Abstract
We analyze the main factors influencing the attractiveness of public-private partnerships (PPP) applied to Brazil. Considering the Brazilian regulatory framework, the risks involved in a railroad PPP in Brazil are quantified and the attractiveness of this investment is evaluated through Monte Carlo simulations. Results suggest that Capex and regulatory risks are the main obstacles to PPP projects in Brazil. In addition, measures have been proposed to be implemented by the government to improve the return of these enterprises. New attractiveness analyses confirm a reduction in venture risk with the proposed measures.
Highlights
A public-private partnership (PPP) is a contractual arrangement established between governments and private companies with the objective of leveraging investments in infrastructure to provide services to society (Osei-Kyei & Chan, 2015)
The variable regulatory risk, which is not considered in the ANTT model, is contemplated in this model and its expected value is 2 percentage points above the defined discount rate
The analyses carried out presented and quantified the main risks to an investor in a railway infrastructure project in Brazil, especially in a publicprivate partnership arrangement, and how these risks impact the economics of a project
Summary
A public-private partnership (PPP) is a contractual arrangement established between governments and private companies with the objective of leveraging investments in infrastructure to provide services to society (Osei-Kyei & Chan, 2015). Despite the “appetite” of governments to implement these partnerships, a number of difficulties for the stakeholders involved include high transaction costs, inability to properly measure risks (Mladenovic et al, 2013), difficulty in accessing capital markets, and others. It is not even feasible to conclude the partnership without government contributions in the form of guarantees and public financing (Osei-Kyei & Chan, 2015). A strong and wellestablished capital market in a mature financial system, coupled with regulatory and institutional stability, and several alternatives available for access
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