The risks of private finance are magnified if a programme is not in place. Table 1 summarizes the possible consequeneces if key program features are missing. Evidence that there is an ability to attract private finance by creating a clearly articulated and well thought through and supported program of opportunities seems overwhelming. This ability seems to be characteristic of countries and ectors that have been successful in involving the private sector.
1 Table 1: Possible risks if key program features are absent
Factor | Risk if absent |
Clear policy | Lack of a clear policy can mean the program is not integrated with infrastructure needs. Delivery bodies are not appropriately empowered, leading to ad hoc and uncoordinated approaches to procurement that may lead private players to cherry pick the most favorable terms. |
Political support | Lack of political support can result in uncertainty that the program will proceed. |
Ongoing pipeline | Lack of an appropriate pipeline can increase transaction costs, lack of credibility, and variation of bids, making comparison difficult. |
Presence of necessary laws and regulations | Lack of needed laws and regulations can mean delays or ultimately abandonment of the project. |
Administrative capability and capacity | Inadequate administrative ability can result in lack of consistency and coordination across public bodies and inability to transact projects and ongoing contract management. |
Pathfinder projects | Not using pathfinder projects can result in no time to review whether all other factors are in place and whether draft contracts include appropriate and realistic terms, such as risk transfer. |
Sizeable opportunities | Few opportunities can lead to a lack of interest and competition, which in turn may increase costs. |
Credible project timetable | An unrealistic timetable may lead potential bidders to question the whole procurement process and in turn they inflate costs, and so on, to give some protection should the timetable and process extend beyond that planned. |