New Report: “Public Private Partnerships in the EU: Widespread shortcomings and limited benefits”

A special report by the European Court of Auditors was published on Tuesday 20th March, exposing the weaknesses and failures of PPPs in the EU. 

Here are some of the key findings from the report:

  • PPPs allowed public authorities to procure large-scale infrastructures through a single procedure, but they increased the risk of insufficient competition and thus putting contracting authorities in a weaker negotiating position.
  • Procuring PPPs typically requires negotiating on aspects that are usually not part of traditional procurement and therefore takes up more time than traditional projects. One third of the 12 audited projects were, with their procurement duration of 5-6.5 years, affected by considerable delays.
  • Similarly to traditional projects, also the majority of the audited PPPs were subject to considerable inefficiencies in the form of delays during construction and major cost increases. Overall, seven out of the nine completed projects (with aggregate projects costs of 7.8 billion euro) faced delays ranging from two to 52 months. Moreover, an additional amount of almost 1.5 billion euro in public funds was necessary to complete the five motorways we audited in Greece and Spain, around 30 % of which was provided by the EU (corresponding to 422 million euro). We consider this amount to have been spent ineffectively in terms of achieving the potential benefits.
  • More importantly, in Greece (which is by far the largest recipient of EU contributions with 59 % of the total EU-amount or 3.3 billion euro), the cost per km of three assessed motorways had increased by up to 69 %, while at the same time the project scopes were reduced by up to 55 %. This was mainly due to the financial crisis and to poorly prepared projects by the public partner, resulting in premature and insufficiently effective contracts with private concessionaires.
  • The large scope, the high cost and the long duration of typical infrastructure PPPs require particular diligence. However, we found that prior analyses were based on over- optimistic scenarios regarding future demand and use of the planned infrastructure, resulting in project rates of use of up to 69 % (ICT) and 35 % (motorways) below forecasts. This does not take into account the pending risk of the heavily underused motorways in Greece after their completion.

Read the full report here.