3.2.3.1 Approach (a): All risk borne by the Contracting Authority -
In some markets the Contracting Authority typically bears all the risk of change in law and provides full relief to the Private Partner. This may be the only way that private finance can be raised in its jurisdiction for the bankability reasons mentioned above. As mentioned in Section 3.2.1.3, this risk allocation should also enable the Private Partner to offer a more competitive price without the need for contingency pricing.
| EMERGING AND DEVELOPED MARKET DIFFERENCES Although a Contracting Authority may bear all change in law risk at the start of a PPP programme, once a track record and/or legal environment is established in its jurisdiction which gives the private sector greater confidence in the stability and predictability of the regime, Contracting Authorities procuring new PPP Projects may be able to explore some risk transfer to the Private Partner. See Section 3.3, Sample Drafting 3. |