Transport and Covid-19: responses and resources

Better Regulation of Public-Private Partnerships for Transport Infrastructure

Roundtable Report 151

Policy Insights

  • A mix of financing models spreads risks.
  • A dedicated budget for PPPs, set in relation to the rate at which future liabilities will be accumulated, can provide such a limit.
  • Explicit consideration of alternative financing arrangements should be employed in determining whether to proceed with PPP projects.
  • It is recommended that governments require PPP projects to pass tests of affordability and to clear the hurdle rates of return generally applied to publicly financed transport projects.
  • The expected cost of PPP projects should take account of cost inflation resulting from the propensity for projects to be renegotiated.
  • At the individual project level, risks should be assigned to the party best able to manage them, along with rights to make related decisions.
  • Assigning demand risk is not straightforward and risk sharing arrangements are therefore common.
  • Continuity of resources and expertise is essential for addressing strategic behaviour and optimism bias more generally.
  • Regulatory agencies are well placed to ensure transparency and accountability by publishing reports on the criteria employed to make decisions and publishing contracts.

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