Public-Private Partnerships: Policy and Governance Challenges Facing Kazakhstan and Russia 1st Edition Nikolai Mouraviev

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NIKOLAI MOURAVIEV
NADA K. KAKABADSE
PUBLIC–PRIVATE
PARTNERSHIPS
Policy and Governance
Challenges Facing
Kazakhstan and Russia
Public–Private Partnerships
Nikolai Mouraviev • Nada K. Kakabadse
Public–Private
Partnerships
Policy and Governance Challenges Facing
Kazakhstan and Russia
Nikolai Mouraviev Nada K. Kakabadse
Dundee Business School Henley Business School
Abertay University University of Reading
Dundee, United Kingdom United Kingdom
ISBN 978-1-137-56951-6 ISBN 978-1-137-56952-3 (eBook)

DOI 10.1057/978-1-137-56952-3
Library of Congress Control Number: 2016958208
© The Editor(s) (if applicable) and The Author(s) 2017

The author(s) has/have asserted their right(s) to be identified as the author(s) of this work in accordance
with the Copyright, Design and Patents Act 1988.
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by similar
or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.
Printed on acid-free paper
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The registered company address is: The Campus, 4 Crinan Street, London, N1 9XW, United Kingdom
Contents
1 PPP Meanings and Forms: A Critical Appraisal 1
2 Internal and External PPP Drivers in Kazakhstan

and Russia 17
3 Why Partnerships? The Approaches in Kazakhstan

and Russia 37
4 PPPs in Kazakhstan and Russia: The Nature and Scope

of Government Involvement 55
5 Concessions: PPP Pathfinder 73
6 Partner Interaction Dynamics and PPP

Organisational Forms 87
7 PPP Risk Management: Management of Financial

and Revenue Risks and an Emergent Guarantee
Culture in PPPs in Kazakhstan and Russia 115
v
vi Contents
8 Legal and Regulatory Barriers to Effective PPP

Governance in Kazakhstan: Findings from the Field 133
9 Case Study: How Experiential Learning Facilitates

the Formation of a Public–Private Partnership in Russia 153
10 The Role of PPPs in Disaster Risk Management

in Infrastructure 171
11 PPP Impact on Market Failures and Externalities 183
12 Critical Issues in PPP Development, an Emerging

Policy Paradigm and the Future of PPPs 203
Conclusion 221
Index 229
List of Figures
Fig. 2.1 Internal and external PPP drivers in Kazakhstan and Russia 26
Fig. 6.1 Partner interaction scheme in a PPP implemented by
a jointly formed project company 100
Fig. 6.2 Partner interaction scheme in a PPP project implemented
by a private operator without an SPV 102
Fig. 6.3 Partner interaction scheme in a PPP project with an
SPV, option one 103
Fig. 6.4 Partner interaction scheme in a PPP project with an
SPV, option two 104
Fig. 7.1 Links between partners’ behaviour in a PPP: fostering
a guarantee culture 128
Fig. 11.1 Revenue structure and risk levels for the private sector
partner in the kindergartens’ PPP, Kazakhstan 193
Fig. 12.1 The PPP policy paradigm in Russia and Kazakhstan:
core elements 209
vii
List of Tables
Table 1.1 PPP fields of study and underpinning theories 6

Table 3.1 Understanding and features of a PPP 50
Table 4.1 Growth of PPPs in Russia, from 2005 to 2015 61
Table 4.2 PPPs in the Russian economy in 2015, by sector 62
Table 4.3 Concessions approved by the Kazakhstani government
in 2007–2011 63
Table 4.4 Ongoing concessions in Kazakhstan as of May 2016 67
Table 6.1 Partner interaction: themes and perceptions 91
Table 6.2 PPP organisational forms: principal features 105
Table 6.3 Tools for dispute resolution in PPPs: perceptions and practice 109
Table 6.4 Partner interaction in a PPP: summary of issues and
improvement opportunities 110
Table 7.1 Summary of risks, perceptions and risk mitigation methods 127
Table 7.2 Sources of risk and risk mitigation tools 129
Table 8.1 The field study’s questions vs. findings 146
Table 9.1 Construction and operation of a toll viaduct in Ryazan,
Russia: key project details 155
Table 9.2 Experiential learning in a PPP: underpinning dynamics 162
Table 11.1 Three PPP projects in Kazakhstan and Russia:
key project details 186
Table 12.1 A policy paradigm: varying meanings and
influential authors 208
Table 12.2 Factors that drive the PPP policy paradigm formation 210
Table 12.3 Forms and methods of government financial support to PPPs 212
ix
Introduction
Public–private partnerships (PPPs) continue to draw considerable atten-

tion from governments in many countries, both industrialised and tran-
sitional. Two ex-Soviet nations—Kazakhstan and Russia—are actively
seeking private investors willing to collaborate with the government on
a long-term basis, by sharing responsibility and risks with public sector
organisations.
This book investigates PPP governance in Kazakhstan and Russia and
discusses questions including:
– What meaning is assigned to a PPP?
– What underpins PPP formation in the two countries?
– What interests does the government pursue by forming
partnerships?
– What are the management practices in newly formed PPPs?
– What are the key issues regarding which partner interaction evolves
and the various PPP organisational structures?
– How do partners manage risk? and
– What is the direction of the government policy on PPPs?
The book also presents two case studies: one, exploring legal and
regulatory barriers to PPP management in Kazakhstan and the second
reviewing a PPP launch in Russia. Furthermore, the book sheds light
on two topics on which the literature has, to date, been limited: the role
xi
xii Introduction
of partnerships in disaster risk management in infrastructure and the

potential for PPPs to correct or exacerbate market failures in selected
industries. The book’s final chapter provides an overall assessment of gov-
ernment policy regarding PPPs in Kazakhstan and Russia and offers the
concept of a PPP policy paradigm that has emerged in the two nations.
Amongst the two economies, Russia leads PPP development as the
country has already launched hundreds of partnerships and is commit-
ted to accelerated PPP deployment in many sectors. Since 1991, when
Russia began its transition to a free market system, many changes in
the nation’s political, economic and social life have occurred, and the
country’s landscape has significantly transformed. Multiple institutional,
organisational, business and social changes have become a part of Russia’s
reality. The PPPs that the country began developing at the beginning of
the twenty-first century are one of these innovative changes. As PPPs
have the potential to revolutionise how public services are financed and
provided, it is no surprise that partnerships instantly drew considerable
attention from policy makers, economists, investors, financial analysts,
infrastructure experts and researchers in many fields. This also explains
the need to monitor and analyse the country’s progress in the PPP area,
so that one can conceptualise Russia’s experience, how and what the gov-
ernment aims to achieve with the use of partnerships, and how successful
the PPP management is. For an international reader, PPP governance in
Russia is a novel theme as there is virtually no literature that highlights
the nation’s PPP experience over first ten years, from around 2005 to
2016, specifically from a management perspective that embraces stake-
holders, elucidates their interests and analyses their competing and/or
overlapping agendas. This book aims to minimise, at least in part, the
knowledge gap in the PPP governance field.
Although Kazakhstan began PPP development at approximately the
same time as Russia, in 2004–2005, its progress has been slow and its
experience much smaller. Lack of progress should not be viewed as a
sign of bureaucratic impediments (although certain barriers exist) or a
lack of interest in partnerships. On the contrary, the Kazakhstani gov-
ernment’s interest towards PPP deployment can be perceived as very
high. However, demonstrating general interest and building legal and
institutional frameworks, backed by political will, appear insufficient for
Introduction xiii
ensuring fast PPP deployment in the nation. More fundamental prob-

