Nr | Question | YES | NO | User comments | Reference to MGDD | |
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VIII. Final risk distribution questions The purpose of this section is to summarise the most relevant questions from sections IV - VII. This section provides also some additional guidelines in case the questions from sections IV-VII did not provide the final answer. |
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73 | Does the private partner bear construction risk and both availability and demand risk? |
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| Some contracts may combine payments linked to both availability and demand risks in a quite balanced way (or based on fragile hypotheses), as reflected in the indicators relating to the level of payments where no category seems to be predominant. It is recommended that additional criteria be used for determining the overall risk transfer mentioned in sections IX and X and XI. | VI.5.3.2/39 |
74 | Does the private partner bear construction risk and at least one of either availability or demand risk? |
| on-balance sheet |
| If the construction risk is borne by government, or if the private partner bears the construction risk but no other risk, the assets are recorded in the government's balance sheet. If the answer is "yes", then the assets may be off the government's balance sheet, provided that, there is no other mechanism in place, such as a guarantee (see section IX) or government financing which transfer these risks back to government. If government assumes the risks through another mechanism (see section IX), or if the answer is "no", the assets are to be recorded on the government's balance sheet. For borderline cases, it is appropriate to consider other criteria, such as what happens to the assets at the end of the PPP contract (see section XI). | VI.5.1/6 |
75 | Is the value of the asset split between the private partner and government? |
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| The answer can not be "yes". ESA95 requires national accounts to use a "binary" reporting system: assets are to be classified either as wholly government assets or as wholly non-government partner assets (i.e. their ownership cannot be split between government and non-government partner). The rule is that an asset appears in the balance sheet of only one economic agent, for its total value. It cannot be split in national accounts. The analysis of the risks borne by each party must assess which party is bearing the majority of the risk in each of the categories mentioned above (construction, availability, demand). | VI.5.3.2/32 |
76 | Does the degree of government financial involvement increase during the course of the project, so that it surpasses the threshold of 50% of the project capital cost (as in question 37)? | on-balance sheet |
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| Risk sharing and risk analysis is a crucial part of the project implementation not only at the preparation phase, but over the whole life of the project. In other words, risk distribution is important not only at the particular point in the time (e.g. before contract signature) but also during project implementation when events occur that shift the distribution of risks between government and the partner (e.g. renegotiation of the contract). If the answer is "yes", this triggers a reclassification of the assets to government accounts, at the time of the increase. | VI.5.3.4/59 |
77 | Does government receive revenues from the asset (e.g. tolls)? |
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| Whether government collects the tolls using its own staff or via private partner resources is irrelevant. If the value of tolls received by government exceeds 50% of the payments that are made by government to the private partner under a contract (i.e. the cost of the service for government), the asset should be classified on the government's balance sheet. Eurostat does not consider such cases as PPPs and the risk assessment rule described in question 74 (between the private partner and government) is not applicable. See also a case study on motorways in Portugal (available at www.eib.org/epec). | VI.5.3.2/39 |