Public Private Partnership Financing Research Articles

Mediating Effect of Delivery Capability on Public-Private Partnership Financing Structure and Geothermal Energy Development Project Completion in Kenya

Investments in Geothermal Energy Development Projects (GEPs) are still considered high-risk and capital-intensive with unpredictable completion even amidst the adoption of Public Private Partnership (PPP) financing models particularly in sub-Saharan Africa (SSA). Numerous GEP completion bottlenecks affecting timely project completion have been documented lately; these challenges have caused delayed delivery of critical path milestones, project stalling, and even outright project failures. Recent empirical studies focused more on developed countries' longitudinal secondary databases covering the wider energy sector, with minimal attention paid to the situation of GEPs in developing countries. Anchored on the positivism and pragmatism foundations, this study examined the mediating influence of delivery capability on the relationship between PPP financing structure and the completion of GEPs in Kenya. Using a census survey design, data from 48 geothermal energy projects (private sector project managers and implementation team leaders from the public sector) and key informants was collected and analyzed using mixed methods. Data triangulation and diagnostic tests were performed. The results and findings revealed that while PPP financing structure alone explains 43.9% of the variance in project completion, the inclusion of delivery capability substantially increases the explained variance to 66.1%. A balanced PPP financing structure and delivery capability have statistically significant effects on project completion outcomes, with delivery capability (β = 0.579) having a stronger isolated effect than the PPP financing structure (β = 0.326). The reduction in the PPP financing structure coefficient from the first to the second model suggests that some of its effect is shared with or mediated by delivery capability. The study concluded that completing PPP-financed GEPs requires an integrated approach that considers both predictor variables: A balanced PPP financing structure comprising private equity, commercial and concessional loans, grants and government contributions; and strong delivery capability including geological, technological, PPP modelling and agile project management competencies. Geothermal sector-specific government support measures and industry recommendations are provided to enhance the completion of PPP-financed geothermal energy development projects mainly in the SSA region.

EFFECT OF PUBLIC PRIVATE PARTNERSHIP FINANCING STRUCTURE ON COMPLETION OF GEOTHERMAL ENERGY DEVELOPMENT PROJECTS IN KENYA

Objective: To determine the effect of Public Private Partnership (PPP) financing structure on the completion of geothermal energy development projects in Kenya. Theoretical Framework: The study used agency and public choice theories to analyze the dynamics between PPP financing structure and completion of geothermal energy development projects. Methodology: A cross-sectional census survey in Kenya surveyed 48 geothermal energy development projects, collecting quantitative data through structured questionnaires and qualitative insights from industry regulators, financiers, and practitioners. A combination of descriptive, correlation, and linear regression statistical models were applied. Multiple diagnostics tests and data triangulation were performed. Results and Discussion: The study results provide strong statistical evidence depicting a positive relationship between PPP financing structure and the completion of geothermal energy development projects in Kenya. The findings suggest that as the level of PPP involvement increases, so does the likelihood of faster project completion. The study also reveals that a balanced PPP financing structure has a substantial effect on the completion of geothermal energy development projects. The analysis demonstrates that a hybrid PPP financing structure comprising recommended proportions of private and government equity, commercial and concessional loans, hybrid finance, and grants significantly affects project completion outcomes. Research Implications: The study emphasizes the significance of a structured PPP financing model, comprising private and government equity, concessional and commercial loans, hybrid finance, and mixed grants, in mitigating inherent PPP risks for enhanced project completion outcomes. In addition, effective government support measures and robust delivery capability of developers jointly influence the two variables in a significant manner. Originality/Value: This study uniquely analyzes the influence of PPP financing structure on the completion of geothermal energy development projects in Kenya, integrating quantitative and qualitative data for a comprehensive perspective, thus offering essential insights for stakeholders.

The Effect of Balikpapan-Samarinda Toll Road Construction with a PPP Scheme on The Formation of Economic Structure in East Kalimantan

Economic effects are just one of the many effects of the massive infrastructure investment in Indonesia made over the past ten years. The aim of connecting Indonesia between regions is the basis for massive infrastructure growth, especially toll road infrastructure. Several funding schemes have been implemented to build toll road infrastructure, including the Public-Private Partnership (PPP) financing scheme. This PPP financing scheme was also implemented in the Balikpapan-Samarinda toll road construction. Therefore, this research attempts to capture the impact of the construction of the Balikpapan-Samarinda toll road with a PPP scheme on the formation of the economic structure in East Kalimantan province using the Input-Output (I-O) table. The investment value for the Balikpapan-Samarinda toll road is IDR 9.97 trillion was injected (shock) into gross fixed capital formation in the construction sector. The calculation results in this research show that the construction of the Balikpapan-Samarinda toll road contributed 9.8% of total demand. Apart from that, there is a significant impact on the economic structure of East Kalimantan Province, as seen from the expenditure multiplier figure with an output total of IDR 15,111 billion, a total income of IDR 2,471 billion, and a total workforce of 25,095 workers due to investment in the construction of the Balikpapan-Samarinda toll road.

