Public-Private Partnerships (PPPs) are complex financing structures involving substantial transaction costs, with the legal documentation alone often consisting of several hundred pages. Despite the care taken in preparing PPPs, renegotiation is a common occurrence and can have an impact on value for money. It is not clear, however, whether this reflects the impossibility of any contract to foresee every eventuality or is usually the result of more mundane explanations.

Public-Private Partnerships (PPPs), sometimes referred to as P3s, are complex financing structures involving substantial transaction costs, with the legal documentation alone often consisting of several hundred pages. Despite the care taken in preparing PPPs, renegotiation is a common occurrence and can have an impact on value for money. It is not clear, however, whether this reflects the impossibility of any contract to foresee every eventuality or is usually the result of more mundane explanations

Public-private partnerships (PPPs) have the potential to increase efficiency and improve resource allocation. However, contract renegotiations are common and make us question the benefits of PPPs.

This chapter analyses the experience of renegotiations in Latin America: the lessons learned, reflections made and their high incidence, based on the evolution of PPP contracts over the last 25 years.

Public-private partnerships (PPPs) typically rely on long-term contracts between participants. When conditions arise that fall outside the expectations embodied in the contract, one party may seek to renegotiate the contract terms. Globally, the frequency of PPP contract renegotiations has been sufficient to raise questions regarding why these events occur and what their consequences are for the projects and society. The literature highlights four relevant causes behind renegotiation occurrences: unexpected exogenous changes, the complexity of the contractual relationship, winner´s curse and rent seeking behavior.

This chapter brings together a large panel of project-level technical and financial data and country-level economic, institutional, political and governance variables, to assess the determinants of private financing of infrastructure in emerging markets and developing economies.