Button for menue
DE | EN
  • Dear Readers!

    Public private partnerships create a win-win situation. There is no better way to sustainably safeguard jobs, create new jobs or use efficient innovations for public services and so help keep local fees and charges stable. And yet one might occasionally get the impression here in Germany that there is currently a kind of trench warfare going on between the public and private sectors. People are talking about the current trend of some local authorities to renationalise services. Something that is threatening to eliminate fair competition. There are a number of impartial studies around that have looked in detail at the pros and cons of nationalisation. The international economics research institute, e.ca economics, for example, discovered that this trend towards nationalisation is one that is catching. On the one hand, districts that have renationalised services in the past are more likely to do so again in the future. Consequently, this effect is seen more often in districts where a large percentage of the services are already being delivered by municipal businesses. On the other hand, there is also a noticeable trend towards local authorities trying to drive private sector competition out of their market, in particular in districts with a low population density.


    Having worked together with local authorities for many years, REMONDIS is, of course, critical of these trends. Each and every day, REMONDIS shows that things are so much better when the public and private sectors work together. Being a partner in 50 PPP companies and delivering services via numerous third party contracts, we have perfected the concept of public private partnerships for all those involved – both when it comes to public services and water management. All in all, REMONDIS and its public sector partners serve over 12 million people. The local authorities and their residents are provided with high quality services at a fair price. At the end of the day, they are the ones who finance the public services via the fees and charges they must pay. At the same time, the municipal partners must keep a close eye on their budgets and economise where necessary. Having a reliable source of income from taxes can also help here. It is well worth taking a look at the way the different tasks are allocated in Germany.

    Around 35% of waste management services are provided by the local authorities themselves via their own municipal companies, which means no VAT is charged on these services. More than one third of the people living in Germany, therefore, do not pay VAT on these public services; and yet at the same time they benefit from the payments made by other local inhabitants as a result of funds being allocated between districts. The local authorities themselves lose out as they receive less tax. An unfair tax situation that ends up hurting everyone. Councils are deliberately choosing not to open up their markets even though this would enable them to cut costs. They are effectively holding back the private sector economy rather than making the most of the opportunity available to them to improve their situation and work together with the private sector to take the pressure off the public purse, increase their workforce, stabilise fees and charges and ensure they have a steady and reliable source of income.


    Both we and our long-standing municipal partners agree that the best solution is to work together as partners. This special edition of our company magazine focuses entirely on the subject of public private partnerships and aims to provide a more detailed picture of the various PPP business models, the advantages they bring for local authorities and their residents as well as the positive impact they have on jobs, on the local economies and on the environment. And, as self-praise is no praise, we are more than happy to give our partners the opportunity to speak about their PPPs here. Local authorities, which would like to have a stable and sustainable budget, to provide their residents with high quality services and to achieve the highest possible levels of sustainability in their waste management and recycling sector, will find some valuable suggestions and experiences here to help them in their decision-making process. Here’s to future collaborations!


    Yours

     

    Thomas Conzendorf

A successful, tried & tested model

It has been noticeable over the last few years that local authorities across Germany have been making efforts to grow their business activities in a number of different sectors. This can also be seen by the rising number of municipal companies and their increasing contribution towards nominal gross domestic product. One of the tried and tested business models that they sometimes choose to adopt here is the PPP – a joint venture business with a private sector partner.

  • One in every 10 people in Germany benefits from waste collection services provided by PPPs.

Perfect for providing services for local residents

Public private partnerships (PPPs) are used to ensure a whole range of public services are provided – from public transport, to education and security, all the way through to the health sector and energy supply. Indeed, PPPs, i.e. where the public and private sectors work together, are a sustainable way for local authorities to provide services to their local residents. There is a long tradition of PPPs in Germany.

Well established in the recycling industry

Public private companies also play a major role in the recycling, service and water sectors. In Germany, PPPs are responsible for collecting mixed municipal waste from more than 7.8 million local inhabitants. Furthermore, PPPs are very important when it comes to the plants and facilities needed to treat household waste. According to a study published by the market research firm, Prognos, 22 of the residual waste thermal treatment plants across Germany were operated by public private partnerships in 2015. Together, these plants had a capacity of 7.4 million tonnes – 38 percent of the total volume of this type of waste generated in Germany.

  • PPPs can keep local charges stable without having to cut back on services.

Greater efficiency keeps fees stable

One of the greatest advantages of PPPs – besides their positive financial impact – is the fact that they help to safeguard jobs and even to grow the workforce. Such collaborations often open up new fields of business which bring in additional revenue. This, in turn, is transferred straight to the public purse and more employees are needed. Or the private sector partner brings new contracts to the business. Moreover, the business model developed by the private sector partner in response to the competition they have had to face creates efficient and cost-effective structures – e.g. regarding the planning of collection routes or discounts on purchases. This all means greater value for money and ensures fees and charges remain stable without the quality of the services suffering. What’s more, the most can be made of idle capacities – material, for example, can be delivered from the REMONDIS Group so that facilities are used more efficiently.

More room for manoeuvre

Many local authorities find themselves permanently walking a tightrope, trying to cope with their budget and investment problems on the one hand and meet the high expectations of their local residents on the other. The injection of capital from the private sector partner has a positive effect here. Local authorities are given far more room to manoeuvre. Moreover, collaborating with a private partner reduces the amount of money that local authorities must invest in their infrastructure. The investment does not have a negative impact on either the public purse or on the creditworthiness of the local authority as it is carried out by the PPP. There is also a possibility here to use financing models that do not impact on the local authority’s finances at all.

  • Progress needs ideas and the right conditions, so pioneering innovations can be turned into reality.

Vital support for strategic goals

  • The competition faced by towns and cities is growing all the time – both when it comes to attracting new companies and to fulfilling the expectations of local inhabitants. At the same time, towns are being judged by the efforts they make to protect the environment and improve their carbon footprint. Many local authorities, therefore, are driving forward sustainability initiatives or looking to officially become a ‘green city’ or a ‘carbon-neutral town’. Private partners, with years of experience of sustainability and sustainable development, are able to offer in-depth knowledge and a wide range of expertise and so support them to achieve their goals. This is particularly true for companies that can provide access to an extensive network of logistics systems and plants and facilities.

    A PPP with REMONDIS can make the very most of the group’s 800+ plants & facilities which can treat a whole range of different materials.

    The official tasks, rights and fundamental responsibilities of local authorities are all stipulated in detail in the various types of contract which are adjusted to meet the exact needs of the local authority and the precise tasks of the PPP.

© 2019 REMONDIS SE & Co. KG | Imprint | Privacy & Cookies | Image credits