Despite the financial crisis, investments in PPP projects on emerging markets have remained relatively dynamic, continuous pressures existing as PPPs contribute to cover basic critical gaps in an efficient manner of costs.
Recent financial turbulences have put pressure on the application of PPP projects and, to this end, the segment of transport projects, their elaboration and implementation include a variety of critical aspects which must be considered. Each part of the project, from the preparation to design and application, comprises its own specific demands and challenges. Extremely complex, the investment elaboration and cost planning need a real cost-benefit analysis regarding the project preparation and design. Although many states have gaps on the legislative system and have a limited experience as regards PP project implementation, they are aware of the significant role of PPPs in the development of transport infrastructure. In order to approach infrastructure projects in relation to the economic situation, some states decide to implement PPP projects through the “build, operate and transfer” system, this method being deemed as an efficient option of externalising public projects towards the private sector dealing with the design, financing, construction and exploitation, by means of a concession agreement. In the concession period, the private party operates and maintains all facilities related to the infrastructure project, and after this period, the private investor must transfer the project to the initiator, in full functioning and operation capacity and free of charges and obligations.
For instance, this system is considered by the Railway Company in India as a new policy for the attraction of private partners for railway projects. Therefore, through the new strategy, based on the build, operate and transfer system, the company wants to implement projects amounting to EUR 15 Billion. The new strategy also includes the model of dividing expenses for projects of track doubling. “This policy will be a more complex and efficient one as regards relations with private investors. Since the plans for the attraction of the private sector applied until now did not have the required results and we faced problems due to several factors, we decided to formulate this new policy for the attraction of private companies”, declared a representative of the Ministry of Transport, who is involved in the application of this policy.
This is the principle based on which the project of the underground line 7 in Bucharest (Romania), Bragadiru – Voluntari will also be based. Thus, the company wants to let for 30 years to a private operator the passenger transport services on the future line Bragadiru – Voluntari which will be ready by 2020. Within the project carried out by PPP, the state will make the land available and the investor will provide the financing for the construction works and acquisition of trains, almost EUR 1.25 Billion. The investor “will recover the invested money from the equivalent of the sold tickets, as well as from the different retail or advertising activities to be carried out inside the stations. The tender for the execution of this project will be won by a consortium which should also include an experienced constructor and an investment bank or fund. The price per kilometre would be about EUR 50 Million. After the reception of works, the consortium would operate this line for 30 years”, declared Gheorghe Udrişte, the General Manager of Metrorex. To be able to attract private investors into the partnership, the studies for the Line 7 should reveal a traffic of at least 30,000 passengers/hour/direction.
The success of such projects depends on the evaluation of economic, financial and technical parameters, the application of the system being beneficial to both sectors (the public one would win from the experience of the private sector which holds different exploitation instruments to the benefit of the public party and private users). The adoption of this system will allow the identification and distribution of socio-economic benefits of the project, and financial changes will contribute to the increase of the public sector capacity to implement new projects which could otherwise be delayed or cancelled.
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