Risk Management in Transport PPP Projects
In the Islamic Countries
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3. RISK MANAGEMENT IN TRANSPORT PPPS: CONCEPTS AND FRAMEWORK
3.1. Introduction
The term Public-Private Partnership (PPP) does not have a single universally accepted
definition. Internationally, PPPs cover a variety of long-term contractual arrangements
involving the private sector in the construction and management of public sector assets and in
the delivery of related services. International organizations have proposed different definitions
of PPP. The Table below provides some examples.
Table 4: Examples of PPP definitions
Organization Definition
Asian Development
Bank (ADB)
A contractual arrangement between public (national, state, provincial, or local)
and private entities through which the skills, assets, and/or financial resources of
each of the public and private sectors are allocated in a complementary manner,
thereby sharing the risks and rewards, to seek to provide optimal service
delivery and good value to citizens.
European PPP
Centre of Expertise
(EPEC)
A PPP arrangement is characterized by:
 a long-term contract between a public contracting authority and a
private sector company based on the procurement of services, not assets;
 the transfer of certain project risks to the private sector, notably with
regard to designing, building, operating and financing;
 a focus on the specification of project outputs rather than inputs, taking
account of the whole life-cycle implications for the project;
 the application of private financing (often “project finance”) to underpin
the risks transferred to the private sector;
 payments to the private sector which reflect the services delivered. The
private sector may be paid either by users through user charges, by the public
authority or by a combination of both.
Global
Infrastructure Hub
A long-term contract between a Procuring Authority (government or other public
agency) and a Project Company (private partner or commercial partner) for the
development and/or management of a public asset or service, where the
Project Company bears significant risk and management responsibility
throughout the life of the contract, and where remuneration is significantly
linked to performance and/or the demand or use of the asset or service.
OECD An agreement between the government and one or more private partners
(which may include the operators and the financers) according to which the
private partners deliver the service in such a manner that the service delivery
objectives of the government align with the profit objectives of the private
partners and where the effectiveness of the alignment depends on a sufficient
risk transfer to the private partner.