Dáil Éireann Debate, Tuesday - 5 March 2019
63. Deputy Jonathan O'Brien asked the Minister for Public Expenditure and Reform the annual cost of public private partnerships through unitary payments; and the reason total unitary payments are greater than the contractual value of projects. [10633/19]
View answerA breakdown of the annual cost of unitary payments by individual project can be found on the PPP website. The cost of unitary payments for 2018 is in the region of €260 million.
Public Private Partnerships (PPPs) are partnerships between the public and private sectors for the purpose of delivering a project or service. Some of the advantages associated with PPPs are that they allow the public sector to avail of private sector expertise and innovation and the private partner assumes responsibility for a considerable portion of the risk.
The contracts tend to be long-term arrangements, typically spanning 25 years or more, and can be Design-Build-Finance-Maintain (DBFM), Design-Build-Finance-Operate-Maintain (DBFOM) and Concession projects.
Design-Build-Finance-Maintain (DBFM): DBFM projects require the PPP Co to provide and maintain the asset/infrastructure but not to operate it. This is likely to be used to provide schools and similar infrastructure; in such cases the public sector will want use of the asset but will not require that the private partner provide the attendant service, i.e. in the case of a school, the public sector or the relevant patron would employ the teaching staff.
Design-Build-Finance-Operate-Maintain (DBFOM): DBFOM PPPs effectively require the private sector to replace the public sector for the duration of the contract. These PPPs require the private sector to both provide and operate the asset/infrastructure. In the case of a water treatment plant, for example, this would require the private sector to staff the plant to ensure service delivery on behalf of the public sector contractor.
Concessions: Concessions differ from other PPPs in how they provide a financial return to the private sector. Unlike other PPPs the private sector achieves its financial return by levying a user charge on the service. In Ireland, concessions have been used to a large extent in the transport sector.
The capital cost consists of all the costs (including VAT) associated with the construction or acquisition of the physical assets to the point of it becoming available for use. The public sector provides annual unitary payments to the private sector for a contractually agreed period of time. These unitary payments typically comprise one or more of the following elements – usage payments, availability payments and service performance payments.
Hence, unitary payments cover more than the construction cost of the asset. They comprise the full availability payments entailed to deliver the required service level.
