EU Public Private Partnerships suffer from widespread shortcomings and limited benefits
EU co-financed Public Private Partnerships (PPPs) cannot be regarded as an economically viable option for delivering public infrastructure, according to a new report from the European Court of Auditors. The PPPs audited suffered from widespread shortcomings and limited benefits, resulting in €1.5 billion of inefficient and ineffective spending. In addition, value for money and transparency were widely undermined in particular by unclear policy and strategy, inadequate analysis, off-balance-sheet recording of PPPs and unbalanced risk-sharing arrangements
Between 2000 and 2014, the EU provided €5.6 billion for 84 PPPs, with a total project cost of €29.2 billion. The auditors assessed 12 EU co-financed PPPs in France, Greece, Ireland and Spain in the areas of road transport and information and communication technology (ICT), with a total cost of €9.6 billion and an EU contribution of €2.2 billion. Overall, they found that PPPs allowed public authorities to procure large-scale infrastructure through a single procedure, but these increased the risk of insufficient competition and therefore put the contracting authorities in a weaker negotiating position.
Moreover, the majority of PPPs audited were subject to considerable inefficiencies during their construction, with seven of the nine completed projects – corresponding to €7.8 billion – project cost incurring delays of up to 52 months and major cost increases.
“Almost €1.5 billion extra in public funds was needed to complete the five motorways audited in Greece and Spain. Some 30 % of this (€422 million) was provided by the EU”, said Oskar Herics, the Member of the European Court of Auditors responsible for the report. “This was spent ineffectively in terms of achieving the potential economic benefits.”