Risk Management in Transport PPP Projects
In the Islamic Countries
189
 Affordability (“is there evidence that the Public Contracting Body’s budget projections
could afford to pay for these PPP services in the future? If end-user fees are required, will
end-users likely be able to afford to pay them?”);
 Risk (“is there potential to achieve a better Value-for-Money (VfM) through the transfer of
certain risks to a private service provider? Consider the VfM benefits of: design and/or
technology risk; construction risk; market/demand risk; operational risk;
availability/performance risk; residual value risk; other risks)”;
 Performance-based contract (“is it likely that the project could be fully described in
terms of output-based Key Performance Indicators?”).
Through the questions on risk, a preliminary risk identification and assessment exercise is thus
performed by the Transport Ministry.
Based upon the responses to this PPP Suitability Checklist, the Public Contracting Body
recommends whether the project should continue to be considered as PPP, or if it should be
considered for implementation through conventional public procurement. In the former case,
the Ministry submits to the PPP unit a PPP Project Proposal Memorandum48, which also
includes a preliminary discussion of the possibility to transfer financial, technical, and operating
risks to the private sector and to mitigate their impact.
The PPP law allows the submission by the private sector of unsolicited proposals under some
conditions. If all conditions are fulfilled, the Ministry of Transport can ask the promoter to
prepare a Project Proposal Memorandum. If both the Memorandum and the full PPP feasibility
study are approved by the PPP Council, the PPP is tendered and the promoter has to compete
with all the other investors. If the promoter is not awarded with the project, he is entitled to
receive compensation for the preparation and submission of the Project Proposal Memorandum
and a full PPP feasibility study. It appears that up to now, most of the unsolicited proposals
received by the Ministry did reach the tendering stage as PPP.
Special arrangements for PPPs
Once the PPP unit has reviewed the Project Proposal Memorandum and it has been approved by
the PPP Council, a PPP feasibility study is carried out by the Ministry through external advisors
and with the supervision of an internal Technical Committee.
As part of the PPP feasibility study, PPP-specific tasks and analyses are performed, among which
the following ones are included:
 Development of PPP Project’s Required Output Levels of Service;
48 A standard template for the PPP Project Proposal Memorandum is provided in the PPP guidelines.