Introduction

The National PPP Guidelines include both Standard Commercial Principles for Social Infrastructure and Standard Commercial Principles for Economic Infrastructure.

PPP projects are complex commercial structures and applying the right commercial principles requires analysis of individual project characteristics. It is not always a direct translation of either set of principles to an individual project contract.

This overview is a practical guide to the appropriate mix of commercial principles that could form the basis for infrastructure project contracts. The National PPP Guidelines aim to promote a consistent approach to the application of the commercial principles.

The economic infrastructure principles have been drafted based on a demand-risk transfer payment model, which has most frequently been applied to toll roads, but is also applicable to car parks, energy generation/distribution facilities, water treatment facilities and potentially port facilities. Under this model third party users pay for use direct to the private partner (often within a regulated payment framework) over the life of the contract.

The social infrastructure principles have been drafted based on an availability payment model, which has most frequently been applied to hospitals, schools, public transport and correctional facilities. Under this model government pays for the community's use of the infrastructure services through regular service payments to the private partner over the life of the contract.

At times individual projects may not readily fit into either of the economic infrastructure or social infrastructure principles, and a hybrid model borrowing from both the two sets of principles may be required.

Differences between jurisdictions apply for some of the commercial principles. Particular areas where there are jurisdictional differences are noted in both sets of principles, and specific jurisdictional positions can be found in the relevant Jurisdictional Requirements.