Unless the sponsor is financing the project on its balance sheet, the funding for the project is likely to come from a mix of limited-recourse debt finance and equity investment.
The debt financiers will generally take their security over the revenue stream of the project and the project contracts, rather than the project asset. The term of the debt may be for some 20 years, but will generally be shorter than the contract period under the project agreement. The private party will repay the debt out of the service payments it receives from government (or from the end users in a 'user-pays' project). This gives the debt financiers a strong incentive to ensure that the project remains on track, and that service delivery commences on time and is carried out at optimum performance. This in turn reduces the likelihood of non-payment or abatement of service payments.
Commentators have often noted that the debt financiers' interests in a public private partnership project are most closely aligned with those of government. Whilst this is true in many regards, there will be occasions when government's public interests and the commercial expectations of the financiers diverge (for an example, see the discussion on insurance in section 3.2.3). However, government can certainly take some comfort from the initial due diligence and through continual checking and monitoring, both of which are part of the debt financiers' role.
Whilst the debt financiers are concerned with ensuring steady, long term returns, that will keep the project viable and service the debt (at agreed rate); equity investors have a stake in the 'overall' success of the project, and will be hoping to maximise the return on their investment. Equity investors' interests most closely align with those of the other consortium members