Features of Public-private Partnership Financing as an Economic and Legal Tool for Sustainable Development

The economic transition from a market to a social model requires a review of the role of the state and representatives of business structures in the economic system. Various forms of their interaction are becoming increasingly important, the main of which are public-private partnerships aimed at financing, formation, and implementing socially important projects. The purpose of the study is to analyze and evaluate the parameters of interaction between the state and the private sector in terms of improving the socio-economic partnership based on the provisions of the concept of public-private partnership (PPP). To achieve the goal were used such methods: analysis and synthesis; formalization and grouping; systematization and logical abstraction. The practice of the Public-Private Partnership Center of the Republic of the Philippines shows that the rational use of social partnership financial instruments will allow the state to reduce the budget burden, ensure infrastructure development, increase employment, develop private enterprises and improve the quality of goods and services. It is noted that the level of public-private partnership use in the world differs significantly, and therefore requires further intensification of efforts to stimulate its use, including due to the wide range of significant benefits of its use for the economy and the population in particular. Public-private partnerships are becoming increasingly popular as they provide many important benefits. In particular, the opportunity to obtain additional financial resources, including through additional investments, quality projects involving professional companies, open access to innovative technologies, and priority opportunities for the state to direct funds to specific areas. Thus, the direction of further research may be to determine the details of the functioning of projects in the framework of public-private partnerships. It is also important to conduct a pre-investment analysis, check the effectiveness of financing, prepare appropriate recommendations for each project stage.

Assessing Financial Risk in Public-Private Partnership Financing for Road Construction Projects in Iran Using Uncertainty Conditions Approach

Abstract Private section investment in the construction of transportation infrastructure, one of the most important of which is freeway projects, has been extensively used in developing countries in recent decades. However, in many cases due to the lack of necessary investigations and studies, the criteria have not been properly identified and, as a result, the proper way of participating in large-scale transport projects has resulted in numerous problems and, in some cases, project failure. However, choosing a private-public partnership will have a major impact on the success of freeway construction. However, due to the current conditions of the country’s economy, these projects are following with some risks. Therefore, in this study, the financial risk assessment of “public-private partnership” financing for road construction projects in Iran was investigated using the uncertainty approach and the BAS method. The research population of this study consisted of 23 researchers and experts with Ph.D. degree in finance with minimum degree of associate degree and experience of research and financial consulting in investment firms. According to the results, the lack of stability in planning and implementation of government programs and political risks, increases the risk of road construction projects and, in this regard, controlling the price fluctuations and bank financing of road construction projects can reduce the risk of these projects.

Designing a financial risk assessment model for public-private partnership financing for road construction projects in Iran

One of the most important issues in Iran’s road construction projects operated by public-private partnership financing is the financial risk. This research aims to design the financial risk assessment model for these projects. The factors for financial risk assessment were identified using a semi-structured interview with 23 experts. A total of 14 factors were extracted including liquidity risk, market risk, inflation rate risk, interest rate risk, Government stability in planning, the nature of Iran’s capital market, political risk, the way of bank finance for project, price changes at macroeconomic level, changes of expected return rate, credit risk, and exchange rate risk. The interpretive structural modeling (ISM) approach is applied to identify the relationship between the factors and model levels. MICMAC analysis also is used to specify the characteristics of the factors. The results of the analysis showed that among these variables the operational risk of autonomous variable, exchange rate risk and political risk of independent variables and other variables of the model are the type of interface variable. The results obtained by ISM consisted of a five-level model with 14 factors. Model analysis showed that political risk is the most influential variable and liquidity risk, market risk, inflation rate risk, credit risk, project bank financing, expected rate of change and financial performance are the most influential variables of this model.

Problems of implementing the mechanism of public-private partnership in the field of public transport services in the Russian Federation

The article presents the problems of the formation of public-private partnership in the field of public transport services in the Russian Federation. The risks of the participants of the agreement on public-private partnership are considered. As the most priority mechanism for implementing public-private partnerships in public transport services, the project financing is analyzed, which is based on the formation of a specialized company and the use of various sources of public-private partnership financing. The principles of the agreement of public-private partnership in the sphere of public transport services are proposed.