lems, such as ambiguity of the government’s own commitment to the
operational aspects of a PPP once it is in motion and the risk of changes
in the regulatory environment, exist and deter investors from engaging in
long-term contracts with the government. Nonetheless, after a number
of unsuccessful PPP launches in transportation, the energy sector and the
social sector, the country is preparing and/or has already prepared a large
number of projects that may begin in near future, which may result in
massive PPP deployment across the nation. The more cautious approach
to PPP development that Kazakhstan shows to date can be explained by
the need to learn from its own experience, both positive and negative.
Subsequently, considerable time is required to incorporate changes into
government proposals to form new partnerships, which is a very slow
process as it involves multiple rounds of adjustment and approval.
In addition, it is likely that Kazakhstan simply lets Russia lead PPP
development. The authors’ field studies suggest that Kazakhstan, in its
PPP policy and practice, aims to learn from the Russian experience, bor-
row Russia’s best solutions and implement them for its own use. This can
be illustrated by the fact that, in 2015, each nation adopted, separately, a
new PPP law, which may be viewed as a largely co-ordinated action when
one country follows in the footsteps of another. It is no surprise that these
two laws possess considerable commonalities.
Despite the limited accumulated experience that reflects the smaller
(compared with Russia) size of the economy, Kazakhstan’s PPP policy
and practice deserve careful investigation. Ongoing PPPs, as well as proj-
ects that have been shut down, provide a wealth of data regarding the cost
structure, scope and extent of government support, partner interaction
dynamics, and the kinds of management and financial problems partner-
ships face. Whilst the nation is looking for effective and efficient solu-
tions to launch and manage collaborative PPP arrangements, the design
and improvement of partnership mechanisms are a priority on the gov-
ernment agenda. In addition, as Kazakhstan positions itself as a leader
in Central Asia, neighbouring countries such as Kyrgyzstan, Tajikistan
and Uzbekistan, as well as other ex-Soviet nations including Armenia,
Azerbaijan, Belarus and Ukraine, may learn from Kazakhstan’s experience
and borrow parts of its legal, institutional and management frameworks
xiv Introduction
related to PPPs. If so, this would enhance Kazakhstan’s political and eco-
nomic influence in the Central Asian region and beyond.
In both nations, the road to extensive PPP deployment has been dif-
ficult. Among the many challenges that Kazakhstan and Russia face in
PPP development, the following issues in particular draw the attention of
policy makers, government officials, investors and researchers:
• What is the meaning assigned to the term ‘PPP’? There is no doubt

that the entire governmental PPP agenda may be quite different
depending on the meaning of the term ‘PPP’ and how this meaning is
manifested in policy documents, laws and regulations. It is critically
important to have a shared meaning that is consistently reflected in the
nation’s legislative framework. Although Kazakhstan and Russia’s PPP
development draws on international experience, both nations are keen
to adapt this experience to their local context in order to serve domes-
tic needs; however, adaptation also becomes a source of problems in
PPP governance. To what extent may or should governments adjust
international PPP tools and practices?
• What are the most effective PPP models and forms that would best
suit each country’s economic, political and social environment? To
date, both nations have exclusively used concessions and the build-
transfer-operate model, which has its limitations. Whilst other options
are currently available, will they be any better for PPP management,
and most importantly, will they make a difference for private firms
considering investment in partnerships?
• What should be the role of the government in forming PPPs and PPP
management? In both nations, governments tend to show their domi-
nance in most, if not all, PPP-related processes. Often, government
dominance replaces organisational structures, clearly established pro-
cedures, dispute resolution mechanisms and citizens’ participation.
Why and how does this happen? What are the areas that require
improvement? What kinds of improvement are necessary?
• What are the tools and methods to attract private investors in PPPs? If
private firms are reluctant to invest, there will be few or no PPPs.
Governments in both nations began PPP development by offering
extensive financial support to partnerships. However, this naturally
Introduction xv
decreases PPP value-for-money and creates distorted risk allocation

when governments inevitably accept a large share of risk. What is the
proper balance between offering government support that attracts
investors and creating incentives for them to invest, innovate and per-
form better in a PPP?
• Finally, can PPPs play a broader role in society? In the context of the
two nations, PPP deployment is difficult to justify with the traditional
value-for-money approach, as PPP costs are very high. This means that
governments may be struggling with (potential) criticism regarding
the use of taxpayers’ money and also with public acceptance of PPP-
delivered public services that will be provided for a fee, such as toll
roads, childcare or healthcare. Can partnerships be justified by their
role in creating jobs, formation of PPP-centred entrepreneurial clus-
ters, their contribution to environmental sustainability (e.g. via effec-
tive water treatment in urban areas) and reliable provision of public
services that are simply unavailable without PPPs?
The book aims to discuss these and other challenges facing Kazakhstan
and Russia. It offers insights into the nature of current PPP development
in the two nations, identifies issues in how PPPs are formed and man-
aged, and contrasts and compares accumulated experience with that in
industrialised economies.
Non-Russian-speaking scholars and practitioners know little about
partnerships in Russia, and virtually no studies are available about PPPs
in Kazakhstan. Practitioners may find the book useful, as it highlights
a vast array of real-life problems that PPP actors experience when they
form partnerships and engage in project implementation. The discussion
of these problems is illuminated by excerpts from interviews conducted
with staff of PPP operators, staff in national and regional PPP centres,
lawyers and government officials. Furthermore, the book offers an assess-
ment of PPP actors’ views from a variety of perspectives. The comprehen-
sive and balanced presentation of opinions and perceptions of those who
work in or with PPPs, followed by critical appraisal, will be of particular
interest to readers who are managers or are involved in operations and
decision-making, as they will have a solid background for developing
their own understanding of PPP issues and their application in different
xvi Introduction
contexts. Although Kazakhstan and Russia’s environment is unique, prac-

titioners in other nations may identify commonalities with PPPs in their
country; this might be helpful for studying best practice or borrowing
from the experience of the two ex-Soviet nations.
Researchers may also benefit from reading this book, as it is the first
systematic coverage of the governance challenges facing PPP actors in
Kazakhstan and Russia, and how organisations and governments have
adapted to these challenges. The book identifies commonalities and dif-
ferences between the two countries in how PPP governance has pro-
gressed and makes a cross-country comparison on a broad range of PPP
management issues. Furthermore, the book investigates the theoretical
foundations of PPP management in OECD countries, compares them
with the concepts put forward by academics in Kazakhstan and Russia,
and offers theoretical insights into the controversy that surrounds cur-
rent PPP development in the two nations. In summary, the discussion of
a broad range of practical issues relating to PPP formation and project
implementation, and investigation of partnerships’ theoretical underpin-
ning, creates a unique blend of practice and theory that may attract a
wide spectrum of readers who are interested in PPP development in tran-
sitional countries.
Dundee, UK Nikolai Mouraviev

Henley-on-Thames, UK Nada K. Kakabadse
1
PPP Meanings and Forms: A Critical
Appraisal
Introduction
This chapter reviews various meanings attached to the term ‘public–
private partnership’ (PPP) in Western literature, contrasts and com-
pares them, and identifies commonalities and differences between
them. The chapter highlights the concepts underpinning different
meanings and surveys the understanding of what are called PPP forms,
as well as models. This is followed by a discussion of yet another PPP
categorisation, namely, the initiator of the partnership. The chapter
also elucidates some disparities in the use of PPP terminology and con-
cepts in Western literature when compared to Russian-language lit-
erature. The latter captures PPP development not only in Russia, but
also in Kazakhstan, in which Russian is widely used. The chapter con-
cludes that researchers and practitioners in the PPP field in transitional
Parts of this chapter are reproduced from the paper Mouraviev, N., and N.K. Kakabadse. 2012.
“Conceptualising Public-Private Partnerships: A Critical Appraisal of Approaches to Meanings and
Forms” published in Society and Business Review 7(3): 260–276, with the journal’s permission.
© The Editor(s) (if applicable) and The Author(s) 2017 1

