Give PPPs a chance

Swedish roads and rails, especially in peripheral areas, are in dire need of construction and maintenance. Estimates show that at least 300 billion SEK are currently required for infrastructure upgrades, and that the upcoming recession will aggravate the infrastructure debt. In light of this, it is time to reconsider PPP as a way to finance large-scale infrastructure projects. As one of few legal professionals in Sweden who has been involved with PPP in the railway sector, OEBERGS’ Senior Partner Björn Öberg explains what will be needed for this to turn out well.    

You have been involved in the contractual arrangement for Arlandabanan – one of Sweden’s few PPPs so far. What insight do you bring from this experience to the current discussion about PPP?
That legal expertise is key for PPPs to turn out well. PPPs are complex ventures. The involved legal professionals must thus have thorough knowledge and long experience of this particular contractual arrangement.

Many Swedish citizens feel skeptical towards Public-Private-Partnerships after Nya Karolinska Sjukhuset (NKS). After that project, PPPs are often associated with high transaction costs. What is your response to this?
PPPs indeed lead to higher transaction costs than traditional public procurement. These contractual arrangements involve more consulting personell, evaluators and legal professionals. Since PPPs are already expensive, it is thus another reason why legal experience and expertise matters. Since the transaction costs are high, the legal practitioners must know from start what they are doing and how to manage the proceedings efficiently. This area is too expensive for trial-and-error and learning-by-doing. If Sweden is to move ahead with PPP, we must ensure that the most knowledgeable legal professionals are on board.

How can Swedish professionals gain the necessary experience to succeed with future PPPs?  
Sweden is currently stuck in a difficult catch-22-situation in which political, legal and business professionals need more PPP-knowledge, but where PPPs are too costly to be used as learning environments to practice in. My idea of the road forward would therefore be to learn from success stories in for example Norway and the Netherlands, where PPPs are put in place for for example motorway constructions. Through these experiences, coupled with small-scale PPPs in Sweden, we could learn sufficiently to use PPPs in future large-scale projects.