Public-Private Partnerships for Transport

Public-private partnerships (“PPPs”) can be an effective way to build and implement new infrastructure or to renovate, operate, maintain or manage existing transport infrastructure facilities. In both areas PPPs can be a mutually beneficial way to solve critical transportation problems.

Transportation infrastructure (airports, ports, rail, roads, urban transport) is indispensable to sustainable socio-economic development and trade. They link peoples and regions and connect firms to markets. Efficient transportation infrastructure is a major contributor to enhanced productivity.

It is anticipated that very significant investments will need to be made in the transportation sector globally over the next 20 years to meet the increased demand arising from population and economic growth. This will entail both the construction of new infrastructure, as well as the refurbishment and expansion of existing infrastructure, to accommodate both increased traffic flow and the increase in the size of transports (e.g. larger planes and ships). While the greater part of this demand is expected to come from developing economies, the infrastructure that will be required in developed countries is also forecast to be substantial.

At the same time, improved energy efficiency in the transportation sector will also be a key part of mitigating climate change. This will require innovative solutions. (See further on Climate-Smart PPPs)

PPPs provide a useful avenue for governments to access additional capital as well as technical expertise in the private sector to meet the very substantial demand from their populations for new and expanded transportation infrastructure in the coming decades.

As the transportation sector encompasses a number of subsectors, different considerations apply to PPP structures, depending on the subsector. Nonetheless, a number of thematic issues are relevant to all subsectors:

• Transportation infrastructure is by its nature monopolistic assets. Accordingly, the regulation of competition and public access in respect of the infrastructure will have important economic implications.

• The private consortium’s ability to impose tariffs on users of the infrastructure is another important structural consideration, as it directly impacts both public amenity and the private consortium’s ability to recover its investment.

• The allocation of revenue / demand risk for the infrastructure is another core negotiation point between the host government and private consortium in transportation sector PPPs.

Navigate the following subsections for more information and sample laws and agreements.

• Airports

• Ports

• Roads

• Railways

• Urban Passenger Transport

• Transport Toolkits

• Integrating Gender into Transport Projects

• Further Reading and Resources

Further Reading and Resources

• PPP Risk Allocation Tool (2019) – provides a useful reference source which outlines common risks arising in different types of PPPs and different market approaches to the allocation of such risks.

• Sustainable Development of Inland Waterways Transport in Vietnam - prepared by a World Bank team, provides a comprehensive review and assessment of the challenges that the sector faces, along with a reform program recommended to the Government of Vietnam that could help improve the enabling environment for the inland waterways transport industry and further its growth and technical sophistication.

• Common Transport Infrastructure: A Quantitative Model and Estimates from the Belt and Road Initiative by François de Soyres, Alen Mulabdic, Michele Ruta, World Bank, April 1, 2019.

• Incorporating Resilience in Infrastructure Prioritization: Application to Japan’s Road Transport Sector - result of joint work by Kyoto University and the World Bank, May 1, 2018.

• Public Private Partnership Models for Development of Sustainable Urban Transport Systems - The report identifies key barriers to the success of PPP in urban transport infrastructure space particularly in bus terminals development and operation, Public Bicycle Sharing (PBS), city bus private operations, street infrastructure and Intelligent Transport System (ITS) in India.

• Review of Maritime Transport - This document prepared by the UNCTAD aims to foster the transparency of maritime markets and to analyze relevant developments.

• Successful Practices for P3s - The United States Department of Transportation (U.S. DOT) has developed this report to describe how government agencies can best work with the private sector to deliver transportation facilities that protect the public interest.

• Public-Private Partnerships for Transport Infrastructure: Renegotiations, How to Approach them and Economic Outcomes. Roundtable Summary and Conclusions by Dejan Makovsek, Stephen Perkins and Bjorn Hasselgren, International Transport Forum at the Organization for Economic Co-Operation and Development (OECD) Discussion Paper No 2014-25, January 2015.

• Public-Private Partnerships in Transportation - a Toolkit for Legislators developed by the National Conference of State Legislators (2010 with updates from 2014) - includes links to PPP enabling legislation in the transport sector in different states of the United States.

• Better Regulation of Public-Private Partnerships for Transport Infrastructure (Une Meilleure Réglementation des Partenariats Public-Privé d'Infrastructures de Transport), Organisation for Economic Co-operation and Development (OECD) September 2013 (English and French).

• A Study on Standard Financial Model for BTO Projects on Roads, Railways, and Ports by Ko Hyo Suk Ko, Korea Development Institute (KDI), December 2007, (Korean with table of contents in English).

• National PPP Policies and Guidelines (Australia) – best practice guidelines published by the Australian federal government in respect of procuring infrastructure projects under a PPP model. The guidelines cover a range of topics including an analysis of different procurement models and detailed recommendations on the government’s preferred position on material negotiation points in the project agreements with private contractors. Also relevant is a Best Practice Case Study published in 2010, which summaries learnings from 8 infrastructure projects in Australia.