Net present value-time curve behaviour of public private partnership projects

Abstract

The development wheel in Egypt, and many other countries of the same profile, is hampered by insufficient governmental funds. Successive governments have not succeeded in providing large and immediate investments to cover such needs. Public Private Partnership (PPP) is a project delivery method that can be used to overcome this dilemma. In this financing system, the public sector partners with the private sector providing projects/services; the private sector affords the financial burden and shares the risks with the public sector. As the most commonly used PPP scheme in Egypt, B.O.T has no objective negotiating criteria to determine the concession period in such projects. This article proposes a framework to determine the concession period boundaries of BOT projects. The B.O.T Net Present Value (NPV)/Time Curve behaviour has been noticed previously for roads projects. The methodology depends on reviewing different types of PPP (B.O.T) projects in Egypt; a resort, a garage, and an airport. The NPV/Time curve behaviour in all of those projects was the same as the road one. Such observation institutes a foundation that facilitates the decision-making of determining the PPP (B.O.T) concession period. Consequently, it enables awarding more PPP projects to accelerate the development wheel.