Risk Management in Transport PPP Projects
In the Islamic Countries
113
5.2.6. Operation
Management of risks during the operation phase
Operational risks are typically transferred to the private party. Nevertheless, when signing a
PPP contract, the state bears some risks of regulatory nature linked to its obligation to
guarantee to the private operator a stable tax, customs and financial regime for the duration of
the PPP contract. Also, the state has an obligation to supervise the provision of the services and
ensure service continuity. Finally, in terms of risks, it shall be noted that in many instances, the
state could also be forced to continue the project in the event of a failure of a private operator,
given the economic and social importance of the public service provided.
In addition, during the operational phase, the state has the obligation to ensure the proper
execution of the PPP contract and the implementation of the means necessary to fulfil all its
obligations by the private entity. This monitoring duty is particularly relevant for PPPs, as
remuneration is in many cases linked to performance, and this has to be monitored and
measured by means of appropriate KPIs.
As in the construction phase, in Côte d’Ivoire, a Project Management Unit (or committee) is
generally in charge of managing and monitoring the PPP from the contracting authority’s
perspective. The composition and responsibility of this committee are defined in the contractual
arrangements. Reporting obligations by the private operator also need to be defined in the PPP
agreement including at least an annual reporting duty, which shall cover both the execution of
the PPP contract and the analysis of the quality of the works or services provided. These
minimum reporting obligations are also needed to inform the national monitoring process of
PPP initiatives at the governmental level, which is assigned to the CNP-PPP and the Ministry of
Budget. Audit by external entities can also be requested by the contracting authority if needed.
Management of risks in the operational phase is relevant not only to ensure the proper
management of individual PPP schemes but also to evaluate potential systemic risks at the
sectoral and national level. Until recently this was considered as a weakness in the performance
of the administration of Côte d’Ivoire (République de Côte d’Ivoire, 2019). Recently, as discussed
previously with reference to the project preparation phase, the public authorities have invested
in additional tools and resources to improve the PPP initiatives in the implementation of
monitoring and risk assessment tools that are being gradually applied also to monitor project
performance and manage risks in the operational phase. This is the case for the risk
management toolkit recently adopted by the CNP-PPP and the PFRAM tool for monitoring fiscal
risks adopted by the Ministry of Budget. The establishment in the CNP-PPP since 2012 of a
comprehensive database of PPP initiatives is a pre-requisite of this new planned
improvement, and it is now considered fully achieved in Côte d’Ivoire.