N. Mouraviev, N.K. Kakabadse, Public–Private Partnerships,
DOI 10.1057/978-1-137-56952-3_1
2 N. Mouraviev and N.K. Kakabadse
nations may explain new terms and concepts that are broadly used in
these nations, for example, what risk management denotes in the coun-
try’s contextual environment.
PPP Meanings
What is a public–private partnership? Many definitions are available,
ranging from focused (i.e. those that capture select PPP features) to those
that are very broad. The broad perspective argues that a PPP is any form
of collaboration between a government and private sector companies.
Those who take this stance emphasise that a PPP is a ‘language game’
implying that a PPP is anything and everything that involves a large vari-
ety of forms, models and methods that highlight how the government
works with private firms. Naturally, this broad view of partnerships is
conceptually vague and unhelpful for practitioners or researchers who are
interested in learning the specifics and best practice of PPP implementa-
tion and management.
Most academics and business people view a PPP as a contractual agree-
ment. This means that a partnership is a legally binding contract between
a public sector organisation (or a few of them) and one or more private
firms. In addition, banks and other financial companies that provide finan-
cial resources to the project also may be involved in the PPP contract.
Often, a PPP may include a set of many contracts in which a large number
of government organisations, private companies, lenders and other insti-
tutions are involved. However, thinking of a PPP as a contract or a set of
contracts is somewhat misleading as this approach emphasises the legal
side of a partnership, and disregards essential PPP features and the process
of project implementation. Naturally, one should not underestimate the
contract’s importance, as it specifies the principal terms and parties’ obliga-
tions at the PPP launch. However, PPP projects are long—typically 15 to
30 years or longer—and ensuring a contract is fully comprehensive can be
simply impossible. PPP contracts are often incomplete; they are also sub-
ject to frequent re-negotiation, when parties attempt to amend many criti-
cal elements, such as tariffs and how often they can be adjusted, financial
obligations, the scope of what has to be achieved and the completion dates.
A better, more coherent and useful way of looking at a PPP is to iden-

tify the principal features that a partnership possesses and that distin-
guishes it from other forms of collaboration between the government and
the private sector, keeping in mind that a PPP is a contractual arrange-
ment. This book focuses exclusively on contractual PPPs and does not
consider broad forms of public–private collaboration, such as special eco-
nomic zones or innovation parks.
Often, instead of giving a complete definition, scholars pay attention
to a selected PPP feature. A few PPP characteristics that are typically
emphasised include:
• Solidarity between the public and private partners (Sedjari 2004).

Hence, a PPP can be called a new phenomenon that presents ‘a culture
of engagement’, which is understood as a ‘capacity for the collective
mobilisation of participants which now forms the substance and
strength of public programmes’ (Sedjari 2004, 303).
• Mutuality as a partnership’s key conceptual feature (Brinkerhoff and
Brinkerhoff 2004).
• Commitment above and beyond contracts (Bovaird 2004).
• Organisational identity that is described as maintenance (rather than
surrender) of each partner’s own identity, beliefs and values (Haque
2004).
• Shared (by the government and private partners) responsibility for a
product and shared resources, risk, costs and benefits (Klijn and
Teisman 2003). This feature is unique to PPPs, although in reality
responsibility for the provision of public services may be fully shifted
to the private sector.
In sub-contracting, the parties involved normally do not expect fea-

tures such as solidarity, mutuality or commitment above the level that
is contractually required. In fact, these features are usually non-existent.
Therefore, the characteristics listed above highlight partnership proper-
ties that make PPPs different from traditional forms of collaboration
between the public and private sectors, such as public procurement
contracts or when the government sub-contracts a specific task to a
private company. Nevertheless, these characteristics are insufficient to
explain how, exactly, collaboration in a partnership happens and for

what purposes.
More comprehensive definitions are, however, available. A PPP may
be viewed as a long-term contractual agreement between the government
and the private sector for the construction or management of public sec-
tor infrastructure facilities by the private sector entity or for the provision
of services by the private sector entity to the community on behalf of the
government (Grimsey and Lewis 2002). This perspective captures the
following key properties of a PPP:
(a) An agreement between a public agency and a private partner must

take a form of a legally binding contract;
(b) A contract should be long term;
(c) PPPs normally provide services in infrastructure, or partnerships may
provide other services that one views as a public sector
responsibility;
(d) A PPP provides services on behalf of a public agency;
(e) In the PPP framework, a physical asset is normally constructed or
renovated;
(f ) In some cases, the government may transfer an asset to a private part-
ner, and the latter accepts responsibility for its maintenance;
(g) PPPs provide services to customers with the use of the asset(s) con-
structed by a private partner or transferred to a private partner by the
public entity; and
(h) The private sector partner may be compensated for the service provi-
sion by government payments, through user charges and fees or a
combination of both.
Tangible PPP elements—legal long-term contracts, asset construction

and provision of services with the use of constructed assets—form the
core of the framework for public–private collaboration. However, the
framework may be incomplete, as it does not take into account the PPP
project implementation process and interaction between partners.
Many authors emphasise the greater importance of partner interaction
over the legal framework. Some argue that a PPP is a continuous process
of interaction and negotiation (Andersen 2004). Others claim that the
involved parties mutually add value to the project (Klijn and Teisman
2003). Further, output specification is often noted as a PPP feature.
Whilst input specifications determine how much a private partner has
to spend on asset construction or maintenance or how many staff should
be hired, output management focuses on parameters of the service provi-
sion. To summarise, those who emphasise partner interaction tend to pay
less attention to the legal frameworks underpinning PPP arrangements.
In their opinion, the creation of added value in a partnership depends
first and foremost on the relationship between the partners.
Additionally, a distinctive PPP property is a long-term character of
interaction (Klijn and Teisman 2003). Long-term projects, as a rule,
require mutual contribution of resources, and this is why the parties
implement them jointly, as each is unable or unwilling to undertake a
project on its own due to high risk and/or high costs associated with
long-run activity. In contrast, short-term projects are easier to finance
and carry a smaller risk. For a short-term project, one can simply hire
a private company to implement a public task, or a government agency
can accomplish a task on its own, and there may be no need to form a
PPP. Thus, a long-term nature of collaboration also becomes an essential
feature accompanying the partnership’s shared elements.
The Underpinning Theories

Conceptual frameworks that may be useful for studying PPPs vary.
Although analysis of partnerships may take many different perspectives,
the vast majority of studies fall into three domains: partnerships as a
policy tool; a PPP as an organisational and financial arrangement; and
issues related to PPP performance, risk allocation and critical success
factors. As these fields and underpinning theories overlap, researchers
may use more than one theory in each field. Table 1.1 shows these
relationships.
Studies of PPPs as a popular public policy option often consider part-
nerships as a tool for development and an effective alternative to pri-
vatisation (Osborne 2000; Grimsey and Lewis 2004; Hodge and Greve
2005). Whilst PPP assets remain, ultimately, in the public sector, private
Table 1.1 PPP fields of study and underpinning theories

PPP fields Underpinning Influential
of study theory Principal ideas authors
PPP as a policy Theory of Private markets are Osborne (2000),
tool market superior to the public Wettenhall
efficiency; sector in efficient (2003), Grimsey
value for resource allocation. and Lewis
money PPP brings more (2004), Hodge
benefits than and Greve
drawbacks. (2005)
PPP as Value for PPP should ensure lower Klijn and
organisational money; TCE; costs and greater Teisman (2000),
and financial governance benefits compared to Asenova and
arrangement theory government in-house Beck (2003),
service provision. Vining and
Effective governance is Boardman
the key to success. (2008)
PPP Effective risk Risk should be Hall (2008a, b),
performance, allocation transferred to the Sadka (2007),
risk allocation, theory; party best able to Morallos and
critical success governance manage it with the Amekudzi
factors theory lowest cost. Effective (2008)
governance is the key
to success.
PPP’s social PPP delivers a PPP’s social value van der
value range of outweighs monetary Wal et al.
benefits that cost of a project; (2011),
create high hence, high costs may Reynaers and
value to be acceptable. PPP de Graaf
society contributes to (2014), de
sustainable Graaf and
development, Paanakker
innovation, (2015)
entrepreneurship and
social cohesion.
Source: Compiled by the authors
partners build and manage them to seek profit. The underpinning theory
here is that resource allocation by private PPP operators should deliver
greater efficiency as opposed to government service provision. The intro-
duction of market-based incentives into traditional government sectors
ensured the development of ‘the theory of private finance for public proj-
ects’ (Pollitt 2005, 209).
Other studies focus on a PPP as an organisational and financial

