1887

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

taxpayer.

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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Executive summary

International Transport Forum

The financial crisis has spurred interest in new sources of private finance for transport infrastructure at the same time as exposing the scale of liabilities that off-balance sheet financing mechanisms can create for taxpayers. Many governments seek to attract private finance from a broader spectrum of investors through new models of partnership in order to maintain investment at the same time as limiting public spending. Others are struggling to make payments due for roads delivered under existing public private partnership (PPP) contracts, agreed when the economy was growing more rapidly.

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