Risk Management in Transport PPP Projects
In the Islamic Countries
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 Rehabilitate, Operate and Transfer (ROT);
 Rehabilitate, Operate, Own and Transfer (ROOT).
Most of the PPP initiatives in Mozambique in the transport sector correspond to the Build
and/or Rehabilitate, Operate and Transfer model. As mentioned above a PPP contract standard
model is not in use in Mozambique; nonetheless the PPP law implementing regulation is very
detailed in terms of the expected content and elements to be included in PPP contracts.
Furthermore, the legislation foresees that all elements, including the ones ruled in the PPP law
and implementing regulation shall in any case be also included and further detailed and
specified in the contract. These also applies to the risks potentially concerning PPP initiatives
over all phases of delivery of a PPP contract, including project development, implementation,
operation and closure.
The set of risks explicitly mentioned in the PPP law implementing regulation are: political
and legal risks, conflict of interest of institutional and business as well as political nature,
economic and financial risks, project development and design risks, commercial, management
and operation risks, traffic and revenue related risks, preservation and maintenance of the
project assets, environmental impact risks and other risks not explicitly defined in the regulation
such as the effects and impacts arising from force majeure events; undue assumption by the
public party of economic and/or financial burdens of the contractor; other unforeseen events
with adverse impact on the economic and financial sustainability of the PPP contract. Further to
their identification, the PPP law also allocates these risks to the private or public party. The
treatment of the risks shall be detailed in the individual contracts. The Table below provides a
summary of the allocation by law of the risks between the public and the private sector outlining
the underlying rationale.
Table 30: Indicative risk matrix in transport PPPs in Mozambique (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 is responsible for political and
legislative risks arising fromunilateral measures taken by the government
or public institutions resulting in negative or adverse effects on the
normal implementation and management of the PPP contract and/or the
competitiveness of the project. The public party is also responsible for
risks of conflicts of interest of institutional nature, generated by the
concentration or accumulation of regulatory, procuring authority and/or
equity investor by a public authority. Risks of economic and political
conflict of interest are however also borne by the private party which may
arise for instance, in the event the management of the private party may
be holding a public office or have interests in business competitive to the
PPP project; or in the event public officials have an interest in the PPP
project or private entity involved in the PPP project.