Risk Management in Transport PPP Projects
In the Islamic Countries
106
PPP contractual arrangements
Ivorian law recognizes two broad categories of contracts for the financing, construction,
operation, servicing and maintenance of infrastructure and public assets39. Both these
contractual forms allow a contracting authority to assign to the private entity the responsibility
to operate an asset for the specific purpose of providing a public service. The main difference of
the two categories relate to the type of remuneration: in the first category (partnership
agreements), a private sector entity is paid a fee by the public part for building/renovating and
operating an infrastructure; in the second category (concession agreements), the contract
holder generates revenue through the commercial operation of a project (in particular the fees
paid by users). In the case of public funding partnership agreement, the remuneration of the
contractor needs to be linked to performance objectives assigned to it.
As such, the public authority has to determine the exact nature of the contract that is agreed,
taking into account the services to be performed and the payment conditions of the private
entity. In both concession and partnership agreements, the public authority can assign the
design, build and operation of a project to a private entity (i.e. Build-Operate-Transfer or Build-
Operate-Own-Transfer agreements, which are by far the most common type of partnership in
use in Côte d’Ivoire). However, the public authority may also decide to assign only the rights to
the management of a public project that has already been built (i.e. Transfer of Operation Rights
contracts).
The responsibilities and obligations of each party of a PPP are precisely defined in each specific
contractual agreement. However, a typical allocation of risks in BOT transport infrastructure
projects in Côte d’Ivoire is summarized in the Table below.
Table 28: Indicative risk matrix in transport PPPs in Côte d’Ivoire (by risk category)
Risk type Risk category Usual allocation of risks (public/private/shared)
Context-
related
risks
Political and
legal risks
In general terms, the public party in Côte d'Ivoire bears responsibility
for political events outside the control of the private partner, for changes
in the regulatory and legislative system and guarantees the grantor
exclusivity to operate the infrastructure and/or services scope of the PPP
contract.
Macroeconomic
risks
Macroeconomic risks are shared. Inflation risks during construction are
typically borne by the private partner, while inflation risks during the
concession term are typically primarily borne by the public authority.
Currency risks are allocated based on the currency used in the contract
but are also partially mitigated by the inclusion in the larger UEMOA
monetary area, which is linked with a fixed exchange rate to the EURO.
39 A third catefory of contracts exists for the delgation of public services, therore not relevant for the transpor
infastructure sector.