Case Study on "Public Private Partnership athe Proposed Amman Zarqa Light Rail System"

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The passing of this deadline effectively renders null and void the 30-year Construction & Operating Agreement signed a year earlier by the government of Jordan, the Jordanian Public Transport Regulatory Commission, and JKC.

It was envisaged that the LRS would operate using electric light rail vehicles on a standard gauge double-track line. The 26 km route was to be largely constructed within the existing Hedjaz Railway right-of-way, which would cease operations in this corridor. Early ridership studies forecast close to 100-000 passengers per day (both directions) initially, with weekday peak ridership of between 4 000 and 6 000 passengers per hour per direction during the first few years. Roy (2009, p. 34)

Area of Study

The fate of the stalled LRS, projected to counter the continually worsening traffic congestion between Amman to Zarqa, remains unclear. Figure 1 portrays a segment of the existing Hedjaz Railway alignment which the Amman-Zarqa LRS expected to utilze.

Figure 1: Segment of Existing Hedjaz Railway (Roy, 2009, p. 34).

Figure 2 represents a perception of the proposed Amman-Zarqa Rail System.

Figure 2: Proposed Amman-Zarqa Rail System (Roy, 2009, p. 35).

Significance of the Study

The newspaper article, "Public-private partnerships," (2009), explains that the fundamental premise behind public-private partnerships reflects a division of expertise and resources. When one single sector cannot or chooses not to handle a particular project on its own, the ensuing effort calls for "a combination of financial and other resources to implement it The process minimizes delays, cuts costs and offers both sectors to share their knowledge and experience for the country's benefit (Public-private…, 2009, ¶ 7-8). As the contemporary world economic crisis presents an array of challenges for the public and private sectors, partnerships between the two sectors can either prove invaluable or comprise a collage of challenges. Examining whether PPP could prove suitable for the Amman-Zarqa LRS Project, the writer asserts, will enhance the reader's understanding of PPP not only in this particular scenario but also in general. Applications from this knowledge may also benefit the reader in other areas.

Organization of the Study

After the first section, the Introduction, the case study includes the following sub-sections.

Review of Relevant Related Literature

Private and Public Ownership

PPP Components

Concerns Challenging the LRS Project

Conclusion

Research Question/s

The primary research question for the case study queries: Will Public-Private Partnership (PPP) prove suitable for the Amman-Zarqa Light Rail System (LRS) Project? To support the principal research question, the researcher examines literature leading to answering the following three sub-questions

1. How do private and public ownership differ?

2. What components constitute criteria of PPP?

3. What current concerns challenge the Amman-Zarqa Light Rail System (LRS) Project?

During the next section of the paper, the review of literature will relate more specifics regarding public-private partnership and whether PPP will be suitable for the Amman-Zarqa LRS project. The writer proffers the reader literal and figurative insight regarding failure factors as well as components contributing to a project's success, no matter if the project relates to LRS, personal projects, or studies like the current one.

Review of Relevant Related Literature

A "partnership between the public and private sector is the way forward"

(Public-private partnerships, 2009, ¶ 6).

Moving Forward

The way forward for paper, the review of relevant related literature, includes the use of secondary data. During the review of literature, a formal survey of professional literature relevant to the study's research questions, the writer relates information others have discovered that relate to his study's focus. This information helps frame and focus the researcher's research questions and moves the researcher toward addressing the research questions he presents during the paper's introduction.

The literature review provides the necessary background the reader needs to understand the study. After the researcher selects a topic to investigate, Lawrence A. Machi and Brenda T. McEvoy (2008) explain in the book, The Literature Review: Six Steps to Success, the researcher then searches the literature and develops the argument/premise for the study. As the writer surveys the literature; he simultaneously critiques and chooses pertinent information to include in the paper. The article, Literature Review (N.d.) asserts that the researcher does not include every published study in the area of the study's focus but carefully chooses the most relevant and most significant sources; also including those which may prove to be contrary to the researcher's intent. Options for effectively organizing the literature review include the following methods:

1. By topic/theme

4. By argument and counter argument

5. By age level of subjects

6. By chronological order (Literature Review, N.d.).

For the case study focusing on PPP and whether it will be suitable for the Amman-Zarqa Light Rail System (LRS) Project, the researcher utilizes the thematic method. The following three themes serve as the foundation for exploring and understanding the study's phenomena and also depict the literature review's subsections which evolved from the paper's research questions.

Private and Public Ownership

PPP Components

Concerns Challenging the LRS Project

Public/Private Ownership

The contemporary debate over state vs. private ownership, Nhut H. Nguyen (2009), a research officer at Massey University, New Zealand, has engendered a massive volume of literature. In the journal article, "State vs. private ownership: A shareholder's wealth perspective," Nguyen purports that "researchers have provided abundant empirical evidence to indicate that private ownership leads to higher profitability, improved operating efficiency, increased capital investment spending, lower leverage, and better corporate governance" (¶ 2). Even though, in some instances, State intervention may appear theoretically justified to resolve some type of market failure or prove beneficial in markets for social goods, public ownership generally proves inferior to private ownership.

The state-owned enterprise's (SOE's) objective function may dramatically differ from that of a privately-owned firm. "Rational governments have incentives to maximize social welfare whereas private owners' motivation is to maximize shareholders' wealth. Moreover, politicians often align their policies with the interests of voters rather than shareholders" (Nguyen, 2009, Literature review… Section, ¶ 1). At times, indistinct alliances by government entities lead to over-employment; potentially negatively impacting the firm's efficiency. Amidst soft budget constraints, government-owned enterprise managers do not possess the incentives to improve quality and performance or reduce costs. Public managers realize politician owners routinely rescue the firm from major financial problems as bankruptcy would entail high political costs.

In light of the government's regulatory power, Nguyen (2009) asserts, the case for government ownership appears diametrically opposite efficiently justifiable rationale. Arguments against government ownership; for private ownership include, but are not limited to the following:

Insufficient profit maximization, political interference, and lack of market-driven monitoring and governance over state-owned firms (Nguyen, 2009, ¶ 1).

In countries with stronger financial systems, shareholders benefit more from less government intervention in business operation, developed capital markets and investor rights being better protected. Reports from privatized firms indicate they experience positive improvement in countries with better corporate governance and higher level of capital market development. As the degree of competitiveness differs across industries, albeit, this also comprises a factor that affects the privatized firm's performance. In a highly regulated industry like the utilities industry, firms less likely benefit from privatization. In addition, a significant difference exists in the post-privatization performance of firms in regulated industries compared to those operating in competitive industries (Nguyen, 2009).

Private companies, typically recognized as the engine that stimulates an economy's growth; fuel the economy, provide employment for a great number of people, invest funds in vital sectors and ensure that many of the service industries keep operating. At… READ MORE