Better Regulation of Public-Private Partnerships for Transport Infrastructure

image of Better Regulation of Public-Private Partnerships for Transport Infrastructure

Many governments seek to attract private finance for infrastructure through public-private partnerships (PPPs) in order to maintain investment at the same time as limiting public spending. Experience with PPPs has, however, been mixed. Some transport PPP projects have delivered major cost savings but many more have exceeded their budgets. PPPs are prone to overestimating revenues and when projects run into financial difficulty, risks have a tendency to revert to the


The report examines the nature of risks and uncertainty associated with different types of PPP project and the practical consequences of transferring risks to private partners. It assesses the fiscal impact of PPPs and discusses budget procedures and accounting rules to limit the public liabilities they can create. The report also reviews the relative merits of tolls, availability payments and regulated asset base models for attracting finance for public infrastructure from private investors on a sustainable basis.

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Alternative ways of financing infrastructure investment: potential for ‘novel' financing models

International Transport Forum

This section of the report examines the issue of financing (transportation) infrastructure investment projects. It looks closely at what market failures result in the private sector not being able to cover the investment requirement itself. It then assesses the government failures associated with intervention, and identifies what public–private partnerships (PPPs) offer in overcoming these failures. The limitations of PPPs are then addressed, and the regulated asset base (RAB) model is introduced as a potential alternative, with an assessment of its advantages and disadvantages.

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