Editorial

Public-private mix: risk management and distribution

The increasing involvement of the private sector in the development, financing, implementation and operation of public services has been further strengthened in the past decade. Without a doubt, public-private partnerships, in varying forms, are today's key solutions for reconciling profitability requirements and the public interest.
These systems mainly concern developing and emerging countries or those in transition, where economic and financial constraints are heavy. But they are also increasingly relevant to countries applying for accession to the European Union as well as developed countries (cf. studies of the French Planning Office on the development of networked public services in France in the European context). This approach centres around the methods of sharing, management and coverage of risks described in this issue of the Lettre. Risks related to construction and operating costs must be managed and distributed among public and private partners with the help of financial agencies. Revenue-related risks which, in the case of our study on ports, depend on traffic volumes, are sensitive to the particularities of local political contexts, with a direct impact on the costs of cover.
Marked differences exist between sectors, particularly as regards the volume and economic feasibility of investments, which require appropriate involvement of the public authorities. These differences also concern the players, who include local authorities and users, particularly in the case of urban services.
But sectors have many points in common, particularly in the institutional and legal areas, as each allocation of responsibility for infrastructure or a public service requires clear identification of the players and consolidation of the relationships between them at all levels.
The partners to these contracts will all have to fulfil the requirements on which their goals depend. This particular situation of a long-term, two-way commitment between public and private partners must be based on a relationship of trust and contractual flexibility, which includes the means to settle disputes through an appropriate regulation mechanism.

 Jean Smagghe,
 President of Isted

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