Public-Private Partnership and Financing the Development of National Infrastructure

Abstract

The chapter contains a methodology for formalized evaluation of the model of replacement of budget funds by private investment in the public infrastructure PPP projects for the purpose to ensure public finance sustainability. It can manifest itself only if the state could create appropriate conditions for private investors, including institutional players as its partners. The latter means primarily the stable formal institutional conditions for private investors, low transactional costs, attractive financial parameters, that could bring the ratio of budget and private financing of public infrastructure PPP projects to more than 1 to 1. It has become evident that accelerated development of many public infrastructure PPP projects is hampered by two factors: (1) inadequate institutional support for the design process itself and (2) absence of state-prepared acceptable financial models of public infrastructure PPP projects regarding the division of risks of infrastructure projects and delegating the proprietary rights of the state to private investors.