Risk Management in Transport PPP Projects
In the Islamic Countries
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risks throughout the project life-cycle are not in use in Algeria (WB, 2018). Provided that
institutional PPP may still theoretically reduce the risks related to the operation stage,
particularly in the event the risks are allocated to the private sector at this stage, Public-Private
Partnerships require appropriate supervision during all phases. The fact that under the same
institutional model, the public sector may be responsible of the provision of the basic
infrastructure as in the case of the container terminal of the por of Bejaia, also represents a
possible mitigation risk factor in Algeria due to the experience of the country in the
implementation of infrastructure projects and generally adequate supervisory and control
mechanisms concerning public procurement. This may explain the overall positive experience
of the existing PPP projects in the transport sector. An appropriate management of the risks
related to the implementation, management and operation of PPP initiatives would
however generally require the adoption of measures, competences and staff tailored to
PPP. Additionally, whereas according to the current public procurement system the line
Ministry retains full responsibility on the implementation and operation of the projects, the
other involved public institutions having a primarily consultative role, different levels of
approval procedure by the Ministry of Finance or the government may be adopted in the
event of implementation of a PPP national policy and regulatory framework. These
considerations would be of particular relevance in the event of adoption of project focused PPP
models other than the institutional PPP.
Remuneration
In absence of a dedicated PPP legislation also remuneration of PPPs in not defined by law
and is set on a case by case basis. According to the World Bank’s database on Private
Participation in Infrastructure the PPP projects implemented in Algeria in the transport sector
have been mostly remunerated on the basis of users fees. This is not only the case of the three
container terminal projects involving rehabilitation and development of port structure and
superstructure, but also of the Algiers International airport management PPP initiative. The
Metro of Algiers management PPP project was instead remunerated on the basis of availability
payments (WB, 2019). Also in consideration of the model adopted for the above PPP initiatives
in Algeria, i.e. institutional PPP, risks relating to the demand and revenues are theoretically
shared by the public and private parties, except in the case of the Metro d’Algiers, where demand
risk is borne by the state as the service is subsidized. These solutions are generally in line with
standard practices for these type of projects.
5.4.5. Construction and asset delivery
Management of risks during design and construction
As mentioned above, depending on the type of project, the public and the private parties may be
both involved in the preparation of the project and its implementation. This is for instance the
case of the container terminal at the port of Bejaia, where the public sector developed the basic
port structure and the private operator the superstructure facilities and equipment. When the
private sector is responsible for the development and implementation of both structure and
superstructure, the risks related to these activities are borne by the private party. Technical
design risks are also shared or retained by the private party. Depending on the project