KDM Consultancy
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Establising A Consortium
Varying with regard to the implementation method, the PPP structure has a similar structure shown below
One side of this structure is the public or government entities named "Administration". These entities can be the ministries or municipalities which represent the public corporation. On the other side of the structure stands one or more than one private sector entity.
The most important element of this structure is a Special Purpose Vehicle which is responsible for the execution of the Project and founded solely for this purpose. The partners of this company are construction companies, suppliers, operating companies, maintenance companies, creditors (capital investors), end users of the services and public administrations.
The Special Purpose Vehicle mentioned above is incorporated independent from its partners, and is a null company except the assets and liabilities attached to the Project in accounting terms. In general, the life of the company is limited with the life of the implementation contract. The Special Purpose Vehicle is the responsible party for all the contracts signed during the realization of the project. All the credit facilities are being used by this company and the assets of this company is granted as collateral. Functions such as construction, maintenance, and operation are undertaken by sub-contractors via sub-contracts.
Because of such characteristics summarized above, the Special Purpose Vehicles provide ease of implementation at risk management, project financing, profit distribution, and pricing. However, it necessitates a unique expertise to bring entities which has different specialties and corporate culture together.
