More than 20 percent of London's main water pipes are over 150 years old; the median age of coal power stations in the United States is over 40 years; and some of the major metro systems, such as Moscow's, are more than 70 years old. If the infrastructure asset will last for many years, what impact does this have on the use of private finance to fund it, in whole or in part?
There are many often interlinking factors that feed in to the final decision on the choice of financing. We will focus on two key ones, namely:
∙ certainty vs. flexibility of asset functionality, and
∙ the ability to forecast costs and revenue over the long term.
As these issues are most pertinent in concession-based contracts, we will also touch on the question of how long the concession should be in effect.