To expect one set of tariffs, or even a tariff structure or regime, to remain viable and appropriate over the typical life of a PPP project is unrealistic. It is therefore essential to define practical rules for adjustments. This requires defining:
• The triggers or drivers for a price adjustment, such as changes in raw material prices (such as oil prices for power), inflation, and exchange rate fluctuations (where the operator had to assume unhedged foreign currency exposure);
• The mechanisms by which the adjustment will be made, including cost plus and price-cap regulation; and
• The frequency of adjustments including cost pass-throughs, tariff indexation, tariff resets, and extraordinary tariff adjustments.