Transport Reviews

ISSN: 0144-1647 (Print) 1464-5327 (Online) Journal homepage: http://www.tandfonline.com/loi/ttrv20

Public Private Partnerships in Transport

Infrastructure

Athena Roumboutsos

To cite this article: Athena Roumboutsos (2016) Public Private Partnerships in Transport
Infrastructure, Transport Reviews, 36:2, 167-169, DOI: 10.1080/01441647.2016.1134044

To link to this article: http://dx.doi.org/10.1080/01441647.2016.1134044

Published online: 26 Jan 2016.

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 TRANSPORT REVIEWS, 2016
VOL. 36, NO. 2, 167–169
http://dx.doi.org/10.1080/01441647.2016.1134044

EDITORIAL

Public Private Partnerships in Transport Infrastructure

Exactly a year ago, Transport Reviews devoted a special issue to this theme. Boosting
private investment in the provision, operation and maintenance of infrastructure has
been a key objective for many governments. The transport infrastructure sector has
been one of the primary sectors of interest given the well-acknowledged infrastructure
gap (cf. European Commission, 2011) combined with constrained public budgets and pol-
icies to reduce and contain the public debt (cf. European Commission, 2009). Therefore,
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the continuing interest of transport infrastructure policy and decision-makers, prac-

titioners and academia alike in Public Private Partnerships (PPPs) is of no surprise. Here
we present four additional papers that are directed at issues related to implementation
and the means by which successful performance can be achieved.
The first paper focuses on Sub-Saharan Africa, where there is less experience in the adop-
tion of infrastructure delivery schemes involving the private sector. Osei-Kyei and Chan
present us with three examples: the Lekki toll road in Nigeria; the N4 toll road, a cross-
border road connecting South Africa to the Port of Maputo in Mozambique, which is
itself the third case discussed. Notably, examples like the N4 toll road are limited in
regions with a longer experience of PPPs (EU Reg. 1316/2013). Their analysis concludes
with a number of overarching lessons learned, including the need for effective and efficient
stakeholder management; a transparent and competitive tendering process; and strong
government commitment and regulatory framework (see also Verhoest, Petersen, Scherrer,
& Soecipto, 2015). Other important conditions identified included reasonable user charges,
the participation of local investors and a stable macro-economic environment.
Unstable macro-economic conditions formed the focus of the second paper from Ortega,
Baeza and Vassallo. Spain has over 50 years’ experience in the delivery of transport infra-
structure through PPP-type approaches, with local investors and contractors being involved.
Today, leading the international PPP development market are firms of Spanish origin
(Suarez-Aleman, Roumboutsos, & Carbonara, 2015). PPPs are awarded through an ‘open pro-
cedure’ and use standard contracts. This is evidence of a transparent and competitive
process, with reduced procurement transaction costs, which, however, leads to incomplete
contracts. The preferred remuneration scheme has been user toll charges. Hence, demand/
revenue risk has mostly been allocated to the private partner. This paper recognises the
deficiency of transferring more risk than is manageable to the concessionaire, as Roumbout-
sos and Pantelias (2015) also concluded. It also highlights the negative impact on society
(public sector) of mitigation measures (see also Carbonara, Costantino, Gunnigan, & Pelle-
grino, 2015). These shortcomings are more apparent during periods of recession, as more
pressure is placed on constrained public budgets when addressing concessioner compen-
sation claims, high transaction costs and the need to continue without disruption transpor-
tation services. Monitoring mechanisms are important in the re-negotiation process, and the
© 2016 Taylor & Francis
 168 EDITORIAL

paper ends by proposing monitoring mechanisms during re-negotiations to safeguard the

public interest (see also Domingues & Zlatkovic 2015; Macário, Costa, & Ribeiro, 2015) and
also placing a ceiling to public budgetary commitments associated with PPPs. This suggests
that PPPs cannot be used to cover the entire infrastructure gap (see also Meaney & Hope,
2012; Roumboutsos & Saussier, 2014).
Portugal is also a country with rich PPP experience. Shadow tolls for road concessions
were the prominent model of remuneration allowing the government to implement its
development policy. The Portuguese Court of Auditors plays a significant role in monitor-
ing PPP contracts and safeguarding public interest. Through the PPP model, Portugal has
managed to address its historical deficit in infrastructure. In the third paper, Fernandes,
Ferreira and Moura show that this has been at a cost. They study seven shadow toll
PPPs and compare their financing costs with those that could have been incurred
should the projects had been delivered through the public sector by issuing bonds.
They identify far higher financing costs than could be justified, recognising that the selec-
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tion of the PPP model had been on the basis of restricted alternatives. However, one
should not disregard the fact that through the PPP model, Portugal grew from 24% to
52% of the per capita average value of the ‘Government Net Capital Stock Index’
among OECD countries (Kamps, 2006, p. 133 as cited by the Fernades, Ferreira and
Moura). This suggests that an overall assessment should include other factors (Liyanage
& Villalba-Romero, 2015), which may out-weight these less favourable outcomes. It is con-
cluded that ‘investments made by concessionaires should be accounted for in the same
way as other public investments implemented through traditional procurement’. This
implies the disclosure of project data that is often considered to be confidential.
The need of project-level data to further the research and understanding of the PPP
transport infrastructure delivery model is the key conclusion of the final paper from
Chen, Daito and Gifford. Their meta-analysis of research reports was triggered by the
need to demonstrate that the limited understanding of PPP performance can be attributed
to the limited availability of project data. Their analysis found statistical associations
between research themes and data types. This is restrictive for both research and its
potential exploitation. The recommendation made stresses the need for balanced infor-
mation, especially with respect to PPP performance. Benchmarking performance and iden-
tifying the most suitable structure will remain a formidable challenge, as long as
performance data with respect to PPPs and traditional delivery are not made publically
available. However, this has always been the challenge in the study of PPPs (cf. Hodge,
2010; Shaoul, Stafford, & Stapleton, 2006).
The key question linking all four contributions in Transport Review 36 (2) is performance.
Researchers have tried to identify what can be learned from the different case studies, and
how past experience can be best used in the future. However, what is interesting especially
when comparing these experiences is the different needs and how they are changing over
time. In the first paper, a set of conditions were set based on the Sub-Saharan experience. All
of these were present in the case of Spain, where it was concluded that the applied insti-
tutional and legal framework was a limiting factor when addressing the impact of the econ-
omic crisis. This second paper proposes a monitoring mechanism. In Portugal, the use of
shadow tolls allowed the government to pursue its development policy by subsidising
PPPs, while the Court of Auditors monitored projects. However, renegotiations were not
avoided (Macário et al., 2015) nor were excessive financing costs as shown by the third
 TRANSPORT REVIEWS 169

paper. These contradictions are related to the contextual nature of PPPs. PPPs will perform
(or not) in different settings and will be considered successful (or not) by different stake-
holders. In summary, this suggests that PPPs might be described as ecosystems requiring
a study that cuts across the thematic aspects of the PPP model. This leads to two unresolved
issues, one relates to the type and minimum amount of data that would be needed to
monitor and assess the performance of PPPs in an independent way, and the other
builds on the ecosystem concept to suggest that a systems approach could be an alternative
way to progress the analysis of PPPs in transport infrastructure.

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Domingues, S., & Zlatkovic, D. (2015). Renegotiating PPP contracts: Reinforcing the ‘P’ in partnership.
Transport Reviews, 35(2), 204–225.
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Athena Roumboutsos
Department of Shipping, Trade and Transport, University of the Aegean, Chios, Greece
athena@aegean.gr