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Public-Private Partnership (PPP), a solution for public entities and local authorities

Increasingly, states are faced with large public expenditures and the associated demands for more and more. Unfortunately, state resources are limited and priorities may not meet those of taxpayers at various levels. PPPs can be an acceptable solution to this public funding shortfall. It should be noted that PPPs have certain requirements that must be met regardless of the model chosen:

  • Value for money should be favorable to the contracting public entity;

  • A public utility of the infrastructure to be used by the users;

  • An infrastructure that is, if possible, green, inclusive, and resilient;

  • An internal rate of return (IRR) that meets the requirements of the project sponsor or promoter.

  • Sufficient debt service coverage (DSCR) to compensate lenders;

  • A return of the infrastructure to the contracting entity in a good or serviceable condition at the end of the period.

However, it is necessary to create an enabling market for these PPPs and the conditions for their success. The mechanisms for creating a framework conducive to PPPs exist and only need to be popularized in order to enable a large number of public entities to achieve their development objectives. Addvalorem C.F.R.M can accompany them in the PPP process.

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