ADB and Public-Private Partnerships

Asia’s infrastructure requirements today are estimated at over $1.7 trillion a year until at least 2030. There is a huge gap between the financing that is required and what governments can afford to pay from their own budgets. This shortfall, along with weak capacity, an underdeveloped enabling environment, poor project preparation, and insufficient project financing, are holding back economic growth and poverty alleviation.

What are PPPs?

• PPPs are contractual arrangements where a government partners with the private sector to build and run infrastructure, such as a road or bridge
• PPPs can be used to finance and run traditional infrastructure, as well as railways, ports, water, sewage facilities, and renewable power systems
• There also successful PPP examples in the education, health, and other social sectors

Why tap the private sector?

• Greater efficiency and lower costs than governments when constructing and managing infrastructure projects and delivering services
• Cutting edge technology and innovation to development projects
• Open tendered construction of infrastructure can result in faster delivery

The Mactan-Cebu International Passenger Terminal Project was a priority PPP project of the Philippine government. It is the country's second largest airport and serves as the southern hub of its air transportation system. Photo: Ariel Javellana/ADB

How can PPPs be successful in a development context?

• They must demonstrate clear public benefit, yet operate on commercial principles and with effective risk sharing
• Must have a sound bankable contract structure that offers value for money over the life of the project, which is often many years

The Office of Markets Development and Public–Private Partnership's services

• Capacity building, training and knowledge-sharing for governments
• Creating an enabling environment for policy formulation, legal, regulatory and institutional frameworks for PPPs
• Transaction Advisory Services: deal structuring, risk analyses, financial modeling, preparation of bid documents, managing the tender process
• Creating opportunities for financing in close coordination with ADB’s sovereign and nonsovereign operations

The Office of Markets Development and Public–Private Partnership's track record

• Harnesses the private sector’s efficiency at managing infrastructure projects while delivering quality infrastructure services
• Delivers bankable PPP projects that balance risks and benefits
• Ensures workable regulations and frameworks are in place to attract private sector interest in PPPs
• Brokered a number of successful PPP projects

ADB’s PPP operations are also supported by the Asia Pacific Project Preparation Facility (AP3F), managed by ADB’s Office of Markets Development and Public–Private Partnership.

The AP3F is a multi-donor trust fund supported by generous contributions from the governments of Australia, Canada, the Republic of Korea, Japan, and ADB. The trust fund helps prepare and monitor PPP projects, build government capacity, and create an enabling environment for PPPs.

Transaction Advisory Services (TAS)

TAS are most appropriate for transactions that can benefit from:

• ADB’s unique knowledge and experience that can help resolve financial, legal, or risk issues to create markets
• ADB’s reputation for transparency, fairness, and good governance
• Multilateral financing and credit enhancement products
• Bespoke financing, structuring and support
• Alternative options where the perceived country risk is high and there is insufficient local financing
• ADB’s ability to catalyze and mobilize financing