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INFRASTRUCTURE & RESOURCE

c. Transfer the risk of performance of the as- cause unless PPP is seen to offer continuing
set to the private sector. The private sector business opportunities, firms will be reluctant
only realises its investment if the asset per- to develop the necessary resource that is re-
forms according to its contractual obligations. quired to bid for contracts.
As the private sector will not usually receive
any payment until the facility is available for • Enabling legislation PPP projects need to
use, the PPP structure encourages efficient be supported by enabling legislation that is
completion, on budget and without defects firmly embedded in the legal structure of the
d. Buildings and services which would not other- host country. A key aspect of this enabling
wise be affordable – this is a major benefit and legislation is the existence of a concession law
helps public authorities to take a long term that can be readily applied to projects.
strategic view of the services they require over
a long period. • Expertise Both the public and private sectors
e. The concept helps to reduce government debt must have the necessary expertise to deal
and frees up public capital to spend on other with the PPP process.
government services
f. Innovation and best practice. The expertise • Project prioritisation The government
and experience of the private sector encou- needs to identify those sectors and projects
rages innovation, resulting in reduced cost, that should take priority in the PPP process
shorter delivery times and improvements in the and undertake a review of the viability of each
construction and facility management proces- scheme before the project is procured. This
ses. Developing these processes aids best avoids unnecessary failures and high bidding
practice. costs.
g. Repairs and maintenance – assets and ser-
vices will be maintained at a pre-determined • Heavy Deal flow and standardisation. A
standard over the full length of the concession regular and predictable flow of deals based on
h. Enable investment decisions to be based recognised risk allocation templates, assists
on fuller information as it requires a defi- the development of a successful PPP pro-
ned analysis of project risks by both the go- gramme. Guidance on contract structure also
vernment and lenders at the outset. helps to keep costs down.
i. The tax payer benefits by avoiding paying
higher taxes to finance infrastructure deve-
lopment
j. The government or public authority still retains The BOOT / PPP structure
strategic control of the overall project and ser- In view of the flexibility of the BOOT/PPP structure
vice and its variants, the legal and company structure
k. The process can assist in the reform of the pu- differ from project to project, dependant on sector
blic sector and country of origin. However, the normal struc-
ture would involve the creation by the promoters of
a special-purpose, joint-venture company in which
Requirements the contractor, operator and banks may have a
share. This concession company borrows in or-
for successful PPPs der to fund the construction on the security of the
revenue that lending banks believe will be genera-
• Political support political support at the po- ted by the facility. All financial obligations must be
licy level is important for the private sector, be- serviced within the life of the concession. Conces-

80 80 Impiantistica Italiana - Marzo-Aprile 2022