By Chongo Sombo Mulenga (MCIArb)

An Independent Power Producer (IPP) is a private entity that produces electrical energy for sale to a utility, central government buyer or the public at large. IPP projects and Public Private Partnership (PPP) projects share the central theme of private sector involvement in the provision of a public service or asset; save that
IPPs are limited to the energy sector whereas PPPs span across various sectors
such as transportation, water and sanitation, agriculture and telecommunications,
among others. On account of the strong overlaps between IPPs and PPPs, experts
opine that IPPs are actually a form of public private partnership focusing on
electricity supply.
Key Differences between PPPs and IPPs
As PPPs and IPPs represent a collaborative effort between the public and private
sectors in infrastructure development and the delivery of public services, curiosity
demands an appreciation of the distinguishing factors. Some of these factors pertain
to the following:
Sector Coverage and Scope
PPPs span across various sectors and are therefore considered to have a wider
sector coverage as opposed to IPPs which are focused on and limited to energy
production. In this regard, PPPs have a broader scope viz a viz infrastructure
development and public service delivery as compared to IPPs which are exclusively
dedicated to the generation and sale of electricity.
Objectives
While it has been advanced that IPPs are a form of public private partnership, it is
cardinal to note that IPPs are predominantly commercially motivated and the delivery
of electricity supply to end users can be said to be a means to an end. For this
reason, many IPPs are anchored on “Build Own Operate” or “Build Own Operate and
Transfer” PPP models which enable the private entity to operate the project facility
for profit.
Conversely, public service delivery and infrastructure development are at the heart of
PPPs which seek to leverage private sector financing, efficiency and expertise in the
delivery of public services. For this reason, it is not uncommon to see PPP projects
facilitated through alternative models such as “Build and Transfer” whereby the
public sector reimburses the total project investment with returns for the private entity
from sources that may not necessarily relate to the project itself.
Contractual Relationships
The rights and obligations of the public and private entities under a PPP project