Uncertainties are events that are indefinite, while risks apply to events that have a measurable probability. Uncertainties are often the result of the aims and actions of third parties, rather than directly related to the infrastructure being considered. (Please see Appendix A.6 for further discussion of these aspects of risk.) Many of these uncertain events are linked to the political, legal, or economic environment, and they are highly relevant to private finance of infrastructure. Some of the issues to consider include:
∙ Is the bidding process in this country transparent and fair?
∙ Does the public authority have the power to enter into the contract?
∙ Can the public-sector party be brought to court if they fail to fulfill their contractual obligations?
∙ Will courts in this country uphold decisions?
∙ Can the lending be done in the local currency?
∙ Is the opportunity open to foreign investors?
These are questions that apply to developing, emerging and developed economies. For example, it is crucial to know when regulatory approaches may be outdated or flawed, or whether the political support for the transaction is uncertain. The Texas roads program, which has been hindered by political indecision, is one such case (see Case in Point 1: Texas P3 roads program).