This section provides a summary of the renegotiation data analysis. The full data analysis is available in Appendix A (Data analysis).
The study found 48 examples of renegotiation, out of the 146 projects for which data was available, which is an incidence of 33%. It should be noted that the prevalence of renegotiation results is heavily influenced by the timeframe that was selected for the research (i.e. projects that reached financial close between 2005 and 2015, inclusive). While all projects in the sample have been running for at least two years, this reduces for each subsequent year, and only 50 projects have been in progress for more than eight years. The influence of this is that, while only 33% of projects in the entire sample experienced renegotiation, the data indicates that 45% of PPPs have experienced renegotiation by their fourth year after financial close. This suggests that the true prevalence of renegotiation is higher than was found in the study, due to the timescales involved.
There are several other interesting findings from the data collection on renegotiations that relate to prevalence of renegotiations in particular regions, particular sectors and at particular times after financial close.
As demonstrated in Appendix A (Data analysis), the transport sector has the highest incidence of renegotiations overall, with 42% of transport projects renegotiated compared to 33% of projects overall.
As also demonstrated in Appendix B (Data Analysis), the average period of time after financial close for renegotiation to occur was 3.6 years. Where the renegotiation occurred during the construction phase, it occurred on average 2.5 years after financial close. Where it occurred during the operations phase, it was on average 5.0 years after financial close. For the reasons noted above in relation to the timescales involved, this average period may change for projects as they reach full contract duration. Large numbers of renegotiations took place between two and four years after financial close, with 7% of the 146 projects studied being renegotiated in the third year after financial close.
Table 1 sets out the prevalence of renegotiations in different regions based on data collected on all projects at all stages after financial close. It should be noted that, for the regions with less data available, only a small number of projects were investigated. The percentage prevalence for the regional information is therefore not statistically significant.
Table 1: Prevalence of renegotiation by region
Region | Projects with data | Renegotiation events | Percentage |
East Asia | 17 | 2 | 12% |
Europe | 43 | 12 | 28% |
Latin America and the Caribbean* | 43 | 25 | 58% |
Middle East and North Africa | 8 | 1 | 13% |
North America | 5 | 2 | 40% |
South Asia | 14 | 5 | 36% |
South East Asia | 8 | 1 | 13% |
Total | 146 | 48 | 33% |
*Note: It is understood that the prevalence of renegotiation in Latin America is due in part to the Brazilian government unilaterally changing electricity tariffs in 2012, which led to many renegotiations on energy projects and hence has skewed these results. Affected Brazilian power projects make up 11% of the projects in Latin America, and 3% of the total sample data.
Typical causes of renegotiation and typical outcomes, including a detailed analysis of some of those causes and outcomes are detailed below.