PF Archive

Needs meet cost

01 12 2005

When the new Eu25 billion ($30 billion) 2005-2009 Portuguese infrastructure investment programme – Programa de Investimentos en Infrastructuras Prioritarias (PIIP) – was announced in June it was the first sign that the political stasis that has afflicted the Portuguese public-private-partnership (PPP) market, along with the economy, for the past four years is over. Portugal needs PPP – no argument – if it wants the infrastructure to fuel much-needed economic growth. In August the EU gave Portugal three years to cut its deficit – which stands at 6.2% of GDP, more than double the 3% limit imposed by the EU's Stability and Growth Pact – and six months to come up with measures that would cut the deficit by the equivalent of 1.5% of GDP in 2006 and by a further 0.75% in 2007 and 2008. The socialist government of Jose Socrates has responded with a budget for 2006 that slashes state spending next year (over 50% of the PIIP plan is expected to come from the private sector) by around Eu2 billion and will, if all goes to plan, trim the public deficit down to 4.8% of GDP in 2006. But the new urgency in the Portuguese approach to PPP goes deeper than the PIIP and fiscal reform – there is a fundamental change in methodology brewing in government. A change in PPP methodology Significantly, the Portuguese government is looking at ways to reform the PPP tendering process and has made a commitment to shorten the period from request for proposals (RFP) to awarding –...