The first known PPP was set in stone

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Published on 19 November 2018

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Having become intensively involved in the Certified PPP Professional (CP3P) program I often get the question during my trainings what the first PPP has been. An intriguing question.  After all it is often quoted: “The past is where you learned the lesson. The future is where you apply the lesson, don’t give up in the middle”.  

 

The Americans may refer to the Thurley Bridge over the Newbury river in Massachusetts which was built in 1654 by Richard Thurley at its own risk and costs authorised by the General Court of Massachusetts including the right to toll animal (!) crossings to recoup its costs. 

 

The French may claim the Canal du Midi to be the first concession. It involved the construction and operations of 240 km of canal between the Mediterranean Sea and Toulouse by private entrepreneur Pierre-Paul Riquet commissioned as such by King Louis XIV of France in 1666.

 

The Brits may think they can beat that with the private development and operations of a tide wheel at the London Bridge to supply water as agreed between the City of London and Dutchman Pieter Mauritz in 1582. 

 

However, the credits for the first recorded PPP known to mankind are most likely to go to Greece. Thanks to the work of Professor Denis Knoepfler we know that the City of Eretria granted a concession in 318 BC to a foreign contractor called Chairephanes for the drainage of Lake Ptechae. Presumably for the purpose of creating additional land for agriculture to secure the food supply to the city. The contract detailing the rights and obligations of both parties was engraved in marble (!) and ‘signed’ by 230 citizens with six named Eretria citizens as guarantor.

 

The contract included the following provisions (adapted from Papademos, 1975):

1. Between the city of the Eretrians representing the 31 municipalities of the Eretrian region and the contractor Chairephanes, a contract is made concerning the draining of the Ptechae Lake. 

2. The draining works include the construction of drainage canals, sewers, and wells for the drainage of water to natural underground holes or cracks, and miscellaneous protection works including wooden or metallic railings.

3. In addition, irrigation works, such as the construction of a reservoir with side length up to 2 stadia (360m) for storing irrigation water, and sluice gates, are included in the contract. 

4. It is agreed a 4-year construction period that could be extended in case of war.

5. The contractor is granted the right to exploit the dried fields for 10 years (extended in case of war), starting by the finishing of the drying works. 

6. The contractor is granted the privilege of custom free import of materials (stones and wood).

7. The contractor is obliged 

   1. to pay all labour costs without any charge for the people Eretria; 

   2. to pay the amount of 30 talents in monthly instalments as a rental for the permission to exploit the lake for 10 years; 

   3. to maintain all works for the exploitation period, in order to be in good condition after the finishing of the contract; 

   4. to compensate the land owners by one drachma per foot of land area that is to be the expropriated for the construction of works; and 

   5. to avoid harm on private property as much as possible by locating the works in non-cultivating areas. 

8. In case of death of the contractor, his heirs and collaborators will substitute him in the relations to the city.

9. Penalties are enforced against any person trying to annul the contract. 

10. The contractor is obliged to submit a good construction guarantee up to the amount of 30 talents.

 

As such the contract fully complies with the definition of PPP as included in APMG’s PPP Certification Guide: “A long term contract between a public party and a private party for the development (or significant upgrade or renovation) and management of a public asset (including potentially the management of a related public service), in which the private party bears significant risk and management responsibility throughout the life of the contract, provides a significant proportion of the finance at its own risk, and remuneration is significantly linked to performance and/or the demand or use of the asset or service so as to align the interests of both parties”

 

It is good to see that Greece has reinvigorated PPP as indicated by the different PPP transactions over there in the recent years. Not only are they the cradle of democracy but apparently also the cradle of PPP.

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