In a report by Kearsarge Global Advisers entitled “Benefits of Private Investment in Infrastructure”, a group comprised of seven law firms and 11 companies made the case for PPP, or ‘P3’ as it is known in the US.
The group, which also includes Chadbourne & Parke, Debevoise & Plimpton, Fulbright & Jaworski, Mayer Brown and McKenna Long & Aldridge, argued that PPPs can create 1.5m US jobs by using $180bn (£128bn) in available private capital to build infrastructure projects, freeing up government dollars in the process.
Their report said that US projects only made up 15 per cent of global PPP markets of $61bn. Europe, the Middle East and Africa (EMEA) account for 35 per cent of global totals, the UK for 30 per cent and Asia Pacific for 20 per cent.
Freshfields PFI/PPP head Nicholas Bliss said about the PPP in the US: “It has the potential to be a massive growth market.”
A&O US projects senior counsel David Horner, who recently joined from the US Department of Transportation, explained why PPP had not taken off in the US to the extent it had in Europe.
“Unlike in Europe, in the US there is not a strong national government that can dictate a new policy,” he said. “In the UK the audience of powerful decision makers is quite small – you only need to convince a handful of senior civil servants of the merits of a policy and it’s done.
The lobbying to increase PPP activity ties into Barack Obama’s first budget of 26 February, in which he announced the creation of a National Infrastructure Bank with an initial budget of $5bn (£3.6bn) to support “private co-investment”. It is not yet certain that this will directly translate to PPP investment.
“PPP understandably concerns many incumbent interests that operate in the transportation networks in the US today,” said Horner. “They worry that the PPP alternative presents a threat to their institutional interests, organisational interest and reasons for being. That’s not the case, as the UK experience shows.”
The group in full:
Carlyle Infrastructure Partners,
Chadbourne & Parke,
Citi Infrastructure Investors (CII),
Debevoise & Plimpton,
Fulbright & Jaworski,
McKenna Long & Aldridge
RBC Capital Markets,