However, when properly structured, Public-Private Partnerships (PPPs) are among the project modalities least likely to result in ghost or substandard outcomes.
This is not accidental: it is the result of how PPPs allocate risk, reward performance, and enforce accountability.
Private capital at risk
At the core of a PPP is private capital at risk. Unlike traditional public procurement where government funds construction regardless of long-term performance, PPPs require the private partner to invest upfront and recover its investment only after the project is completed and operating.
A ghost project generates no revenue. A substandard project leads to weak demand, penalties, or even non-acceptance. In both cases, the private partner faces no or delayed investment recovery, making non-delivery economically irrational.
PPPs also rely on performance-based recovery mechanisms. Payments —whether from user fees, availability payments, or hybrid structures— are directly tied to completion, service quality, and operational standards.
If performance falls short, payments are reduced, deferred, or withheld. Substandard work therefore carries immediate financial consequences. This contrasts sharply with traditional projects, where defects may surface long after full payment has been made.
Continuous audit framework
Further, PPP projects are subject to layered and continuous audit. These include pre-approval due diligence, independent technical and financial advisers, lender-appointed monitoring agents, government contract management units, and state auditors.
Unlike one-time infrastructure contracts, PPPs are monitored throughout their life cycle, often spanning decades. This sustained oversight makes it difficult for ghost or substandard projects to escape detection.
PPPs are also imbued with public interest. They deliver essential public services and are governed by contracts that embed service standards, safety requirements, and public welfare obligations.
Failure to meet these standards is not merely a contractual breach but also a reputational and legal risk for the private partner, discouraging opportunistic or fly-by-night participation.
Mutual accountability
Crucially, PPPs create mutual accountability. Government enforces compliance through audits, penalties, and step-in rights, while private partners enforce government obligations through contractual safeguards and lender oversight. Each party has both the incentive and the capacity to hold the other accountable.
In sum, while no delivery model is perfect, PPPs are structurally designed under the PPP Code and its Implementing Rules and Regulation to be anti-ghost and anti-substandard.
By linking recovery to performance, subjecting projects to continuous audit, embedding public interest accountability, and advancing people’s participation, PPPs align private incentives with public outcomes making failure costly and quality indispensable.
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