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There are many different types of public private partnerships around. Fundamental differences can primarily be found in the way services are exchanged and how the cooperation work is actually organised. For the most part, however, such collaborations are one of two basic versions: the concession model or the institutional model.
The PPPs, in which REMONDIS owns a share, provide services for more than 12 million local inhabitants in Germany.
PPPs based on the concession model are often used for tasks that need to be carried out for a limited period of time – especially in the water management sector. This is particularly the case for clearly defined projects where it is not possible to predict in detail beforehand how they will develop. Concession PPPs that are based on an exchange of services can be finalised and adapted to changing conditions.
Local authorities benefit greatly when their collaboration work with REMONDIS is based on the operator model – especially when the work involves treating wastewater and supplying drinking water.
A concession PPP is very similar to the classic procurement or assignment contract. In principle, this involves a task that is awarded by the public sector partner and carried out by the privately owned company. A joint venture company is not set up – the public private cooperation is based exclusively on the contractual terms drawn up between the partners.
Concession models are primarily used in REMONDIS’ water management division – in particular as operations management or operator models. Acting as the local authorities’ partner, REMONDIS is solely responsible here for carrying out all the various tasks. The company bears the operational risks, makes all the necessary investments and guarantees that all quality targets will be met. Besides operating a facility, such collaborations can also include planning, building, maintaining and financing such plants. The public sector partner benefits in a variety of ways, no matter what the specific details are. With the operator model, for example, it bears no financial risks and can plan its exact costs over a period of 20 to 30 years. Furthermore, it has unrestricted access to REMONDIS’ wealth of knowledge – a cornerstone for high levels of efficiency and reliable services.
Institutional PPP projects are based on a joint venture company in which both the local authorities and the private sector firm own a share. Both parties bring resources with them into the joint venture and both are responsible for the business. A contract is drawn up stipulating the exact details of the collaboration, for example regarding the organisation, focus and fundamentals of the business.
Institutional collaborations are primarily used for long-term cooperation work. Rather than being an exactly defined project, their original area of activity is more of a general task. All conditions relating to this are set out in detail and regulated in the partnership agreement and any supplementary framework agreements.
If the PPP company delivers public services, then these are reimbursed by the authority responsible which passes on the fees or charges paid by the taxpayer. The PPP invoices private sector clients directly if it has provided them with services. Should the PPP’s activities that do not involve public services generate profits, then these can – depending on the regulations agreed on – be distributed, ploughed back into the business or credited to capital accounts. The amount of dividends paid to the shareholders depends on their share in the business.
No matter whether a PPP is set up for new business activities or to improve existing services: the public sector partner transfers its business supplies and assets to the PPP. Furthermore, the employees who had previously worked for the local authority are officially taken over by the PPP company, which becomes their employer. The private sector partner brings with it its capital and management know-how. Both parties bear the business risks in line with company law.
The range of services provided by an institutional PPP involving REMONDIS can be as wide and varied as the group’s portfolio. The selection of services depends on the actual requirements of the public sector partner and of the region. Whenever REMONDIS works with a public sector partner, it always makes the very most of its 30 years of experience of working in a wide range of PPPs.