Financing gaps are shortages in funds for a given project-the gap between what a given partner needs to finance and its ability to pay for it. A lack of financing is the most typical of the three types of gaps, and PPPs are most often used as tools for raising capital from the private sector to cover public sector shortages.
Indeed, though equity investors are ready to finance infrastructure, in most countries, only a relatively small percentage of projects are actually "bankable." Few projects offer credibly stable cash flows, and bankruptcies associated with the Indiana Toll Road (and similar projects like State Route 125 in California, and State Highway 130 in Texas) have made private-sector partners increasingly skeptical of optimistic public-sector projections. Many projects require huge capital investments to maintain politically acceptable prices, increasing the difficulty of meeting capital requirements. And still other projects are dependent on the condition of assets that are fundamentally hard to measure-such as the relative health and wellbeing of an entire citizenry. Attracting capital investment with such large unknowns is truly a difficult task.