addressing the problem by operating business units involving private sector partnership has to be explored more.
There are a growing number of ‘social PPPs’ which have shifted from initial concessions (“user-pays”) to “government-pays” models, with or without transfer of traffic risk to the private sector. It enables the public sector to better ensure reliability of services as long as availability payments are honoured.
Public and private users are willing to pay for quality of service e.g. road tolling is socially acceptable in most countries, provided there are alternative routes. The Government’s role is to ensure the fairness of the pricing and to promote the right investment conditions.
Termination and Contractor Default Dispute resolution, termination and contractor default are always major negotiation
points. Flexibility is key with appropriate due diligence during the preparatory phase.
Ultimately, the risk is carried by the State. Lenders will not finance where there is no termination payment guarantor beyond the project’s Special Purpose Vehicle (SPV) since the SPV – by definition – has no other assets. Governments need to price this risk whilst ensuring public interests are protected.
Road safety Africa has the world’s most dangerous road network. Economic costs currently amount to US$10 billion – or 2 percent of GNP, with road traffic fatalities forecast to increase by 80% by 2020.
ICA members and representatives from African Governments took note of the recommendation by the Commission for Global Road Safety that a minimum of 10% of all road infrastructure investment should be committed to road safety.
The meeting was successful in promoting dialogue between sponsors of transport projects and the private sector regarding a number of priority projects. An open dialogue on both financial and political commitments needed to take these projects to financial close took place.
The need for PPPs to help fill Africa’s infrastructure gap was promoted. A greater number of PPPs deals will require strong commitment from countries to ensure the appropriate allocation of risk and increased support for this from