Risk Management in Transport PPP Projects

In the Islamic Countries

Box 13 Joint Venture approach: Venizelos Airport

The objective of the Eleftherios Venizelos Athens International Airport (AIA) project was to

address the modernization needs of the Greek economy in the early 90’s by providing additional

airport capacity and better airport-related services in the Greek capital. After a period of

uncertainty linked to the opportunity of using a PPP (BOT) approach to deliver the new airport

an international tendering procedure was launched and a 30-year concession contract awarded

in 1993 to a consortium led by the company Hochtief, a well-known specialist in airport

construction and management. The EUR 2.2 billion project was delivered according to schedule

and the airport opened in March 2001. It appears that the use of a PPP approach, although

controversial at the time, facilitated the implementation of the project, enabling its completion

on time and substantially in line with budgeted costs. Compared to other PPP arrangements,

the

project is an example where the public sector as an AIA SA shareholder has enjoyed

substantial revenue streams from dividends, taxes and airport fees in the post-

construction phase

, which were estimated in excess of EUR 870 million for the period 2002-

2011. Thus, AIA can be considered a good practice example in the involvement of private finance

in the airport sector and has demonstrated considerable resilience in the very challenging

circumstances following the 2009 Greek debt crisis and recession.

In sum, takeaways, barriers and parallel strategy options related to the operation phase can be

summarized as presented in the following Table.

Table 21: Takeaways, barriers and options related to the operation phase

Key Takeaways



Key concerns for the public sector depend on the specific form of contract, and how the private

party net cash-flow vulnerability is affected by traffic/demand trends and/or on the state of the

asset (“availability”)

Barriers/trade-offs



Barriers on skills and organizational resources may be highly specific, beware of asymmetry in

public sector vs private sector skills (legal, technical)



Trade-off between close monitoring and leaving concessionaire free to find best way to deliver

stipulated post-construction services under the PPP contract

Scope for parallel strategies



As in other cases, scope for parallel strategies combining learning by doing (including) and

implementation of priority projects



Potential to capitalize on lessons learned to apply them to other projects in earlier implementation

stages

Source: Authors.

This box draws on Carbonaro et Al (2017).