A Public Private Partnership (often referred to as PPP, P3, or P3) is built around a mutually beneficial contract between an agent from the public sector and one or more private parties.
In such an agreement, the private investor provides funding for a publically-designated project, while fully assuming both financial and operational risks.
In most cases, the return on investment for the private entity is attained through public use of the service, rather than direct funding from tax-payers.
I.E. Government “X” wants to construct a public railway in a heavily congested area of the city. Company “Y” pays to build it, and makes a profit from the fares collected.
Maintenance and operational fees are generally the burden of the private investor for a contracted period of time, at the end of which duties are transferred to the public authority. Similarly, the period of time the private investor can collect a profit is contractually agreed upon and often features a profit sharing agreement.
In other circumstances, the private party invests in a public project in exchange for public grants, subsidies or tax-breaks.
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