arrangement (e.g. Klijn and Teisman 2000; Asenova and Beck 2003;
Vining and Boardman 2008). The value-for-money perspective often
guides this research, as these arrangements are supposed to deliver greater
added value than government provision alone could achieve (Kakabadse
et al. 2007). Governance theory also informs studies in this field, arguing
that, as partnerships are often formed on incomplete contracts, partner
interaction requires effective management. An overlapping field of stud-
ies includes risk allocation in a PPP and related aspects such as discussion
of performance issues and success factors. The underpinning theory here
employs a principle of effective risk allocation, that is, risk should be allo-
cated to the party best able to manage it with the least cost (Sadka 2007;
Morallos and Amekudzi 2008).
Further, an emerging PPP field of study focuses on how partnerships
create social value. This value includes a number of benefits to society,
such as a boost to the development of entrepreneurship, a positive con-
tribution to environmental sustainability (e.g. effective waste utilisation),
enhancement of societal sustainability (e.g. by creation of long-term
employment opportunities), and fostering innovation in technology,
management and service delivery. The underpinning theory emphasises
the broader PPP value to society, rather than value-for-money related to
a narrow task that a PPP carries out (Reynaers and de Graaf 2014).
Contractual Versus Institutional PPPs: Principal

Differences
A PPP is generally understood to be a specific project implemented in a
public–private collaboration, to which the features discussed above apply.
Normally this kind of PPP is called ‘contractual’. However, there is yet
another type of partnership, called an institutional PPP (IPPP), which
may be described as a company that is partly owned by the government
and partly by a private firm. In some countries, such as Italy and Hungary,
this joint venture may have a contract with the municipality to provide a
service (e.g. water supply). A joint venture’s special status is characterised
by its ability to provide public services without having been required to
compete for a formally tendered contract; in other words, where a service

was delegated without tendering (Hall 2008b).
This description demonstrates that there are at least two types of insti-
tutional PPP. The first is when a company is owned jointly by the govern-
ment and private investors (either institutional investors or individuals)
and is involved in the provision of a public service on an ongoing basis,
without a time limit and without a specific contract with the government
agency. The other is when a jointly owned company has a delegated service
and may have a contract that includes regulation of the service provision.
Apart from the contribution of capital or other assets, a critical feature of
an institutional PPP is that a private partner must play an active role in PPP
management. This is confirmed by the 2008 European Commission com-
munication that describes the private input to the IPPP as the ‘active partici-
pation in the operation of the contracts awarded to the public–private entity
and/or the management of the public–private entity’ (Hall 2008b, 11).
Some key features discussed in reference to project-based PPPs do not
apply to institutional PPPs. In particular, an institutional PPP may con-
struct an asset that may be used for the purpose of service provision, or may
be used for other purposes. A joint venture company does not provide a ser-
vice on behalf of a public agency in the case when the government directly
owns part of this business; it becomes a semi-governmental company.
Depending on the government’s share of property ownership, customers
may view a joint venture company as mostly private or, on the contrary,
mostly government-owned. In addition, an institutional PPP may have an
unlimited timeframe, which differs to project-based PPPs that, as a rule,
have a time limit. To summarise, an institutional PPP has substantial dif-
ferences with a project-based PPP, and the meaning of an institutional PPP
often may not match the key characteristics of a project-based partnership.
A Summary of Approaches to the Meaning

of a PPP
First, in academic literature a PPP refers to a contractual partnership,
meaning a legal long-term contractual arrangement that involves asset
construction by a private party and service provision on behalf of a public
agency with the use of a constructed asset (Grimsey and Lewis 2002;
Bult-Spiering and Dewulf 2006; Hall 2008a).
Second, researchers understand a PPP as a project in which partner
interaction and the parties’ relationship is the most important feature
(Andersen 2004; Brinkerhoff and Brinkerhoff 2004; Sedjari 2004).
Third, researchers can view a PPP as a project that requires a shared
responsibility from both the public sector partner(s) and the private sec-
tor partner(s) for product, risk, costs and benefits (Nijkamp et al. 2002;
Klijn and Teisman 2003; Bult-Spiering and Dewulf 2006).
Fourth, a PPP may be an institutional partnership, that is, a com-
pany jointly owned by the government and private investors (Hodge and
Greve 2005; Hall 2008b).
The first, second and third meanings of a PPP do not contradict each
other. On the contrary, they can be viewed as complementary. The fourth
presents a special meaning that is not aligned with the other three, as it
represents a predominantly structural form of PPP.
PPP Forms
PPPs may take many different forms. PPPs vary infinitely from one sector
to another and from one locality to another (Sadran 2004). The scope of
this variation can be viewed from an industry perspective (i.e. sectors in
which PPPs operate) and an organisational perspective (i.e. how exactly
one arranges a partnership).
Sectors of PPP operations in many countries vary widely and include
transportation services and transport infrastructure (e.g. the construction and
operation of roads, railroads, metro, airports, tunnels and bridges), energy
sector (e.g. the construction and operation of power generation facilities and
power lines), education (e.g. schools and dormitories), healthcare, criminal
justice (e.g. courts and prisons), telecommunications, water treatment and
water supply, disaster management, micro-credit provision, skill develop-
ment, poverty eradication, sewage treatment, waste disposal and environ-
mental management. This list is not exhaustive, as a PPP can be formed in
any field where it may provide a public service in place of the government,
and where the government and society at large deem it appropriate.
From an organisational perspective, PPPs may take specific forms such

as a concession, or private finance initiative (PFI), or asset life-cycle con-
tract (Bovaird 2004; Sadran 2004; Sedjari 2004; Kakabadse et al. 2007).
A concession implies that an asset, such as a road, is constructed or
renovated by a private party with the use of private funding, or in some
cases, an asset may be transferred from a public agency to a private sector
partner. A private company assumes responsibility for the service provi-
sion for a specified period with the use of this asset and at the same time
accepts responsibility for asset maintenance and upgrade. To recover its
investment and operating expenses in return for its services (i.e. how a
private company receives money), customers pay user fees.
With regard to a concession, there are varying opinions regarding
the source of payments made to a private partner. Some experts argue
that a concession contract is where users pay fees to a company, mean-
ing that government funds are not involved, whilst another form of
a partnership—PFI—receives payments from a public agency (Hall
2008b). Alternatively, in a concession, a private company can receive
some form of compensation from final users or through regular pay-
ments by the public authority (Renda and Schrefler 2006). The lat-
ter point of view acknowledges the possibility of the use of public
funds for making payments to a concessionaire. At the same time, it is
unclear whether one still can categorise this form of PPP as a conces-
sion, in the case of payments to a private company by both the govern-
ment and final users.
In addition, in some concessions, so-called shadow tolls exist. A gov-
ernment uses these when it guarantees specific revenue to a private party
for a prespecified volume of service, and the government pays these tolls
instead of final users (Williams 2003; Sadka 2007). This is particularly
relevant to Kazakhstan and Russia as in these nations government pay-
ments to a PPP are common.
PFI is another form of PPP, although the difference between them is
not clear-cut. In contrast to other PPP forms, in which service provi-
sion requirements may change and evolve over time, in a PFI the ser-
vices specification is defined for the entire term at the point of contract.
Additionally, in a PFI a private company is a direct service provider,
rather than a consortium or a company formed solely by a private partner
or jointly with a public agency, which private firms frequently use for
the PPP project implementation (Asenova and Beck 2003; Grimsey and
Lewis 2004). However, the difference between PFI and PPP is indistinct,
and the literature often uses both terms synonymously.
Yet another form of PPP is the asset life-cycle contract. It is similar in
nature to a concession, although the difference may be that it is the pub-
lic agency, not final users, that pays for the asset construction and service
provision (Bovaird 2004; Sadran 2004; Sedjari 2004). The length of a
contract is determined by the asset’s usable life. However, the problem
lies in exactly defining the length of an asset’s usable life, particularly
when innovative technology is involved. The reason is that new technol-
ogy often becomes obsolete faster than simply due to physical wear and
tear, and difficulties in forecasting technological progress may impede
accurate determination of the asset’s life-cycle (Westerman et al. 2006).
Partnership Models
Specific partnership arrangements, also sometimes called PPP forms or
PPP models, depend on the underlying concept that a public authority
wants to apply to a PPP. Available arrangements include build-operate-
transfer (BOT), or design-build-finance-operate-transfer (DBFOT), or
DBFOOMT (design-build-finance-own-operate-maintain-transfer), or
other combinations of some or all of these elements that assign responsi-
bility for provision of public services to a private partner (Williams 2003;
Sadka 2007; Morallos and Amekudzi 2008).
For example, in the DBFOT scheme, a private company designs and
constructs an asset using private funding and then provides a service
with an ongoing responsibility to operate a newly constructed facility.
Immediately after construction is completed, a public agency assumes
the asset ownership. At the end of a PPP contract, a private company
transfers an asset back to the government.
In the DBFOOMT scheme, all elements are the same, with the excep-
tion of the asset ownership: after construction is completed, property
ownership is assumed by a private company, although it has an obligation
to transfer an asset to the government at the end of the PPP contract.
The asset’s private ownership appears to be temporary (although long

