Public Private Partnerships for Transport Infrastructure: Renegotiation and Economic Outcomes
Public-private partnerships (PPPs) are an important vehicle for private participation in infrastructure investment, delivery and management. Renegotiations are an integral part of the PPP process but their prevalence varies markedly in different parts of the world. Renegotiations can be usefully employed to adjust the PPP contract to unforeseeable events, beyond the control of contractual parties. There is also a danger, however, that they will be used to change the initial balance of costs and benefits in the contract.
This report provides an overview of the nature of PPP renegotiations in different regions of the world and at different times to help understand when PPP contract renegotiations are desirable and when they are not. In general it is concluded that when contracts are set up well, renegotiations should be few and far between.
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- Use renegotiation of PPPs only in exceptional cases.
- Use an independent jury to assess whether the outcome of a PPP is what parties might have been expected to negotiate had they foreseen a change that has occurred.
- Consider to task an independent body with determining when renegotiation of a PPP is legitimate.
- Include reputation and demonstrated competence in selection criteria for a PPP.
- Compare advantages and weaknesses of PPPs versus other forms of private capital.