This guideline is part of a project to redress the lack of institutional resources, capacity and experience that impede on successful development and conclusion of PPP projects in developing countries.
The focus of this guideline is on understanding legal and contractual issues arising from PPP transactions at a national level. At a national level, contractual agreements in PPP projects are critically important. First, whether an infrastructure project is "bankable" depends very much on the quality of the project agreements. Infrastructure is usually regarded as a "non-marketable" asset, it is typically immovable (or movable at unjustifiably high cost) and there may be no market for the infrastructure asset altogether. It is the rights to infrastructure facility as determined by the project agreements, rather than the infrastructure facility in itself, that critically determines the risks of the project and the value of the project company. Second, project agreements describe, or should describe, the rights and obligations of the parties, the way the project is to be conducted and how risks are to be managed and allocated. Whether or not the reader is involved with the "legal" or "contractual" aspects of a PPP transaction, these issues need to be considered and understood.
It is hoped that increasing the capacity of government officials and regulators in developing countries in relation to PPP projects will achieve two broader aims:
• Facilitate private sector involvement. The assumption is that if government officials and regulators have an understanding of the legal and financial issues involved in PPP projects, they would be in a better position to identify, develop, design and structure PPP projects that are "bankable."
• Ensure successful completion of projects. Lack of capacity and experience may lead to protracted and confrontational negotiations that can impede on the progress and completion of the PPP project, and result in added transaction costs or breakdown of relations. This guideline explains common issues in PPP projects and provides ways these issues are resolved, with the aim to encouraging government officials and regulators to take a "sensible" approach to negotiating PPP projects while at the same time ensuring that PPP projects achieve the policy aims of the government that serve the interests of the population of the developing country concerned.