Financing infrastructure development promotes social and economic improvements, but it also creates new challenges. Unfamiliar financial risks, complexity and uncertainty of major infrastructure projects – to name a few. Additionally, traditional financing sources can no longer be enough for infrastructure financing. Solutions to the current turbulent market challenges impacting infrastructure will have increasingly to come from innovative financing and operating solutions developed by governments working collaboratively with the private sector. To overcome these difficulties the principal parties to infrastructure ventures will nearly always seek timely, authoritative, unbiased and objective professional advice. This is where KPMG can help.
One of the most important, but complex ways to realize infrastructure projects is to use Public-Private Partnerships.
Typical PPP projects involve the construction/reconstruction of transport infrastructure (airports, roads, railroads, tunnels, bridges), public buildings (hospitals, schools, museums), utilities (water supply, wastewater, waste processing), energy, and also operation and maintenance of these facilities.
In PPP projects, the private sector commits to developing, building, and financing facilities, and operating them in accordance with the parameters and standards established by the government. In return, the private sector is paid by the public sector, with the amount dependent on results achieved (services provided). In some projects, this payment (or part of the payment) comes from the revenues generated by the commercial operation of the facility.
Implementation of PPP projects is a complex task. In addition to the proper legal framework, successful implementation depends on a correct evaluation of the economic feasibility of the project, and no less on an appropriate structure and clear coordination of the work of all parties. Therefore, assistance of an experienced advisor is highly important for such projects.