term). After the whole PPP project is complete, the government will fully
own the asset.
Who Initiates PPP Formation?

From the perspective of who initiates partnership formation, there is yet
another approach to PPP forms: PPP initiated by the public sector, PPP
initiated by the private sector and appointed PPP (Sedjari 2004).
Appointed PPP is a mixed (public and private) company that a city
or a region may create, for example, for provision of city services. Public
authorities must own most of the capital, with some private ownership.
These companies pursue public interest objectives and simultaneously
have flexibility in operational forms. Thus, the description of appointed
PPP resembles that of an institutional PPP. However, those who discuss
IPPPs do not emphasise that a public agency should own most of the
company capital.
An understanding of how one can initiate a PPP is useful in identify-
ing project types that countries are likely to approve and launch, with
varying degrees of political, administrative and fiscal centralisation. For
example, in a centralised federation such as Russia, PPPs may focus on
regional or national projects, at least at the outset. Partnership prolifera-
tion at the municipal level in Russia depends on how liberal and friendly
(to private investors) local rules and regulations have been designed and
on how easily project financing can be arranged.
However, it is possible to draw an additional example from Kazakhstan
in which, with a unitarian political and administrative system in place,
PPPs are even less likely to exist at the local level. Although from 2004
the national government encouraged PPP formation at all levels includ-
ing municipal, until November 2011 there were no approved PPP proj-
ects at the local (city or village) level and regional level in Kazakhstan.
The only current PPP projects that Kazakhstan is implementing are those
of interregional and national scope, such as the construction of an inter-
regional electrical power grid and construction of an international airport
(Kazakhstan Today 2009; Kazakhstan Public–Private Partnership Centre
2012). The existing partnerships in Russia and Kazakhstan clearly illus-

trate that societal governance structure can also influence corporate gov-
ernance models including those of PPP projects.
Conclusion
Transitional countries develop PPPs in their own way. This develop-
ment also involves application of the PPP-related terminology in its own,
country-specific form, and design of its own concepts and terms. For
example in Russia, governmental understanding of partnerships includes
production-sharing agreements, such as those with the oil companies,
and special economic zones. However, in reality, these partnership types
include a mix of contractual and institutional PPPs, and this may cause
confusion. From the Organisation for Economic Co-operation and
Development’s (OECD) perspective, many arrangements (such as special
economic zones) are not a PPP due to their nature and purpose (e.g.
a special economic zone is intended to create favourable conditions for
private business development in a region; however, a zone is not a con-
tractual PPP).
Although it is likely that adjustments to concepts and terminology
will persist, the most effective means of developing PPP terminology is to
explain the meaning of commonly used terms in the context of a certain
country. For example, a term that calls for explanation in the context of
Kazakhstan and Russia is risk management. The most common under-
standing in these two countries is that this term includes only the initial
risk allocation between partners as specified in the original PPP contract
(Alpatov et al. 2010). This view sets strong constraints on the under-
standing of risk management because essential elements are missing. Risk
management must also include risk re-allocation, risk mitigation and
related tools. From this broader perspective, it is no surprise that, in both
countries, the discussion regarding important elements of risk manage-
ment is lacking.
This chapter has presented critical elements associated with PPPs
and which are necessary for theoretical building, theory testing and fur-
ther research. The value of this chapter is in providing clarification of a
position adopted by some authors and governments regarding a specific

PPP aspect, rather than just presenting another author’s view. Certainly,
it is up to a researcher to decide what stance she or he wants to take
in reference to the meaning of a PPP or a specific PPP issue. However,
familiarising oneself with available approaches may help a researcher to
make an informed choice. This particularly applies to those who conduct
research in the PPP field within transitional countries, where partner-
ships are relatively new.
As partnerships are formed based on certain concepts, governments
are inevitably influenced by the direction in which concepts, terminology
and meanings are developing. Whilst PPP terminology may have particu-
lar contextual meaning in a transitional country, terms and concepts have
to be thoroughly explained. This will permit comparisons with similar
PPP aspects discussed by Western literature and is likely to contribute
to the growing body of knowledge regarding partnerships in transitional
economies.
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should have been apparent to the delegates that this was a blocking
motion and might prevent the committee from doing anything, but it
was evidently not so regarded, or else the delegates could not make
up their minds on the subject, for it was agreed to without comment.
The committee did not allow the motion for reopening the question
in six months to hinder them from going on with the new branch, for
immediately the meeting was over they gave instructions to the sub-
committee to secure temporary premises in the vicinity.
THE END OF THE PROPOSAL.
The subject again arose at the 34th quarterly meeting, held on 1st
September, when Paisley Provident was again forward with a
motion: “That if a branch be required after Barrhead had left the
Federation, it be established at Paisley or Johnstone, and that the
present branch in Glasgow be not retaken.” To this it was moved by
Mr Gardiner, Cathcart, and seconded by Mr M‘Murran, Glasgow
Eastern, as an amendment, “That this question lie over for six
months.” After a long discussion the Paisley motion was withdrawn,
on condition that the amendment limit the period of lying over to
three months, and that, meantime, a special committee, constituted
from the delegates present and from the committee, be appointed to
investigate the matter and report to the next quarterly meeting. This
was agreed to, and Messrs M‘Murran, O’May, Aitchison, Brown, and
Slater were appointed the special committee. In less than three
months’ time the committee sent out their report to the societies.
The report contained details of three plans which the sub-committee
had considered. The first of these, that of a branch bakery in Paisley,
they considered could not be worked except at a slight loss. With
regard to the second one, that of a branch at Johnstone, they
considered that the loss would be slightly greater; while, with the
branch at Johnstone, the trade would be more difficult to work. The
third proposal which had been considered was that of increasing the
number of ovens in the present premises, and in the report they
stated they were not prepared to recommend any one of the schemes
in the meantime, but recommended, instead, that the branch in
Paisley Road be taken for another year. The reason they gave for this
recommendation was that they considered that an inquiry should be
made into the advisability of introducing machinery into the
bakehouse, as the whole of their premises would be vacant in
eighteen months and could be utilised; if the result of the inquiry was
satisfactory, steps should then be taken to have it introduced. This
report was accepted by the delegates at the quarterly meeting, and so
a subject which had been a fruitful source of controversy at the
general meetings of the Federation for nearly two years disappeared.
It was again raised at a quarterly meeting some years later, when the
question of removing altogether from St James Street was being
discussed, but was summarily disposed of by the delegates.
BARRHEAD, JOHNSTONE, AND PAISLEY
PROVIDENT WITHDRAW.
Meantime the Barrhead bakery was ready for work and baking was
commenced in the last week of the year, but the society, although it
had withdrawn a large proportion of the loan capital invested with
the Baking Society in order to pay for the erection of its own bakery,
retained membership of the Federation until requested by the
committee to withdraw as the interest on the share capital was an
unnecessary burden on the Federation’s funds. The society was
allowed to withdraw without any of its capital being retained, being
the first of the withdrawing societies to which this privilege was
extended. In 1894, after fancy biscuit baking had been firmly
established by the Baking Society, Barrhead Society rejoined again,
taking up 1,500 shares.
Another withdrawal which occurred in a comparatively short time,
and which was doubtless influenced to some extent by the refusal to
establish a branch in the West, was that of Johnstone Society. At a
meeting of the committee which took place on 15th February 1879,
the minutes record a conversation which took place regarding a
decision of that society, come to the previous evening, to start baking
for themselves. The effect of the information that they were likely to
lose Johnstone Society’s custom so soon after having lost that of
Barrhead had a damping effect on the spirits of the committee, and it
was decided that in the meantime the erection of the new ovens
which they had proposed to build be not proceeded with. With the
withdrawal of Paisley Provident Society at the end of 1880,
consequent on having a bakery of their own ready for occupation, the
controversy with respect to the branch, and also its effects on the
welfare of the Federation, may be said to have ended.
The Federation had lost three of its best customers, but it had
succeeded in keeping its business centralised. It must always remain
a matter of argument whether it would have been better to branch
out at an earlier date and do for the societies in Renfrewshire that
which in later years it has done for Clydebank and the North of
Ireland. The question of branches is still one on which there is
considerable controversy, and, at any rate, it is certain that the
committee, and latterly the delegates, played for safety, and chose to
conserve the strength of the Federation at a time when all its
strength was needed rather than weaken it by widening the scope of
the society’s energies. The majority of the committee, it is quite
evident, were opposed to branching out, for had this not been so,
they would have gone ahead when two general meetings of the
Society gave them the mandate.
It is difficult to see that any great harm was done by the course
which was adopted. The growth of the three societies has been so
great that each of them is large enough to maintain a bakery of its
own, and although the Federation had one or two temporary
setbacks, none of them was serious enough to affect its stability or its
efficiency. It is possible, therefore, to argue that either decision
would have had equally good results. There we may leave what was
undoubtedly a stirring controversy while it lasted, the importance of
which at the time forms sufficient justification for the space which
has been devoted to it.
CHAPTER VI.
ST JAMES STREET: DEVELOPMENTS.
IMPROVED MANAGEMENT—PRIVATE LOANS—

