Mechanics and Implications of Using a Variety of PPP Models

The study found a 29% increase in residential connections per worker, a 32% increase in electricity sold per worker, a 45% increase in bill collection rates, and an 11% reduction in electricity losses. These findings suggest that private sector participation can improve the efficiency and effectiveness of electricity service delivery. There are various public-private partnership (PPP) models that can be used to achieve these performance gains. These models include management contracts, lease contracts, affermage contracts, concessions, and joint ventures. Each of these models has its own characteristics and implications for the parties involved. For example, management contracts typically involve a fixed fee paid by the operator to the government for the use of government-owned assets, while lease contracts involve a fee paid to the operator from receipts prior to payments to the government as owner. The PPP models can be tailored to the specific needs and circumstances of the Caracol Power Utility (CPU) in Haiti. For instance, a management contract could be used to improve the efficiency of the CPU's operations, while a lease contract could be used to provide the CPU with access to new capital investments. Affermage contracts, on the other hand, could be used to transfer the risks and rewards associated with the CPU's operations to a private partner. The term of a PPP contract can vary depending on the model used, but it is typically between 5 to 20 years. The commercial risks associated with a PPP contract are typically borne by the government, while the private partner bears the risks associated with new investments. For example, the government would be responsible for new investments estimated at US$30 million through 2032. One of the PPP models being considered for the CPU is the Société Anonyme Mixte (SAM), which involves a joint venture between the government and a private partner. However, this model may be subject to certain constraints and requirements, including the involvement of the Conseil de la Modernisation des Entreprises Publiques (CMEP) and a minimum 20% State shareholding.