Abstract
Public–private partnership (PPP) has been extensively used in many sectors worldwide to provide alternative funding for public infrastructure. However, limited evidence found that this scheme was successfully adopted in railway transport particularly in the later stage of the project life cycle. Private participation during operation and maintenance stages are worthy of comprehensive research to cope with recovery of public investment and institutionalization problems. This research aims to analyze the potential of unbundling scenarios based on railway components by taking into account the Light Rail Transit (LRT) project in developing countries as the case study. A life cycle cost evaluation and sensitivity analysis were used to formulate a practical and regulatory framework for the macro-level of decision-making modeling. The findings indicate a possible scenario by considering the passenger demand, ticket price, and government support to generate the best option based on net present value (NPV) and internal rate of return (IRR). The proposed alternative recommends an attractive investment return for private interest, encourages lower support for government subsidy, and offers a reasonable tariff for the users. The study also suggests future implications from the adoption of research findings which may affect policy formulation and railway industry as a whole.
Highlights
Public–private partnership (PPP) has been used by various countries worldwide as one of the tools to cope with the lack of funding by the government in providing public infrastructure
In order to gain maximum benefits, PPP has four characteristics that should be taken into account prior to the initial agreement, including long term contracts, project life cycle consideration, private innovation, and acceptable benefits gained by the project for both parties [18,19]
The public–private partnership has been used in many sectors such as construction, roads, energy, and other infrastructure projects to cope with the limited funds of the public sector
Summary
Public–private partnership (PPP) has been used by various countries worldwide as one of the tools to cope with the lack of funding by the government in providing public infrastructure. Southeast Asian countries such as Malaysia, Singapore, Thailand, Vietnam, Philippines, and Indonesia adopt the concept of PPP in the past decade mainly to expand state capability in providing physical assets for the public, and to reduce monopoly in the market. This scheme offers a prospective scenario for the public agency by providing maximum value for money in the project through life cycle cost optimization and market competition.
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