Abstract

Public-private partnerships (PPPs) change how governments work. They introduce competition into the provision of public services, mobilize additional expertise and financial resources, adopt life cycle asset management within a results-based approach, base payments to service providers on
performance, and allow governments to reduce the risks they bear. These innovations can help deliver public services faster, at lower cost, and at higher quality. But to achieve these benefits, the right projects need to be identified, and PPPs need to be developed and implemented well.
Many countries have established project development funds or facilities (PDFs) to strengthen their PPP programs, and high level regional organizations have encouraged their use. PDFs provide the specialized resources needed to conduct studies, design and structure a PPP, and to procure a PPP. They call on a revolving fund to meet the up-front cost of developing a PPP, a cost which is normally higher than that of a project delivered in the conventional way. PDFs also provide governments with a tool for demonstrating good practice standards in project development.
The People’s Republic of China (PRC) is ramping up its PPP program, with the number of PPPs in preparation overwhelming that seen in other countries. The government is exploring the role that PDFs can play in this ramp-up. This working paper responds by drawing on the experience of other
countries to design a model PDF for the PRC. The aim is to help ensure that the PRC’s PPPs are robust and sustainable. Guidance is provided on the key issues to consider in using the model PDF.​