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On 26 July 2005, the Irish Government published its decision to substantially expand the role of the National Development Finance Agency (NDFA) to include the procurement and delivery of key infrastructure projects by way of Public Private Partnerships (PPP).
The use of PPPs has been proven internationally to be an effective method of providing high-quality infrastructure projects and long-term services to the public sector on time and to budget. PPP programmes, which are now well established in Australia, Canada, the UK and other parts of Europe, are becoming increasingly popular in Ireland.
Through PPPs the private sector is helping Ireland to meet its large infrastructure investment and development needs brought about by the phenomenal growth of Ireland's economy since the early 1990s.
The total value of all Irish PPP projects announced to date is in the region of €10bn and is scheduled to include:
- 400km of roads including two bridges and one tunnel
- 50km of additional Metro lines
- 50 educational institutions including a school of music and a school of nautical training
- 20 courts
- 15 waste and water treatment/sewerage/drainage plants
- 10 social housing programmes
- six cancer treatment centres
- two prisons
- The National Conference Centre.
Typical PPP structure
Under a PPP the risks involved with the delivery and management of complex and capital intensive projects are passed to the private sector. At the outset, the private sector agrees to undertake all design, construction, financing and maintenance obligations in return for an agreed regular payment by the public authority. Should these obligations prove to be more expensive than expected, the private sector incurs all additional costs.
Another benefit of PPPs is that the regular payments made by the public authority only commence once the new or refurbished infrastructure facility becomes operational and hence does not incur any costs during the construction period. After a period of between 20 and 30 years, ownership of the facility is handed back to the pubic authority.
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