Public-Private Partnerships (PPPs) are long-term contractual arrangements between a Public and a Private Agency to carry out projects and provide services to citizens and have been used in many European countries as well as internationally. PPPs used in Cyprus include B.O.T (Build, Operate, Transfer) and D.B.F.O (Design, Build, Finance, Operate).

The implementation of PPP projects entails institutional and organizational changes due to the differentiation of the roles of the public and private sectors. The public sector undertakes the evaluation of proposed PPP projects, which, after completing the pre-selection and evaluation process and approved as sustainable and economically affordable for implementation through the state budget, also assesses their value for money for implementation with the PPP method.

The Fiscal Responsibility and Budget System Law (N 20 (I) 2014) defines the framework for evaluation and selection of PPP projects. The methodology for evaluating PPP projects is included in the Manual prepared by the World Bank and the Instructions of the Minister of Finance. PPPs can be applied to three types of projects:

• Projects where the private sector revenue comes from user payments, e.g. airports.
• Projects where the private sector revenue comes from the state (from a service purchase), e.g. hospitals, schools and prisons
• Projects where the private sector revenue is a combination of the two above, i.e. it comes from payments by users and the state.

The policy that will govern the implementation of PPPs in Cyprus as well as the appointment of the roles and responsibilities of the various Services, are under preparation. No final decisions have been made as to which public bodies will be responsible for providing services to the relevant Ministries responsible for planning, negotiating and concluding PPPs, nor which bodies will review the progress of the contracts. At this stage, the procedures for designing, negotiating and contracting PPPs are done through ad hoc arrangements by the relevant departments, with the appointment of committees and the use of external consultants.

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