COMCEC Transport and Communications
Outlook 2017
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advantages of PPP-type procurement arise by regarding cost of services provided and risks
assumed by the government. It is generally expected that private sector can achieve more cost
savings during implementation of investments and provide cheaper services than public sector
can. In addition, during PPP-type procurement, private sector assumes that some of risks, such
as construction, availability, and demand risks associated with projects which public sector
assumes in traditional procurement. For a PPP model to be eligible, value of money must be
achieved, which means that sum of benefits- from cost savings for services provided and risks
transferred from public sector to private one -should exceed costs associated with higher cost
of capital of private sector.
Initially and substantially adopted by the United Kingdom, within the last couple of decades,
public-private partnerships (PPPs) - including private participation in infrastructure (PPIs) -
today play an important role in provision of public infrastructure and services. It doesn’t matter
if the country is developed, developing or a least-developed one, governments use various PPP
models, ranging from management contracts to Build-Own-Operate model and divestitures,
mainly; (1) to attract private finance to their infrastructure projects in face of large budget
deficits, (2) to improve efficiency and quality of services provided, and (3) to liberalize their
economy.
In fact, the OIC geography has been quite familiar with private participation in large transport
infrastructure projects. Opened in 1869, Suez Canal was a typical Build-Operate-Transfer
project for which the private operator had obtained a concession to operate the canal for 99
years. Other transportation concessions during the Ottoman Empire era included the Port of
Istanbul, Port of Izmir, Istanbul Rail Tunnel, and Istanbul Streetcar (Yılmaz, 1996). Some sources
(Tiong, 1990; Handley, 1997; Özdoğan and Birgönül, 2000) cite that even the term Build-
Operate-Transfer was coined by Turgut Özal, the former prime minister and the president of
Turkey. In the 20 th century, the first transport PPI project in the OIC geography was
implemented in Indonesia in 1990 and it was followed by a second PPI project in Malaysia in
1991. The first PPI project in OIC-Sub-Saharan Africa and OIC-MENA were implemented in
Mozambique in 1993 and in Turkey in 1994. Figure 25 presents the timeline of the initial
transport PPI projects in the OIC regions.