In projects involving network risk of a competitive nature, government's likely preferred position is that, where it provides or subsidises competing public services that discriminate against the contracted services, it may provide appropriate redress to the private party.
Agreeing to reduce network competition can in fact be part of a broader government policy or government plan, pursued for the public benefit. For example, in a road project, government's agreed position in respect of network risk may be part of a wider plan to improve traffic management.
This type of risk is at its most pronounced where the project revenues depend on use, and government itself is not the ultimate consumer. The key is to ensure that 'network' is interpreted narrowly, so that only those things upon which the viability of the project immediately hinges are the subject of any assurances or undertakings and that, generally, those are limited to matters which would effectively frustrate the project if they were not as agreed.
Subject to competition policy and anti-competitive laws, government may enter into an exclusive service agreement with the private party. This sort of undertaking is more likely to be given for contracted services in regional areas.
An example of network risk arising in both complementary and competitive forms is a road project where government requires freedom to manage the public transport network. At the same time, however, the private party and its financiers require an underpinning for the project traffic projections, particularly where the project is to be financed on a non-recourse basis. In practice, the result may be a compromise in which government assumes network risk to the extent that it agrees to adopt common laws and policies across the transport system (so as not to discriminate against the relevant road); maintain connecting roads to the project road as it would for public freeways; adopt traffic management measures in the surrounding road network; and compensate the private party if the agreed traffic management measures are not implemented by a particular date or are later removed.