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Why does a project with an attractive return stall?
A port project may be justified in the financial model but still fail to reach financing because of conflicting powers, unclear land ownership, a lack of tariff transparency or unforeseen changes to permits. Bankability is not just about financial ratios; part of it depends on institutional and contractual predictability.
An initial assessment before the tender
First establish which body has the right to grant the concession, which authority holds the land and infrastructure, how permits are issued and whether the proposed guarantees are consistent with the country’s financial and budget laws. Then share demand, construction, operation, change-in-law, currency and force majeure risks between the parties. The design principle is that each risk goes to the party with the best ability to manage or control it, not simply the party with less negotiating power.
How a PPP differs from a service contract and privatisation
The PPP label does not fit every model of transfer. A short-term service contract, a long-term operating concession and a partnership to develop infrastructure differ in investment, ownership and the State’s responsibility. The choice of model should follow an analysis of demand, competition, the public interest and capacity for oversight.
An investment decision note
Prepare a two-page note showing the legal structure, a map of permits, the list of risks that cannot be transferred, the preconditions for the investor’s entry and a failure scenario. The note complements the financial model and specialist legal review; it does not replace them.
Practical checklist
- Confirm the granting authority's powers and the status of the assets
- Allocate demand risk and change-in-law risk explicitly
- Record the preconditions for financing and permits
- Assess the employer's capacity for long-term oversight
Frequently asked questions
Does a PPP mean transferring every risk to the private sector?
No. Risk should be shared according to each party's ability to control it and its capacity to bear it.
Editorial note: this article is written for awareness and management decision-making. Applying any rule depends on the authentic current text, the legal position of the State concerned and the facts of the case. The content is independent and implies no endorsement by, or affiliation with, IMO.