RETRACTED: Research on the risk management of the accounting information of public–private partnership financing mode in the pricing of listed companies' bonds

As the bonds of China’s listed companies have been popularized recently, it becomes an important subject faced by governments at all levels to display the listed companies’ role in currency regulation and control policies in the bond filed; an estimate method for the listed companies’ bond price equilibrium model based on the accounting information of public–private partnership financing pattern has been proposed in this paper. First, the bond price equilibrium estimate model of the listed companies is constructed on the counterweight and restriction to the bond market price of the listed companies by the financial institutions, bond institutions, and credit institutions of the listed companies to make efficient estimate on the bond price equilibrium model of listed companies and deeply analyze the influences of monetary policy on the bond price trend of the domestic listed companies. According to the experimental result, prudent policy at the national level remains necessary to the bond price of the current listed companies in resisting the financing risk to reduce the loan-to-value of the listed companies in the bond field.

Public-Private Partnership: Financing and Constraints

India is unable to compete globally because of infrastructure constraints and hence is adversely affected, which is extremely important to improve the country's productivity of all sectors. This issue is not only related to scarce finance but also due to lack of government's capacity to implement the programmes. In India, the budget resources of the Government are increasingly restrained in the matter of financing economic infrastructure projects. Because of these reasons, Public–Private Partnership (PPP) is the only viable option for financing such infrastructure needs. The recent trends in such PPP finances have highlighted many issues related to implications for large-scale PPP financing programme promised by the Government of India. Such PPPs have relied mostly on commercial banks to finance their projects so it is still unclear how this dependence will sustain. Long-term finances have exposed the banks to asset-liability mismatch risk. There needs to be an active bond market, which increases the flow of such long-term finance and in turn reduces the dependence on banks.

Land value capture strategies in PPP – what can FM learn from it?

PurposeValue capture seeks to generate revenue by extracting a portion of the gains in the value of land and property that result from improvements to transportation networks. The paper aims to present the opportunities for facilities management (FM) on the level of participating more actively in the development of new area to help building a competitive and healthy area with high quality for residence, business and spare time. A framework also includes life period land valuation in the land value capture (LVC) for the assessment and revenue models for public private partnership (PPP) type of investments in the way to identify additional private profit so as to attract landlords to join the project.Design/methodology/approachLand valuation for expropriation is a useful method, which can be evaluated through the life period of the infrastructure. The value capture strategies are identified and respective policies are evaluated. Periodically, market value assessment of land within the value capture model is designed, by which the private partners could be attracted.FindingsIn the paper, LVC shows how the relation to increase value of land can bring competitive areas and as such give new opportunity for FM.Originality/valueCapturing land value and widening the internalisation of external positive impacts enhances the perspective of project assessment and PPP financing models. This model may be used by public and private sector parties involved in PPP arrangements to improve project evaluation and the base of project finance.

中国基础设施PPP项目风险管理分析—基于COSO-ERM框架

在基础设施建设中引入PPP (Public Private Partnership)融资模式能够解决财政资金压力大、项目建设效率较低等问题。但PPP模式中同样存在项目建设时间长、资金缺口大、合同构造复杂、风险因素高等问题，实务中往往因为无法对PPP项目全生命周期中出现的种种风险进行合理、科学管理而致使成功案例较少。在PPP项目中引入COSO-ERM进行风险管理，从内部环境、目标设定、事项识别、风险评估、风险应对、控制活动、信息与沟通、监控等八要素对PPP融资模式进行分析，建立PPP项目风险管理的基本思路和流程，区分相关事项和非相关事项，对相关风险加以控制，保证项目的执行和建设始终符合项目目标。 In the construction of infrastructure, introduction of PPP (Public Private Partnership) financing model can solve the problems of high financial fund pressure, low construction efficiency, etc. But in the PPP model, long-time project construction, large funding gap, complex contract structure, high risk factors and other problems also exist; in practice few cases are successful, due to the lack of reasonable and scientific management of the risks arising from the whole life cycle of the PPP project. The paper introduced COSO-ERM in the PPP project for risk management, analyzed the PPP financing model from the perspectives of internal environment, goal setting, event identification, risk assessment, risk response, control activities, information and communication, monitoring and other eight elements, established the basic idea and processes of PPP project risk management, distinguished the related matters and the unrelated matters, and controlled the relevant risk, so as to ensure that the project execution and construction always meet the project objectives.

