Introduction

Public–private partnership overview

Many developing and developed countries around the world face the challenge of meeting their growing infrastructure needs with limited fiscal resources. It is estimated that worldwide population will increase by approximately one billion between 2005 and 2015 (Sachs 2005). Large-scale development and maintenance of infrastructure will be needed to accommodate the basic needs of these new inhabitants, as well as those of the existing population. However, many developing countries receive less financial support from the World Bank in recent years than they did during the 1960s and 1970s for infrastructure development as a result of the multilateral agencies' shift in focus from infrastructure development to social program development during the 1980s (Harris 2003). At the same time, developed nations such as the United States have found it difficult to raise taxes to maintain their existing infrastructure systems, especially amid the economic crisis of the recent 2000s. Years of delayed or cancelled infrastructure maintenance projects led the American Society of Civil Engineers (ASCE) to give a grade “D” to America's existing infrastructure in 2009 (ASCE 2009). It is estimated that $2.2 trillion of investment will be needed for the next 5 years to fix America's infrastructure (ASCE 2009).

In response to these challenges, some governments have invited private investors to participate in infrastructure development through schemes such as Public–Private Partnership (PPPs), Private Finance Initiative (PFI), and Build–Operate–Transfer (BOT) (Clarke 2000; Gerrard 2001; Lonsdale 2005).