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Reducing State Risks in PPP Deals: Addressing Practical Issues

This article discusses the concerns of public authorities regarding PPP deals and proposes effective strategies to reduce state risks. Topics covered include traffic risk, macro-economic risk, toll structure, and additional measures on noise protection and traffic safety. Lessons learned from tolling existing motorway sections and the importance of careful calculation on the project's benefit and risk are also highlighted.

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Reducing State Risks in PPP Deals: Addressing Practical Issues

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  1. A PUBLIC AUTHORITY INTO THE PRACTICAL ISSUES OF PPP DEALS Zoltán KAZATSAY 5th July, 2004

  2. GOVERNMENT’S CONCERNS • fear of loosing administrative power • new charge/toll against traditionally free or low-price utility service • risk due unforeseeable long-run projects

  3. HOWCANSTATE RISKS BE REDUCED ? THE MOST EFFECITVE REDUCTION IN THE „0” STEP!

  4. M1-M15 • Traffic risk (lower traffic) • Macro-economic risk: inflation rates and significant drop of real incomes in ‘94 -’96 • Short toll section (45 km), easy to divert • Inappropriate structure of the tolls

  5. M5 motorway • The actual annual traffic is the 52% of the planned • High toll • Additional measures on noise protection and traffic safety „on the non-motorway” roads • Inappropriate structure of the tolls

  6. „Lessons learned” • Tolling existing motorway sections is a very sensitive issue • Level of toll should reflect the socially acceptable magnitude • Upgrading parallel roads, by-pass constructions have to be added to the project cost

  7. The way out • PPP project’s preparation is time- and „expert-consuming” process • Benefit and risk to be calculated carefully and exactly • Calculation on whole life-time cycle

  8. THANK YOU VERY MUCH FOR YOUR KIND ATTENTION kazatsay@gkm.hu www.gkm.hu

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