Private Finance Initiatives as an Alternative for Procuring Public Road Infrastrucure Projects

Jiří Dobiáš

Recent financial crisis has created incentives for finding alternative methods of public road infrastructure development. This paper is assessing the economical feasibility of using different private initiatives for public infrastructure projects, precisely roads in the Czech republic. The rise of PPP (public private partnership) projects is not a new phenomenon, however the Czech market has not experienced many PPP projects so far, and therefore the basis of this research is created by assessment of four road projects procured and operated by private sector in the United Kingdom and Australia. All projects had been selected according to their functional diversity: highway, trunk road, bridge and a tunnel project. Each project was examined from different points of view. The used research method is based on quantitative data and compares toll prices of each toll project with GDP (gross domestic product) and annual average income in order to compare all data together. Subsequent findings highlight and investigate successful and unsuccessful factors of each scheme. Furthermore, this examination focuses on risk distribution as well. Final findings are used as a basis for designing a specific procurement path, which leads to financing public road infrastructure by toll roads, where private sector finances project design, construction and also maintenance. The end-user payment mechanism is structured to meet the government policy objectives for the trunk road network and PPP requirements, and incorporates payment based on usage/demand availability of service and performance. Finally, proposed key factors of PPP projects implementation can not only help the public sector to find alternative ways of public projects implementation, but can also help to minimise potential risks during setting up the long term public-private relationship.

PPP; private sector; public sector; toll roads