When undertaking a public private partnership project, the private party is entitled to earn a fair commercial return, commensurate with the level of risk it bears on its investment. This return is comprised of:
∙ third party revenues (for example, user charges) and/or
∙ service payments from government for making a facility available for use (i.e. an 'availability' payment).
The private sector return on investment can be estimated from rates of returns for similar activities observed in the capital markets. Service payments are structured so that they are conditional on the performance of the output specification, and any other contractual obligations.