Appropriate risk allocation in public private partnerships (PPPs) and the GI Hub’s PPP Risk Allocation Tool were central themes of the GI Hub’s recent Regional PPP Risk Allocation Workshop in Bangkok, Thailand. Participants comprised public sector representatives from Bangladesh, Cambodia, India, Indonesia, Myanmar, Thailand, The Philippines and Vietnam, as well as multilateral organizations operating in the region including the Asian Infrastructure Investment Bank (AIIB).
The workshop focused specifically on the key challenges identified in the region which included land acquisition and resettlement, government capacity and experience in PPP transactions and attracting foreign investment. The workshop also facilitated the sharing of information between government representatives on how key challenges have been overcome and gave participants a detailed introduction to the GI Hub’s PPP Risk Allocation Tool. This included discussion on some of the key risks associated with specific project types including disruptive technology risk in photovoltaic solar projects and demand risk in light rail projects.
The workshop identified some of the key factors for successfully implementing PPPs as a means of procuring infrastructure including:
- An effective and consistent PPP regulatory framework
- Capacity across all public sector stakeholders to understand all aspects of PPP procurement
- Thorough project preparation and feasibility studies
- Open, transparent, and fair tender processes
- International dispute resolution procedures and an appropriate enforcement regime
- The political will to support long-term investments
Participants noted that various countries had taken significant steps to address some of these challenges, including by establishing centralised PPP units, enacting PPP legislation, publishing pipelines of upcoming projects and introducing increasingly attractive legal, financial, and regulatory reforms.
For a detailed note on the challenges identified and the outcomes reached at the workshop, please see our detailed workshop summary.
The GI Hub’s PPP Risk Allocation Tool is a freely accessible tool available at https://ppp-risk.gihub.org/ and aims to provide additional guidance on risk allocation to countries, including both members and non-members of the G20, that wish to develop a programme of PPP transactions. The PPP Risk Allocation Tool shows the allocation of risks as between the public and private sectors in typical PPP transactions, along with related information on mitigative measures and typical Government support arrangements. Separate matrices have been developed for 12 designated types of projects within the transport, energy and water and sanitation sectors.
The workshop was hosted by the GI Hub in collaboration with global law firm, Norton Rose Fulbright, who were responsible for preparing the PPP Risk Allocation Tool. The lead presenters at the workshop were Norton Rose Fulbright partner Nicky Davies and the GI Hub’s Senior Manager, Morag Baird, and Principal Advisor, Jack Handford.