A well-constructed and maintained road system is important to both developed and emerging economies but they are expensive to build and properly maintain. In most countries, the majority of the road systems are designed, built, maintained and financed by government. Private sector contractors have been used by governments to carry out construction work but problems of bad design and construction, together with the tendency by governments to neglect maintenance, have led governments to look at alternative solutions and longer term contracts with the private sector.
Private sector initiatives for road development are not a new phenomenon: they have existed for centuries in parts of Europe, such as the United Kingdom and France, particularly in developing bridges over waterways. From the 1970s onwards, governments have increasingly contracted out some of the functions of construction, operation, financing and maintenance of the road networks to the private sector. Whilst toll concessions are one form of PPP, tolls should not be considered synonymous with PPP, as there are many instances of publicly financed roads carrying tolls.
This PPP Insight looks at the different ways that the private sector has been engaged in the road sector around the world and the extensive variety of payment mechanims that have been developed for remunerating the private sector for participation in roads, in response to local and project specific challenges.
Publication Date: 12.2013