Ex post evaluation of PPP government-led renegotiations: Impacts on the financing of road infrastructure

Carlos Fernandes, Carlos Oliveira Cruz and Filipe Moura

The Engineering Economist, 2019, vol. 64, issue 2, 116-141

Abstract: Renegotiations are often claimed to be the major pitfall in public–private partnership projects. In fact, the literature and empirical evidence suggest a bias toward favoring concessionaires, although there are well-known examples of harmful unilateral decisions by governments. This article establishes a distinction between structural renegotiations (with changes in the risk-sharing agreement) and nonstructural renegotiations (without shifting risk) and analyzes the implications of structural renegotiations in a road concession by comparing the ex ante and ex post financial implications for government, concessionaire, and users. The selected project is one that started as a shadow toll and was later changed to real toll. The analysis shows that the renegotiation essentially transferred costs to the users. The financial burden for the government decreased and the internal rate of return (IRR) of the concessionaire increased slightly although the overall risk profile of the concession decreased. The users supported a 40% higher cost, and the system gained an additional cost component (the electronic tolling system). Overall the global financial costs increased 40% when compared with the initial regime. The article also sets out some discussions and implications for policymakers.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/0013791X.2018.1559384 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:uteexx:v:64:y:2019:i:2:p:116-141

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/UTEE20

DOI: 10.1080/0013791X.2018.1559384

Access Statistics for this article

The Engineering Economist is currently edited by Sarah Ryan

More articles in The Engineering Economist from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().