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PPP aims to build on its promises

Capital market practitioners have failed to develop the necessary credit skills to assess and absorb infrastructure risk. Now as Philip Moore reports, these shortcomings are being addressed.

EARLY NEXT MONTH, 502 individuals will involuntarily make history when they are relocated from various places in Germany to the town of Hünfeld, close to the border that used to divide West and East Germany. Unlikely to be uppermost in their minds when they arrive at their new home is that they will be among the first in modern German history to be “accommodated” in a private prison.

While the prisoners count the cost of whatever they did to fetch up at Hünfeld, Hesse’s government will count the euros it will save through going private. Specifically, it has been estimated that Hünfeld’s construction costs amounted to €100,000 per prisoner, compared with €250,000 at a recently constructed facility such as the prison at Weiterstadt. That is chiefly a reflection of the speed with which the prisons were built: Hünfeld took four years, Weiterstadt nine. And the running costs of Hünfeld will be 15% less than those of a comparable publicly run prison elsewhere, saving Hesse an estimated annual €660,000.

Those numbers are a sufficiently compelling argument for inviting private operators to participate more in economic activities hitherto viewed as the exclusive domain of the public sector.

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