IRREGULARITY OF ORDERS AND OTHER DIFFICULTIES—
A NEW FOREMAN BAKER—SHORT WEIGHT IN FLOUR—
DELIVERY DIFFICULTIES CONTINUE—UNINFORMED
CRITICISM—AN ECHO OF THE IRONWORKS FAILURE—
NEW MEMBERS—AMENDING THE RULES—EXTENSIONS
—MANAGER RESIGNS: SECRETARY APPOINTED—
OAKMILL SOCIETY—APPEAL FOR FUNDS—TRADE AND
FINANCIAL POSITION IMPROVING—ANDERSTON
SOCIETY’S FAILURE—GOOD NEWS—MACHINERY
INSTALLED—BECOMING RICH—TEN YEARS’ WORK.
In tracing the development of the agitation for and against the

establishment of a branch bakery we have been running ahead of the
calendar. A new cashier, who was virtually manager of the business,
had been appointed in the last days of 1872, and during the next two
and a half years he carried on the business with as much success as
the conditions under which he was compelled to work permitted. In
these two and a half years he inaugurated a system of private loans to
the Federation for the purpose of increasing the working capital of
the Society; the smallness of the capital having been until then the
greatest difficulty under which the Federation laboured; and so
successful was this venture that by April 1875 the Society was in a
position to deposit £500 on loan with the S.C.W.S., while six months
earlier he was in a position to recommend to the committee that the
acceptance of private loans except from those who had already
deposits with the Society, and from the employees, be discontinued;
a recommendation which was put in force by the committee a month
later.
In other ways, too, Mr Craig brought prosperity to the Federation.
He found it in a position of peril. For a long time after his
appointment he found himself in the position, meeting after meeting,
of having to present to the committee accounts which had been
incurred by his predecessor without being able to check them in any
way. One of these, presented in 1874, had been incurred from 1870
to 1872, and the explanation offered by the contractor was that he
thought the U.C.B.S. and the S.C.W.S. were all the same, and had
kept the invoice back until the building was finished. Mr Craig was
given the job of arranging on the best terms possible. For several
years the difficulty already alluded to, that societies did not pay their
accounts promptly, continued. This was particularly the case with
two of the societies which were in very low water about this time, one
of them eventually succumbing. There was also continuous difficulty
about the maintenance of sales. Sometimes a society would take
bread for a number of weeks or months, and then cease all at once
without any reason being given. At other times there would be a
series of complaints about the quality of the bread and the reluctance
of members to purchase, and investigation showed that these
complaints emanated from the shopman and had very little
foundation in fact. In some cases the shopman was the society, the
committee seeming to exercise little or no supervision; while in other
cases there was, of course, genuine cause for complaint owing to bad
or irregular deliveries or to barm going wrong with the baker. Such
causes were not sufficient to account for the constant stream of
complaints which were launched at the heads of the committee,
however, and doubtless close investigation would have shown that
many of them had their origin in a desire on the part of salesmen to
do business with firms which made it worth their while. With the
appointment of Mr Lang as foreman baker there was certainly a
decrease in the number of complaints, and the sales improved.
A discussion which took place at a committee meeting in June
1873 showed that there was not only a dispute with Barrhead Society,
a deputation having been sent to that society’s meeting and been
refused admission to the meeting, but also that the Baking Society’s
committee had not yet been placed on a satisfactory basis. The
chairman stated at the committee meeting that his committee had
only heard of the Barrhead meeting casually, and expressed the
opinion that it was the duty of the member of the board from
Barrhead Society to have informed the Bakery board of the fact that
it was being held. On the other hand the Barrhead delegate said that
he had forgotten all about it, and that in any case he had no authority
from Barrhead committee to say anything on the matter. It would
appear that a long discussion took place on the subject, and
especially on the position of members of the Baking Society’s
committee in relation to the work of that society, the opinion being
freely expressed that to members of the board of the Baking Society
the affairs of the Baking Society should be the first consideration.
The subject was ultimately dropped, on the understanding that it was
the duty of any member of the Baking Society’s committee to inform
that board forthwith of anything which affected the interests of the
Society.
About this time, also, some trouble was being experienced with
one of the millers who were supplying them with flour. Several sacks
of flour had been weighed by the manager, and each had been found
to be short in weight to the extent of several pounds. The result was
that the committee determined to purchase a “beam and scales” in
order that the flour might be weighed as it came into the bakery, and
meantime it was decided that at present no more flour be purchased
from the defaulting miller. At the same time a claim was made
against him for short weight. About this time, also, some difficulty
arose with respect to the delivery of bread to Lennoxtown Society.
For some time the committee had been of the opinion that they were
losing money by delivering bread to this society, and several
suggestions had been made as to the most economical means of
delivery. No one of these seemed to find favour with the Lennoxtown
people, however, and that committee ultimately decided to ask the
Bakery board to supply them with bread by means of the van as
usual, and, if necessary, to retain the dividend. The Bakery
committee, however, after considering the matter, came to the
conclusion that, apart from the principle, this method would not pay
them, and decided to make no alteration. The secretary was
instructed to reply to this effect, and also to state that the Bakery
would stop supplying bread to Lennoxtown as soon as that society
was able to make other arrangements.
At the quarterly meeting the attention of the delegates was called
by the chairman to the cases of one or two societies in Glasgow which
were members of the Federation, but which purchased little or no
bread from the Society. At this meeting, also, attention was again
called to the needs of the Federation for more capital. The work of
Mr Craig in securing individual depositors had not yet begun to have
any noticeable effect on the finances of the Society. At this time
propaganda work was engaging the attention of the committee, and a
conference of societies in and near Glasgow was held for the purpose
of inducing them to become better customers of the Federation. At
one of the meetings about this time the chairman suggested that
another meeting place be got for their committee meetings, as the
business was being overheard where they met at present. Societies
were now beginning to join up more freely. Applications from some
of the outlying societies were held up for consideration, but in
November 1873 Kinning Park joined the Federation, taking up 100
shares, and a short time later London Road Society became a
member.
UNINFORMED CRITICISM.
About this time the editor of the Co-operative News seems to have
been criticising the Society’s balance-sheet, for a discussion took
place in committee on the subject, and it was duly minuted that “the
remarks of the editor with regard to the balance-sheet were wrong;
that it had been the same with the quarter previous, and he
considered the editor should make himself better acquainted with
the circumstances of the business before commenting on it.” At this
period the Federation had been caught on a rising market with a very
small stock of flour on hand. The master bakers of the city had a
meeting, but two of them refused to raise the price of bread, having
evidently large stocks in hand. Flour was eight shillings a sack dearer
than when the price of bread had been fixed. It was decided to
maintain the price of bread in a line with Glasgow prices; but it was
agreed that if a general rise took place in the various districts the
members of committee should notify the manager so that he could
act accordingly.
At the meeting of the committee which was held on 17th January
1874 the overdrawing by the Ironworks of their account with the
Wholesale Society was referred to. It was stated that the amount
overdrawn was £9,000. A lengthy conversation took place as to the
advisability of having a more thorough check upon the transactions
of the Bakery manager so as to prevent the possibility of a like
occurrence; but, after the matter had been discussed in all its
bearings and various plans had been suggested, no definite decision
was arrived at, except that the finance committee were instructed to
make a regular inspection of the books and use every means to
ascertain the real position of the Society. The delegates to the
Wholesale meeting had also reported that it had been agreed by that
society to charge 5 per cent. on overdue accounts after a certain date.
This was going to hit the Baking Society heavily, and the committee
expressed the opinion that they should not be liable as they were
only receiving half bonus. There is no reason given, however, why
they should be receiving only half bonus, as they had become
members of the Wholesale Society quite a long time previously.
Bridge of Weir and Kilbarchan societies were admitted members of
the Federation, but the admission of Milngavie Society was held over
for a further period. It was decided in February 1874 to recommend
the delegates to the quarterly meeting to amend the rule relating to
the representation of societies on the committee, as it was thought
that with the increase in the number of the societies who were
