Risk Management in Transport PPP Projects
In the Islamic Countries
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outperformance (for instance, the government gets 25% of the dividends if the internal rate of
return (IRR) is between 15 and 25%, and 50% if the IRR exceeds 25%).
Financing was provided by a mix of commercial and institutional banks, such as the Africa Finance
Corporation and the African Development Bank. The World Bank’s Multilateral Investment
Guarantee Agency (MIGA) provided insurance coverage for equity investments and loans for a
period of 15 years against the risks of transfer restriction, expropriation, war and civil
disturbance, and breach of contract.
Community engagement followed the World Bank guidelines, with a special emphasis on the
management of the expropriations. The government was responsible for compensating and
resettling nearly 2,500 people displaced by the bridge’s construction. To ensure public
acceptance, resources were spent in communication to promote the project and the rationale
underpinning the application of tolls, which were the first introduced in the country.
Operational phase. Notwithstanding the communication efforts, tolling resulted an issue in
terms of public acceptance. When the bridge opened, the government requested a toll-free period,
raising the possibility of public acceptance issues at its conclusion, as happened in the Lekki
project in Lagos, Nigeria (See Box 9 in Chapter 4). Due to public opposition, tolls were not
published until tenmonths after the opening, and, in the end, the government unilaterally decided
to apply prices significantly lower than those set in the contract arrangements.
Under the operational standpoint, traffic volumes in 2016 reached around 76% of the target of
around 100 thousand vehicles per day in both directions. Since then, traffic volumes have grown
substantially and are now reported to have reached the ex-ante forecasted levels, although no
official reports are available. In terms of socio-economic benefits to users, travel times have
improved significantly between Riviera and Marcory (from more than one hour to 15 minutes
during peak period), and traffic congestion has also been reduced on the alternative routes via
the pre-existing bridges. Environmental benefits stemming from reduced emission due to higher
traffic speed and reduced travel distances are also considered substantial.
The ex-post socioeconomic assessment conducted by the University of Chicago (NORC, 2018),
based on comparison of data collected for this purpose ex-ante (2014) and ex-post (2018),
confirm that the opening of the HKB Bridge led to additional trips (around 80%), significant time
savings (63,380 hours of driving time daily), and reductions in fuel consumption (-10% on the
core network, corresponding to 5.5 million liters of fuel daily) and emissions (also by -10%).
Also, no management, operational or maintenance issues have emerged, and the quality and
performance of the infrastructure are considered fully in line with the expectations. In this sense,
the private party is proving to be able to manage the technical risks that were transferred by the
state.
On the other hand, the financial performance of the project is not satisfactory, and it is the main
critical issue from the perspective of the public party. In fact, despite traffic levels having reached
the expected levels, the decision to apply lower than agreed toll rates legitimate the private party