The Funding Gap as a Systemic Fact
Lithuania's experience is illustrative. An independent study found that Lithuania needs EUR 62 billion to meet its 2030 targets. The state budget, EU support and other public sources together cover only EUR 18 billion. The remaining EUR 44 billion can be provided solely by private capital — and PPP is the legal and financial framework for attracting it. Latvia's situation is not fundamentally different. Municipal digitalisation requires long-term investment that one-off budget financing cannot provide.
What Lithuania Is Already Doing
By the end of 2024, Lithuania had 50 PPP contracts in force across various sectors — from transport and education to energy and public services. A further 22 new projects are planned to launch in 2025. The Central Project Management Agency (CPMA) provides expert support to municipalities in preparing projects, thereby addressing the competence gap that often delays the launch of PPPs.
Significantly, in the Lithuanian model PPP is used not only for large infrastructure projects but also for relatively small ones — street lighting modernisation, sports infrastructure, and the management of educational institutions. This demonstrates that PPP is applicable to municipalities of Latvia's scale as well.
What Exactly Can Be Digitalised Through a PPP?
At the municipal level, digitalisation via a PPP can cover:
- automation of resident request processing using AI;
- smart city infrastructure (sensors, data analytics, energy efficiency);
- municipal document management systems with AI-powered search capabilities;
- digitalisation of healthcare services;
- digital infrastructure for educational institutions and support for the learning process.
The Critical Question: Risk Allocation
The key to a successful PPP is not price — it is the structure of risk allocation. The municipality must retain control over the service standard and data sovereignty. The private partner must bear the technological, development and operational risk. A properly structured PPP contract ensures that the public sector pays not for technology, but for results.
PPPA is ready to advise municipalities on preparing PPP projects in the field of digitalisation.