members of the Federation the committee was becoming unwieldy
because of its size. From the beginning each society which joined the
Federation had been entitled to be represented on the committee.
There were now twenty societies in the Federation, and, although the
average attendance at a committee meeting was about fourteen, the
more the membership of the Federation was added to the larger the
committee would become. After having been considered by the
societies for a year, the recommendation of the committee was
agreed to, and the membership of the committee was fixed at twelve
—president, secretary, treasurer, and nine representatives of
societies.
The trade of the Federation had fallen off somewhat during the
fifth year, owing to the fact that several of the societies had been
asked to withdraw and that the trade of one or two others was
declining. The turnover was 7,514 sacks, as compared with 7,955 for
the preceding year, thus showing a decline of 441 sacks. The average
price of bread had been slightly higher, however, for the cash value of
the goods sold was £22,153, an increase of £131. The average
dividend paid had been 5½d.—4d., 6d., 6d., and 6d. respectively for
the four quarters—and the reserve fund had been more than doubled
during the year, while depreciations to the amount of £719 had been
made. The capital of the society was still very small in proportion to
the turnover, however, being only £2,300. The societies themselves
were mostly small; they had not very much capital to spare for
investment, and those of them which were members of the U.C.B.S.
had to divide that between that Federation and the S.C.W.S. Added
to this was the fact that several of the societies which were members
of the Federation were in a position which was gradually becoming
more hopeless, with the result that not only were they unable to
invest in the Federation, but they were barely able to pay for the
bread they bought.
EXTENSIONS AND A FIRE.
At the quarterly meeting which took place in December 1874 it was
decided that the erection of the flour loft, which had been held over
for more than a year, should be proceeded with, but a disaster which
befell the Society at the end of the month put a stop to the carrying
out of that particular proposal for some time. This disaster was the
burning down of the premises adjacent to the bakery and the
property of the Society, which were being utilised as a bolt and rivet
works by tenants of theirs. The reconstruction of this property
occupied the attention of the committee for the next few months, and
it was not until May that estimates for the completion of the flour loft
were received and the contracts placed. When the accounts for the
rebuilding of the burned-out property had all been submitted it was
found that they were £70 less than the sum which had been received
in insurances on the property, and the manager was presented with
£5 and was granted a fortnight’s leave of absence. The insurance on
the property and stock of the Society was now increased by £2,000
to £7,000.
RESIGNATION OF MR CRAIG.
At the next meeting of the committee, held on 10th July 1875, a
letter was received from Mr Craig, in which he stated that owing to a
sudden change in health he was compelled to resign his position as
cashier and manager. The committee were unanimous in their
expressions of regret, and a deputation was appointed to meet with
Mr Craig and learn whether it would be possible for him to return to
his position in the event of assistance being given in the office. At the
next meeting this deputation reported that they had met Mr Craig,
who stated that the medical advice he had received was that he
should leave the country, and that he had decided to do so. They had
therefore advertised the position. The committee thereupon recorded
their appreciation of the work which Mr Craig had done for the
Society in the following terms:—
“While we accept Mr Craig’s resignation as manager, we desire to record our
heartfelt sympathy with him in his circumstances and the high esteem in
which he is held by all the members of this committee as an honest and
upright individual, an intelligent and energetic man of business, and a faithful
servant who, for the past two and a half years, has conducted the business to
the great pecuniary advantage of all the members connected with it. While we
regret the loss of such a valuable servant, we hope that he may secure in the
country to which he is emigrating a restoration of health and strength,
together with a due amount of worldly prosperity.”
Alas, it was not to be. No improvement took place in Mr Craig’s
health from his residence abroad, and in a short time he was back in
Glasgow again, his death taking place in the summer of 1877.
At the August quarterly meeting of the Society a grant of £20 was
made to a testimonial which was being got up for Mr Craig, and the
secretary was instructed to record in the minute of the proceedings
that the grant was made
“In recognition of his sterling worth as a man and the able business abilities
he showed by the successful manner in which he conducted the affairs of this
Society during the period he held the office of manager to the Society.”
Mr David Smith, who had been acting as secretary since Mr
Borrowman had resigned from that office, was appointed manager,
and Mr Thomas Slater, London Road Society, was elected secretary.
A BAD INVESTMENT.
In the middle of September there came an appeal from the Oakmill
Society that the Baking Society should invest in its funds. The matter
was delayed for one reason or another, but finally, at the quarterly
meeting which was held in March 1876, it was agreed to invest £200.
At this time the financial position was improving every week. The
profits on working were well over £30 per week, and the committee
were not so chary of spending money as they had been in earlier
years. Among other donations to which the Society agreed was one of
£20 towards the expenses of the Co-operative Congress which was to
be held in Glasgow in 1876. Several of the societies which were
affiliated with the Baking Society were in a bad way at this time.
Blairdardie Society had had their premises destroyed by fire, and a
deputation was received by the Bakery directors. The deputation
explained that the purpose of their visit was to get some
consideration shown to them by giving them their regular supply of
bread until they were able to complete their arrangements. The
committee agreed that Blairdardie should receive their usual supply
of bread for a month, at the end of which period the question would
be further considered. Anderston Society also had fallen on evil days.
For some time the Bakery committee had had considerable difficulty
in securing prompt payment by that society for bread supplied to it,
and early in 1876 they reduced by half the number of shares they
held in the Bakery, as their membership was declining. They
struggled on until the middle of 1878, but after taking stock in July of
that year they gave up in despair and closed the shop. At the time
when they closed down they were owing the Baking Society some
money, and Mr Smith transferred that amount from their share
account to their goods account. The chairman had, however, some
doubt as to the legality of this action, and it was afterwards decided
that should any of the other creditors object the Society would not
take any action to uphold their claim. The debts of the Anderston
Society were taken up by the Wholesale Society, however, and after a
considerable amount of correspondence between the committees of
the two Federations the balance of the share capital of Anderston
Society was transferred by the Bakery committee to the Wholesale
Society, the latter Federation agreeing to relieve the Baking Society
from any responsibility they might incur by so doing.
At the beginning of the year 1878, Barrhead Society ceased to
purchase bread from the Baking Society. This meant a reduction in
turnover of nearly 600 dozens of bread every week, and for the time
being put an end to all thoughts of branching out. Other societies,
too, were going the way of Anderston, and about this time the most
remarkable point in the minutes of the Baking Society is their record
of the names of societies which have long ceased to have any separate
existence. Maryhill, Petershill, Bloomvale, Anderston, and Southern
all lived a more or less precarious existence during the first decade of
the Federation’s existence, and all disappeared. One result of the
failure of Anderston Society was an alteration in the rules of the
Baking Society for the purpose of giving a lien on the shares of a
debtor member. It was also decided about this time that societies
which had ceased to be purchasers be removed from membership,
and have their shares paid out to them. It was at the quarterly
meeting held in December 1876 that the first mention is made of a
practice which has since that time gladdened the hearts of many
hundreds of weary delegates. At that meeting, Mr Neil, Kilbarchan,
moved, and Mr M‘Duff, Linwood, seconded a motion: “That at our
quarterly meetings in future the delegates be supplied with tea.” The
motion was agreed to unanimously. The tenants of the bolt and rivet
works in property owned by the Society wished for an extension of
their lease or, alternatively, to be allowed to break their lease and
remove, and the Society agreed to allow them to remove provided the
removal was carried out in three months. At the end of May 1877 the
Society’s stable in St James Street was destroyed by fire and six
horses were killed; at the same time some doubts were being
entertained as to the stability of the bakery itself, as it was feared that
the back wall was too weak for the load of flour it had to bear. Then
the members of the committee were again being worried with
complaints about the quality of the bread, and especially of the fine
bread. When they came to compare their bread with that
manufactured by competing bakers, however, they usually were of
the opinion that the bread they were baking was as good as any.
PAST PRESIDENTS
1. GABRIEL THOMSON. 2. WM.

