies of the report ‘Closing the Infrastructure Gap: The Role of Public-Private Partnerships’ are available at here.

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Deloitte Ireland has a dedicated, specialised Finance Team advising the public, private and banking sectors on PPP, project finance and financial modelling projects.  This team has been involved in most of the PPP project in Ireland to date across a variety of sectors including roads, waste to energy, ports, housing, property, health and education. The team is currently advising the NDFA on the Thornton Hall Prison PPP project and the first bundle of schools within the education PPP programme.

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