One of the myths I hear all the time:

“Why let the private sector finance if public debt is cheaper?”

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Sounds smart.

But it’s wrong.

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First—there are PPPs that financed themselves cheaper than governments.

Think Canada, Australia, UK deals during times of tight public budgets, when private sponsors locked better terms because of their structure, guarantees, or sheer market confidence.

Think of some less developed countries where lenders prefer dealing with private sponsors than unexperienced government.

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Second—you’re not comparing apples with apples.

When governments borrow, the taxpayer is the ultimate guarantor.

If the project fails, you pay.

When a PPP borrows, lenders take the hit.

That difference matters.

A lot.

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That’s why lenders do real due diligence.

That’s why construction risk, demand risk, and operations risk get priced in.

And that’s why project finance debt isn’t “more expensive,” it’s different.

It’s debt with discipline.

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And here’s the funny part: when governments tried to copy project finance with “no recourse” to taxpayers… banks charged them even more. Why? Because governments had no history of delivering under project finance rules.

No track record.

No comfort for lenders.

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So next time someone tells you PPP debt is more expensive—ask them:

Compared to what?

A fantasy where taxpayers are the eternal backstop?

Or a real project where lenders eat losses if things go wrong?

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PPP debt isn’t a cost disadvantage.

It’s skin in the game.

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And don’t come saying that taxpayers end paying if the project fails… please, that’s a classic and too project specific.

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For more insights, click below.

​100 Q&A About PPP that you MUST KNOW​

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