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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.
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.
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.
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.
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.
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.