IV. Risks and Benefits of Increasing Government's Role

As detailed above, the source of financing is an integral part of the overall risk allocation, and therefore, the participation by the government as a financing source could alter the allocation of risks in the project, diminishing the incentive structure. However, in some cases, the government's participation, whether through partial financial participation, credit enhancements, or risk assumption, is a requirement for financial feasibility. The challenge rests in structuring a role for the government without undermining the success of the project. As governments all over the world have sought more effective and efficient means for providing services, they repeatedly have had to determine what role the government's participation should take in the final privatized contract.

More Information