Forms and Mechanisms of Public-Private Partnerships in Innovative Modernization of the Western Europe Economies

The main purpose of the article is to review the contemporary forms and mechanisms for financing of public-private partnership (PPP) in the context of a innovation policy of the European countries. The authors reveal the essence and specific features of PPP in innovation sector, and provide a comparative characterization of direct and indirect mechanisms for PPP financing. The authors analyze the innovative development of the EU countries and divide them into several groups depending on their innovation performance. The performed analysis led to the conclusion that the economic crisis and the slow pace of economic redevelopment have a negative impact on the innovation-driven growth of the EU countries. The authors conclude that the decrease in the volume of public resources may have a negative impact on R&D budgets in the EU member countries. Solution to social and economic problems will require a technological breakthrough. To this end, the governments of European innovation-active countries held a new course for innovation policy, including the priorities for the development of national systems of innovation measures to enhance and improve the mechanisms for financial support of innovative entrepreneurship.

The Analysis of the PPP Financing Model Application in Ports of China

Liu, W.; Li, W., and Xu, X., 2015. The analysis of the PPP financing model application in ports of China.The article introduces a new model of port financing - PPP (Public-Private Partnership) financing model the analysis of the model's characteristics, then expounds the confirmation of concession period through game theory, and finally discusses the obstacle of private capitals and the role of government in putting forward the prospect of PPP model in ports of China. It provides a certain theoretical basis and shows the practical significance in the application of the PPP financing model in the field of port construction.

Financing Infrastructure Projects through Public–Private Partnerships in India

India has been suffering from a huge deficit in infrastructure facilities. The Indian government perceives the public–private partnership (PPP) model as the preferred mode to bridge this deficit and has initiated several measures in that regard. This paper discusses the basic aspects of PPP and how it works in India. Financing for infrastructure is one of the major issues. This paper explains various issues such as over-dependence on commercial banks for debts; inadequate financing from infrastructure finance companies; issues in external commercial borrowing; nonavailability of mezzanine financing; partial availability of insurance, pension, and provident funds; and nonfinancing issues that are plaguing infrastructure finance in India. The recent improvements such as infrastructure debt bonds, relaxed norms for external commercial borrowing, and reasonable exit options are also examined. The paper suggests various financial reforms that are needed for PPP financing in India such as tapping into savings, allowing foreign direct investment, increasing the cap on viability gap funding, allowing balloon payments, giving impetus for corporation bonds, and building infrastructure corpus.

Public–Private Infrastructure Cooperative

A state-level public–private infrastructure cooperative (iCoop) is proposed as an effective means of financing public–private partnership (PPP) transportation projects. iCoop is an independent state-level infrastructure bank dedicated to financing PPP projects and is operated like a banking cooperative with guaranteed minimum returns to its investors. Its ownership is founded on a public–private partnership, and its initial capitalization draws on the state's noncapital contribution in the form of PPP participation guarantees, private capital contributions from local and global investors, and its own bank deposits. iCoop's business model eliminates the state's need for PPP “subsidies” resulting from toll revenue shortfalls and converts them into additional debt capacity with returns for reinvestment. iCoop helps to lower the overall PPP financing costs and reduce perceived risks associated with greenfield construction financing. iCoop is also designed explicitly to mitigate key political risks underlying PPP projects. Through iCoop, the state can effectively increase its infrastructure debt capacity without jeopardizing its current debt limit and do so with no direct capital contributions. For global investors, iCoop provides a new vehicle to access a portfolio of infrastructure assets, thereby offering them the opportunity to further diversify their risks. iCoop gives a face to the much-talked-about infrastructure bank idea with a sound business rationale and a clear implementation strategy.

Pricing Mechanism and a Framework of Public-Private Partnership Financing Risk Allocation for Public Rental Project

Public rental project is a protection scheme putting forward for the low-income currently in China. But its promoting and building face great obstacles because of the constraints of financial resources of government. There is however a critical issue in its application that it’s hard to reach an agreement for risk allocation and operation process between the public and the private sectors, resulting in a relatively longer negotiation period and a higher transaction cost. This paper analyzes firstly factors affecting the risk allocation of PPP public rental project and then discusses the operation process of public rental project under PPP model, and analyzes the pricing mechanism and its safeguards of the model. Conclusions of the study can provide guidance to improve risk allocation in PPP public rental project.

On the Public Private Partnership Financing Strategies of Urban Rail Transit

Introduction and innovation of PPP mode can attract more private capital to involve urban rail transit construction and enhance overall operating efficiency of URT. Based on analyzing the characters of URT PPP, through summarizing the PPP categories in application, this paper classifies the URT PPP practical approaches into four broad strategies, and provides a framework and some suggestions for assessing and managing risks associated with various URT PPP strategies.