Public-Private Partnerships In Spain: Lessons And Opportunities

Abstract

Public-Private Partnerships (PPP), a “marriage” between public- and private-sector activity, have been employed for almost two decades as a “third way” to optimize the use of public funds and boost the quality of services traditionally provided by the public sector.  Their use has spread from the United Kingdom to Europe and beyond, and has expanded from the transport sector to innovative projects in health, education and others.  In Spain, successive governments have seized on PPPs as a solution to budget constraints at a time of dwindling EU aid and stricter fiscal targets.  As a result, the use of PPPs at all levels of government has exploded since 2003 and most recently culminated in a major infrastructure plan which relies on the private sector for 40% of  its total investment.  Undoubtedly, this trend will bring benefits to the Spanish population in terms of more abundant, lower-cost and higher-quality services.  However, there are risks implicit in the way PPP is unfolding in Spain that could limit and even undo these benefits unless steps are taken to coordinate, monitor and follow up public-private projects and to communicate their virtues to the public.  Spain presents an interesting paradox in the history of PPP.  While it is one of Europe´s oldest, most active and most enthusiastic users of PPP, it is at the same time one of the countries that has demonstrated least interest at an official level in informing, monitoring, regulating and following up projects to ensure that their deepest benefits are being achieved.  Relying on PPP only for private financing entails a risk that the benefits of PPP will not be realized and public services will actually become more expensive and less satisfactory over the medium and long term.  The Spanish government is advised to take steps similar to those taken in the United Kingdom, to ensure that PPP is managed correctly and hence becomes an asset and not a liability to Spanish citizens.