BARCLAY.
3. DONALD CAMERON. 4. ANDREW
BROWN.
PAST PRESIDENTS
1. ALEXANDER FRASER. 2. JOHN

FERGUSON.
3. DUNCAN M‘CULLOCH. 4. DANIEL H.
GERRARD. J.P.
GOOD NEWS.
At one of the meetings of the committee, held towards the end of
1877, an interesting report was given by the Johnstone
representative, which was not without its humorous side. Nearly a
year earlier the Bakery committee had installed machinery for biscuit
baking, and had been building up a good trade. Nevertheless, the
Johnstone committee had thought it necessary to inquire into
complaints which were being made by their members. The biscuits
manufactured by the Baking Society were sold in paper bags which
contained 28 for 1/, and the members complained that other grocers
gave 30 biscuits for 1/. The committee of Johnstone Society had
carried out their investigation in a practical manner. They had
purchased a bag of each of the other makers’ biscuits and had
weighed them. The result showed that the U.C.B.S. 28 biscuits were
heavier by 5½ oz. than were the 30 biscuits of one maker, and were
as heavy as 34 biscuits of another maker, while in each case the
Society’s biscuits were pronounced to be the better in quality. It is
easy to imagine how heartening to a committee who were
continuously being pestered with complaints about the quality of
their wares such a report would be, and the chuckles with which the
humorists amongst them would agree that it should be engrossed in
the minutes “for the information of the delegates attending the
quarterly meeting, so that they may be in a position to lay the matter
before their respective committees; which may result in a
considerable extension of this branch of trade.”
MACHINERY INSTALLED.
For some months the committee had been discussing tentatively
the installation of baking machinery, but without coming to any
definite decision on the matter. In the beginning of 1878, however,
they began to inquire into the subject in earnest, and appointed a
committee to get all necessary particulars as to cost, effect on
working expenses, and effect on the quality and appearance of the
bread, of such machinery. After this committee had reported, the
subject was discussed by the general committee and then remitted to
the quarterly meeting. There the delegates ordered the report to be
printed in circular form and sent out to the societies, so that the
delegates might come to the next quarterly meeting with
instructions. At the next meeting a motion that machinery be
installed in the bakery was agreed to by a small majority. The
amendment, “that it be not installed,” seems to have been the last
protest from those societies who wished a branch to be established at
Paisley or Johnstone, but with the installation of machinery their last
hope of achieving their purpose disappeared.

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Public-Private Partnerships: Policy and Governance Challenges Facing Kazakhstan and Russia 1st Edition Nikolai Mouraviev

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Public–Private Partnerships: Policy and

Governance Challenges Facing

Public-Private Partnerships in Russia: Institutional

Cultural Influences on Public-Private Partnerships in

Open Government Opportunities and Challenges for Public

Regional Development and Public Policy Challenges in

The Intersection of Food and Public Health: Current

Enabling Collaborative Governance through Systems

Public administration partnerships in public service

Russia: Strategy, Policy and Administration 1st Edition

ISBN 978-1-137-56951-6 ISBN 978-1-137-56952-3 (eBook)

Library of Congress Control Number: 2016958208

© The Editor(s) (if applicable) and The Author(s) 2017

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

1 PPP Meanings and Forms: A Critical Appraisal 1

2 Internal and External PPP Drivers in Kazakhstan

3 Why Partnerships? The Approaches in Kazakhstan

4 PPPs in Kazakhstan and Russia: The Nature and Scope

5 Concessions: PPP Pathﬁnder 73

6 Partner Interaction Dynamics and PPP

7 PPP Risk Management: Management of Financial

8 Legal and Regulatory Barriers to Eﬀective PPP

9 Case Study: How Experiential Learning Facilitates

10 The Role of PPPs in Disaster Risk Management

11 PPP Impact on Market Failures and Externalities 183

12 Critical Issues in PPP Development, an Emerging

Table 1.1 PPP fields of study and underpinning theories 6

Public–private partnerships (PPPs) continue to draw considerable atten-

of partnerships in disaster risk management in infrastructure and the

ensuring fast PPP deployment in the nation. More fundamental prob-

• What is the meaning assigned to the term ‘PPP’? There is no doubt

decreases PPP value-for-money and creates distorted risk allocation

contexts. Although Kazakhstan and Russia’s environment is unique, prac-

Dundee, UK Nikolai Mouraviev

© The Editor(s) (if applicable) and The Author(s) 2017 1

A better, more coherent and useful way of looking at a PPP is to iden-

• Solidarity between the public and private partners (Sedjari 2004).

In sub-contracting, the parties involved normally do not expect fea-

explain how, exactly, collaboration in a partnership happens and for

(a) An agreement between a public agency and a private partner must

Tangible PPP elements—legal long-term contracts, asset construction

The Underpinning Theories

Table 1.1 PPP fields of study and underpinning theories

Other studies focus on a PPP as an organisational and financial

Contractual Versus Institutional PPPs: Principal

compete for a formally tendered contract; in other words, where a service

A Summary of Approaches to the Meaning

From an organisational perspective, PPPs may take specific forms such

The asset’s private ownership appears to be temporary (although long

Who Initiates PPP Formation?

2012). The existing partnerships in Russia and Kazakhstan clearly illus-

position adopted by some authors and governments regarding a specific

IMPROVED MANAGEMENT—PRIVATE LOANS—

In tracing the development of the agitation for and against the

1. GABRIEL THOMSON. 2. WM.

1. ALEXANDER FRASER. 2. JOHN

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