DENMARK – Denmark has unveiled a standard model for public-private partnerships (PPPs) to facilitate investment in new public building projects and renovations.
Pension fund administrator PKA welcomed the Danish government's willingness to cooperate with the private sector over construction projects, while minister for business and growth Annette Vilhelmsen said she knew the business community were "looking for large public projects to invest in".
She added that the allowance for building renovation would offer benefits. "The municipalities can benefit from bundling several smaller renovation projects together in one project."
This would attract a wider range of suppliers and ultimately ensure that renovation tasks could be solved in the most effective way, said Vilhelmsen.
The new standard model set out by Konkurrence- og Forbrugerstyrelsens, the Danish competition and consumer authority, provides for two variations – one for new construction and one for renovation projects.
Both models were designed to make it easier for public authorities launch PPP projects, the business and growth ministry said, and to reduce the transaction costs associated with each PPP.
The authority intends to provide guidance and tools for implementation, as well as a standard contract municipalities can use.
The agreements will typically run from 15 to 25 years, and will allow public authorities to bundle the renovation of several buildings.
According to the new model, PPPs will link construction or renovation work with the subsequent operation and maintenance of the building, the ministry said.
This would be the first time in Denmark that PPPs were used for the renovation of public buildings.
"A PPP gives the private supplier the option to think about the renovation work in connection with the subsequent operation and maintenance of it," said Vilhelmsen.
"If the private supplier also pays part of the energy bill, this gives them an incentive to opt for a high energy standard."
PKA's managing director Peter Damgaard Jensen said: "We have long called for political goodwill towards PPPs in Denmark; the minister has delivered this today.
"PPPs work well abroad, and we are pleased that this indicates they are beginning to take off at home too – especially at a time when the public does not have much money to build or maintain buildings."
PPPs would be good for members of PKA's five labour-market pension funds and for Danish society, he said, as they would not only improve public services but also boost employment.
PKA is one of the three major Danish pension funds that last year joined together to facilitate PPP opportunities.
Last year, the funds created a "one-stop shop" to help authorities plan, build and finance construction projects, and said they aimed to invest up to DKK5bn (€670m) in infrastructure and real estate through the partnerships over the next few years.
The fund was also involved, alongside ATP, PensionsDanmark and others, in launching a working group on how to structure Danish infrastructure PPPs.