Risk Management in Transport PPP Projects
In the Islamic Countries
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5.3.8. Conclusions and recommendations
Conclusions
The case study on risk management practices currently applied to PPP projects in the transport
sector in the Republic of Mozambique reports on the main findings of the review of existing
relevant literature and documents.
The following issues have been identified in the study affecting the different stages of project
life-cycle:
 Unclear process of identification and selection of the projects to be developed under
the PPP model and excessive use of the unsolicited proposal PPP development practice;
 Lack of a PPP centralized dedicated unit and lack of units/departments within the main
involved ministries;
 Difficulties of the institutional setting to appropriately and effectively develop and
monitor the implementation and delivery of the PPPs;
 Lack of human resource capacity in the appropriate monitoring and management of the
risks associated with PPP projects.
All the PPPs implemented in the transport sector except the National Road N. 4 and Zambesi
Highways toll roads42, see the direct involvement of the national railway and port infrastructure
manager and operator as a shareholder in the equity of the PPPs. This solution was identified
aiming at improving the performance of the public sector in developing and managing the
railway and port infrastructure, benefitting from the know-how of private contractors and
operators and sharing the benefits from the joint venture.
Albeit sensible in principle, this solution presents the risk of possible conflicts within the SPV
due to potential underperformance of any of both parties, which would inevitably result in a
conflict also between the government and the SPV. Another risk associated with the above
scheme is that of identifying projects on the basis of the technical conditions of the
infrastructure, neglecting that PPPs should be sound initiatives primarily under the technical
and functional stand point. Public-Private Partnerships should indeed be Value-for-Money
projects to mitigate demand and traffic risks as well as liability risks. Accordingly, in the
development of rail-port projects attention should be given to the involvement of partners in
the SPV that can mitigate and manage the risks attributed to the private party and maximize the
effectiveness of the project in reaching its technical and functional targets. In the context of
Mozambique mine industry partners could represent an example in this respect as also
demonstrated by the involvement of the Vale company in the equity of the Nacala corridor
(Fischer & Nhabinde, 2012). An alternative option could be the involvement in the SPV of a
logistics operator that has of course strong interest in using the line to operate their services
42 For more details on the Zambesi Highways toll road, see Valério J. (2015), Concessão Nova Ponte de Tete e
Estradas. Available at