What is PPP?

Public Private Partnership (PPP) is a long-term contract between the public and private sectors to provide public infrastructure or services, where the private sector bears certain risks and management responsibilities, while the payments to the private sector are based on performance.

In the implementation of such projects, the state transfers a number of state-provided services, property or control mechanisms to the private sector, and as a result, the state has a quality infrastructure in accordance with predetermined requirements and the population receives quality services.

In international practice, the DOST model is widely used in the implementation of state (public) infrastructure projects in a number of countries. Among them are the United States, Great Britain, France, the Netherlands, Australia, South Korea, Turkey, Brazil, India, China and Mexico. According to the World Bank, between 1990 and 2018, 6,135 PPP projects worth about $ 1.5 trillion were implemented in developing countries. Relevant support is provided by the Asian Development Bank, the European Bank for Reconstruction and Development, the Sustainable Infrastructure Fund, the Islamic Development Bank, the International Finance Corporation and other international organizations to improve the PPP environment and develop PPP projects.

A significant part of Turkey's major projects, including Istanbul's new airport, the Eurasian tunnel, the Yavuz Sultan Selim Bridge, the Osmangazi Bridge, a number of city hospitals and railway projects across the country, have been implemented using the PPP model.

According to the World Bank's Private Equity Infrastructure Project Database, the new Istanbul airport project, valued at $ 35 billion, is the most privately-invested PPP project.

Other important PPP projects include the Nord Stream Gas Pipeline project ($10 billion), which connects the Russian Federation's gas fields with the European Union's energy markets, THD Grand Est, France's largest fiber-optic project (€ 1 billion). and the construction and renovation of stadiums for the Euro 2016 football tournament (example: PierreMauroy Stadium in Lille worth €618 million), the Blankenburg Tunnel in the Netherlands (€ 1 billion), the Afsluitdijk Dam (€ 810 million), the 1915 Canakkale Bridge in Turkey (3.1 billion) and Bilkent Laboratory (711 million euros).

The highest number of PPP projects were implemented in France, while Turkey was leading in terms of total project value.

The PPP model plays an important role in attracting local and foreign investors to the implementation of relevant infrastructure projects by reducing public investment costs and introducing alternative financing mechanisms. In some countries (Australia, the Netherlands, Chile), even PPP projects are selected only from the ones that included in the public investment program.