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Report exposes how PPPs across the world drain the public purse, and fail to deliver in the public interest

Added 08 Oct 2018
  • Experts call for World Bank Group to end aggressive promotion of PPPs for public service provision

Monday October 8 2018

new report exposing how public private partnerships across the globe have drained the public purse and failed to deliver in the public interest will be launched at the Annual Meetings of the World Bank in Bali this week (Wednesday October 10 at 1.30pm).

History RePPPeated: How public private partnerships are failing has been written by experts across four continents from organisations including Oxfam and the Centre for Financial Accountability in India. They expose the negative impacts of PPPs that have often caused misery to local communities.    

The report shows that multilateral development banks, such as the World Bank Group (WBG) have played a leading role in providing advice and finance for PPP projects in different sectors. This is despite the mounting evidence showing that PPPs are expensive, risky and opaque.

Maria Jose Romero, one of the report authors and Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad), said: “This report is a serious wake-up call. It is a collection of devastating stories – most of them resulting in national and international scandals in both developing and developed economies alike.

“Last year we launched a campaign manifesto in which more than 150 civil society organisations from around the world called for an end to the aggressive promotion of PPPs. There is overwhelming evidence of the harm they cause. How many more scandals do we need before a serious rethink takes place?”

The report covers 10 case studies from Colombia, France, India, Indonesia, Lesotho, Liberia, Peru, Spain and Sweden. The sectors investigated include education, health, water and sanitation, energy and infrastructure.

Some of the main findings are:

  • All projects came with a high cost for the public purse, and an excessive level of risk for the public sector and, therefore, they resulted in a heavy burden for citizens.
  • Nine out of 10 of the projects lacked transparency and/or failed to consult with affected communities, and undermined democratic accountability.
  • Five of the 10 projects impacted negatively on the poor, and contributed to an increase in the divide between rich and poor.
  • Three of the PPPs resulted in serious social and environmental impacts.

The case studies include the Queen Mamohato Hospital in Lesotho, which is bleeding government coffers largely through huge costs for the treatment of patients; and the case of Jakarta Water in Indonesia, where two PPP contracts resulted in huge losses for the public water utility, while residents often have to rely on groundwater from community wedge wells, or buy expensive water in jerry cans.

Romero said: “It is time for the World Bank Group, IMF and other institutions to stop repeating past mistakes and instead support countries to find the best financing method for public services. These solutions should be transparent, environmentally and fiscally sustainable, and in line with human rights obligations. The future of many communities depends on this.”

The report recommends that the WBG, the International Monetary Fund (IMF) and other public development banks, together with the governments of wealthy countries that play a leading role in these institutions:

  • Halt the aggressive promotion and incentivising of PPPs for social and economic infrastructure financing.
  • Support countries in finding the best financing method for public services in social and economic infrastructure.
  • Ensure good and democratic governance is in place before pursuing large-scale infrastructure or service developments.
  • Ensure that rigorous transparency standards are applied.

Access the full report including all case studies at: www.eurodad.org/historyrePPPeated from October 8 or through this link.

Photos of the case studies are available on request.

ENDS

MEDIA CONTACTS:

To interview Maria Jose Romero please contact: Julia Ravenscroft (based in Brussels) on +32 486356814/ jravenscroft@eurodad.org OR Martin Atkin (in Bali from Tuesday afternoon October 9) on +44 (0)779 544 3607/ martin@funnelweb.org.

LAUNCH OF REPORT:

  • The report History RePPPeated: How Public Private Partnerships are failingwill be launched at:  World Bank/ IMF Annual Meetings 2018 in Bali Nusa Dua, Indonesia.

Date: Wednesday October 10th from 13.30 to 15:00

Where: Civil Society Policy Forum, Bandung Room.

Notes to editors:

  • Since 2004 there has been a rapid growth in the amount of money invested in PPPs in the developing world. Although the trend has been volatile since 2012, efforts by multilateral development banksto leverage private finance in both emerging and low-income economies have continued — for example, through the “Cascade” approach developed by the WBG, whereby the use of private finance is prioritised over public or concessional finance.
  • This report shows that manyprojects have been procured as PPPs simply to circumvent budget constraints and to postpone the recording of fiscal costs. Some accounting practices allow governments to keep the cost of the project and its contingent liabilities “off balance sheet”. This ends up exposing public finances to excessive fiscal risks.