Public Private Partnerships for Transport Infrastructure: Renegotiations, How to Approach Them and Economic Outcomes

The core principle behind the PPP is the creation of a contractual bubble – a framework of contracts that is supposed to shield the private investor from opportunistic behaviour and from inconsistency when governments change (of course it should also shield the public sector from opportunism by the private party). However, Given the imperative of upholding contracts for efficiency and the daily reality of frequent renegotiation, the two main questions for this paper are: What are the primary reasons for renegotiations? And more importantly, do they generally uphold the spirit of the contract when they happen or are they more often motivated by interests, other than efficiency?

Publication Date: 02.2015