Introduction of public private partnerships in the highway sector.

The aim of this paper is to highlight the key issues surrounding the introduction of Public Private Partnerships (PPP) in the highway sector. These issues can apply equally whether the highway improvement is complete new construction, rehabilitation and on going maintenance or any combination of investment processes and levels. Before discussing the merits of a PPP approach it is worth reflecting on the other forms of procurement available to governments for the provision of major highway infrastructure. The first, and most traditional, form is Public Procurement. In its simplest form this would involve all funding being provided by the state, either through allocation within the national budget, or through more direct allocation by means of some form of road fund. The road would then be designed, built and maintained by the state and provided to the end user as a free service. A second form of Public Procurement requires all funding being provided by the same means as above however the road would then be designed, built, operated and maintained by a government agency, possibly set up as a wholly state owned private company. With this type of system it would be assumed that revenue would be collected through tolls, either direct or through a vignette system, on the motorway and would then be fed directly back into the motorway agency who could use this to both design and build new motorways and to maintain the ones already constructed. An alternative way to construct and maintain a motorway is for the finances to be provided via Sovereign Loans from one of the major International Financing Institutions (IFIs). In this situation the design, construction and operation would be undertaken by a government agency as outlined above. Other methods that can be used are based around the development of concession programmes for the design, construction, operation and maintenance of the motorways that are funded through various levels of private and public monies. The process that has been tried and tested mostly in Central Europe is the Build Operate Transfer (BOT) process leaving all aspects of finance development and revenue income to the private sector. For the covering abstract see ITRD E124693.