This paper studies the proliferation of toll roads delivered under the Public Private Partnerships (PPPs) structure. It proposes to disentangle theintricate web of contractual relationships to examine the underlying objectives of certain PPP toll roads in the Australian state of New South Wales, and the effectiveness of their contractual and financial mechanisms in incentivising risk undertaking. At the aggregate level, PPP toll roads were implemented to induce the private participation in road operations with the view of gradually fulfilling the objective of cost savings to governments. This effort to entice the private sector has led to consistent erroneous traffic forecasts across projects. Although there have been noticeableadvancements in contract design and incentive mechanisms to optimise the allocation of risks to the public and private sectors, PPP toll roads haveyet to deliver optimal results. PPPs present a unique compounded agency problem. They have enabled governments to escape from public accountabilityand diluted the imperative of public interest consideration. The under-investigated public perception of PPP toll roads offers a scope for future research. (a).
Abstract