Structuring PPP toll-road contracts to achieve public pricing objectives

Abstract

Although the success of public-private partnership (PPP) contracts is often evaluated on financial terms, an even more fundamental question is whether these contracts achieve the public objectives for which they were designed. The state's responsibility as contracting agency for public infrastructure gives it a crucial role in defining these goals, which fall into multiple categories and can vary for each procurement. For toll-road PPPs, the category of pricing objectives is a significant component of these broader public goals. Such pricing objectives often include (1) achieving an affordable toll rate, (2) managing congestion and (3) minimizing state subsidy/ maximizing up-front payment from concessionaires. To identify the specific PPP contract elements which support these pricing-related objectives, the method of qualitative comparative analysis was applied.