Why is this Public-Private Partnership investment scheme (also known as P3) growing more frequent by the day in developing countries? Besides, why do we call it a Public-Private Partnership if it is mostly the private part that runs with all the financing in this case? Jamaica’s new highway is a good example of this, as we describe on this Applied Technical English blog.
Jamaica’s North-South Highway is an example of a Private Finance Initiative (PFI), one of the forms of P3. In this case, the financing is entirely run by the private company (in this case the China Harbour Engineering Co Ltd, or CHEC), which is entitled to build the road and also to borrow the land through which it traverses. In return, the company gains a 50-year concession and therefore collects the toll fares payed by the users. Besides, the investor is also entitled to receive 1,200 acres of lands alongside the road to undertake commercial and residential developments.
At the Applied Technical English blogs we usually talk about technical issues. In this case, we rather put the focus on the financial scheme behind this type of development. So, what is the roll of Public-Private Partnerships in this case, or in developing countries’ projects in general?
On the first place, there is a necessity that calls for money in a country that has run out of it: the present case is Jamaica -as can be many others-, surviving under the burden of returning a great debt. On the second place, there is an investor willing to make its surplus money yield, in this case like in many others, connected with Chinese economy. Thus, the country in need for infrastructures meets the company in need of investment.
The point in this type of partnerships is, of course, a correct dimensioning of both the due investment and the business prediction. An underestimation of the former or an overestimation of the latter would mean a loss for the investor, whilst the opposite estimations would mean an abuse of the country’s resources. In this case, toll prices as well as the 1,200 acre the Government is lending to the investors are the issues that are causing a major social opposition.
For further information about this case please follow the link we suggest you at this Applied Technical English blog.
Autor: Patrick Castelli Cirera, profesor del Máster en Diseño, Construcción y Mantenimiento de Carreteras